Tariff and Non-Tariff Barriers to International Trade

By: Amandeep Kaur Choudhary Isha Aggarwal Nitish Maini

International Trade
International trade is the exchange of capital, goods, and services across international borders or territories.

Trade barrier
Trade barriers are government-induced restrictions on international trade Trade barriers are measures that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services

Some examples of trade barriers are:

Customs duties Customs procedures Technical regulations, standards, etc. Veterinary and phytosanitary measures Restrictions on access to primary products Insufficient protection of intellectual property rights

Trade Barries can be broadly classified as:

Tariff Barriers Non-Tariff Barriers

Tariff Barriers
Tariff barriers are duties imposed on goods which effectively create an obstacle to trade. Tariffs are widely used to protect domestic producers incomes from foreign competition.

Types of Tariffs:
On the basis of Purpose:
Revenue Tariff Protective Tariff

On the Basis of Origin and Destination:

Ad Valorem Duty: Specific Duty: Compound Duty:

 On the Basis of Country-wise Discrimination:

Single Column Tariff Double Column Tariff Triple Column Tariff:

Who Gain from Tariff?

Government of the importing country earns in the form of the revenue. Industries of the importing country would find market for their products as the imported goods will be expensive. Jobs in the domestic markets are saved.

Other Impacts of Tariff Barriers

Tariff Barriers tend to Increase: 1. Inflationary pressures 2. Special interests privileges 3. Government control and political considerations in economic matters.

Other Impacts of Tariff Barriers

Tariff Barriers tend to Weaken: 1. Balance-of-payments positions 2. Supply-and-demand patterns 3. International relations (they can start trade wars)

Tariff Barriers tend to Restrict: 1. Manufacturer supply sources 2. Choices available to consumers 3. Competition

Non- Tariff Barriers

Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff.
Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use.

Types of Non-Tariff Barriers:

(1) Specific Limitations on Trade: 1. Quotas 2. Import Licensing requirements 3. Embargoes (2) Customs and Administrative Entry Procedures: 1. Valuation systems 2. Antidumping practices 3. Documentation requirements

(3) Standards: 1. Standard Disparities 2. Intergovernmental Acceptances of testing methods and standards 3. Packaging, labeling and marketing

(4) Government Participation in Trade: 1. Government procurement policies 2. Export subsidies 3. Countervailing duties 4. Domestic assistance programs

Impact of NTBs:
Have emerged as potent Protectionist tool. It being less transparent, its difficult to identify and quantify its impact.

Apples Banned - Non Tariff Barrier

New Zealand's apples account for a third of its agricultural exports but have been banned from Australia since 1921 due to fears about the spread of fire blight, a crop pest.
By Doug Latimer in Sydney Published: 1:00AM BST 13 Apr 2010

Mangoes Philippines Restrictions

It is a common practice in many countries to use non-tariff barriers to control the entry of imports. For instance, Philippine mangoes and bananas have to meet strict phytosanitary requirements from the US and Australia.

McDonald France Big Beef

McDonalds France in 1998, ran a print ad campaign featuring overweight cowboys complaining about the fact that McDonald's France refuses to buy American beef but uses only French, to "guarantee maximum hygienic conditions" an unsubtle effort to identify the Global Arches with European efforts to block the import of hormone-laced American beef.

Summary
Although tariffs have significantly reduced over the last twenty years in global trade. Bigger concern is the dismantling of non-tariff barriers that restrict trade from less developed countries. Tariffs distort trade flows Industries of the exporting country is adversly affected by the Tariff as well as Non-Tariff Barriers.