Page 105 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

Unit 8 : Tariff, Quotas and Non-tariff Barriers : Definitions and Types

customs and administrative entry procedures, standards, government participation in trade, charges Notes
on import, and other categories.
The first category includes methods to directly import restrictions for protection of certain sectors of
national industries : licensing and allocation of import quotas, antidumping and countervailing duties,
import deposits, so-called voluntary export restraints, countervailing duties, the system of minimum
import prices, etc. Under second category follow methods that are not directly aimed at restricting
foreign trade and more related to the administrative bureaucracy, whose actions, however, restrict
trade, for example : customs procedures, technical standards and norms, sanitary and veterinary
standards, requirements for labeling and packaging, bottling, etc. The third category consists of
methods that are not directly aimed at restricting the import or promoting the export, but the effects
of which often lead to this result.
The non-tariff barriers can include wide variety of restrictions to trade. Here are some example of the
popular NTBs.
Licenses
The most common instruments of direct regulation of imports (and sometimes export) are licenses
and quotas. Almost all industrialized countries apply these non-tariff methods. The license system
requires that a state (through specially authorized office) issues permits for foreign trade transactions
of import and export commodities included in the lists of licensed merchandises. Product licensing
can take many forms and procedures. The main types of licenses are general license that permits
unrestricted importation or exportation of goods included in the lists for a certain period of time; and
one-time license for a certain product importer (exporter) to import (or export). One-time license
indicates a quantity of goods, its cost, its country of origin (or destination), and in some cases also
customs point through which import (or export) of goods should be carried out. The use of licensing
systems as an instrument for foreign trade regulation is based on a number of international level
standards agreements. In particular, these agreements include some provisions of the General
Agreement on Tariffs and Trade and the Agreement on Import Licensing Procedures, concluded
under the GATT (GATT).
Licensing of foreign trade is closely related to quantitative restrictions—quotas - on imports and
exports of certain goods. A quota is a limitation in value or in physical terms, imposed on import and
export of certain goods for a certain period of time. This category includes global quotas in respect to
specific countries, seasonal quotas, and so-called “voluntary” export restraints. Quantitative controls
on foreign trade transactions carried out through one-time license.
Quantitative restriction on imports and exports is a direct administrative form of government
regulation of foreign trade. Licenses and quotas limit the independence of enterprises with a regard
to entering foreign markets, narrowing the range of countries, which may be entered into transaction
for certain commodities, regulate the number and range of goods permitted for import and export.
However, the system of licensing and quota imports and exports, establishing firm control over
foreign trade in certain goods, in many cases turns out to be more flexible and effective than economic
instruments of foreign trade regulation. This can be explained by the fact, that licensing and quota
systems are an important instrument of trade regulation of the vast majority of the world.
The consequence of this trade barrier is normally reflected in the consumers’ loss because of higher
prices and limited selection of goods as well as in the companies that employ the imported materials
in the production process, increasing their costs. An import quota can be unilateral, levied by the
country without negotiations with exporting country, and bilateral or multilateral, when it is imposed
after negotiations and agreement with exporting country. An export quota is a restricted amount of
goods that can leave the country. There are different reasons for imposing of export quota by the
country, which can be the guarantee of the supply of the products that are in shortage in the domestic
market, manipulation of the prices on the international level, and the control of goods strategically
important for the country. In some cases, the importing countries request exporting countries to
impose voluntary export restraints.

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