Page 109 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

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

• There may also be a compound tariff which combines a specific duty with an ad valorem duty. The Notes
distinction between the two types of tariffs is of some significance. As the prices of imported
goods rise, the ad valorem tariff based on a given fixed percentage brings greater revenue to the
tariff imposing country, whereas specific tariffs lack such revenue elasticity with respect to
import price changes.
• A discriminatory tariff calls for different rates of duties depending on the country of origin or the
destination of the product. For example, a country can impose higher rates of duty on goods
coming into the country from, say, Australia and lower rates of duty on goods coming from
Thailand. A non-discriminatory tariff, on the other hand, imposes a uniform rate of duty regardless
of their source of origin.
• A quota is simply a maximum limitation, specified in either value or physical units, on imports
of a product for a given period. It is enforced through licenses issued to either importers or
exporters and may be applied to imports from specific countries or from all foreign countries
generally. Two examples illustrate these different characteristics.
• There are several different variants of division of non-tariff barriers. Some scholars divide
between internal taxes, administrative barriers, health and sanitary regulations and government
procurement policies.
8.5 Key-Words

1. Tariff : A tax imposed on imported goods and services. Tariffs are used to restrict
trade, as they increase the price of imported goods and services, making
them more expensive to consumers. They are one of several tools available
to shape trade policy.
2. Non-terrif Barriers : A form of restrictive trade where barriers to trade are set up and take a
form other than a tariff. Nontariff barriers include quotas, levies,
embargoes, sanctions and other restrictions, and are frequently used by
large and developed economies.

8.6 Review Questions
1. Define tariff. Discuss the types of tariff.
2. Explain Non-tariff barriers and its types.
3. Distinguish between quotas and non-teriff barriers.
Answers: Self-Assessment
1. (i)(a) (ii)(d) (iii)(b) (iv)(c) (v)(b)
(vi)(a) (vii)(b)
8.7 Further Readings

1. Evans, G., Newnham, J., Dictionary of International Relations; Penguin Books,
1998.
2. Filanlyason, J., Zakher M., The GATT and the regulation of Trade Barriers: Regime
Dynamic and Functions; International Organization, Vol. 35, No. 4, 1981.
3. Frieden, J., Lake, D., International political economy: perspectives on global power
and wealth, London: Routledge, 1995.
4. Mansfield, E., Busch, M., The political economy of Non-tariff barriers: a cross
national analysis; International Organization, Vol. 49, No. 4, 1995.
5. Oatley,T., International political economy: interests and institutions in the global
economy; Harlow: Longman, 2007.

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