Non-tariff barriers: NTBS refers to quantitative restrictions imposed on import of goods. Non-tariff barrier are
a. Quantitative restrictions/Quota: A quota is a specific unit or dollar limit applied to a particular type of good. Importing country sometimes fixes the limit of quantity or volume of imports called ‘quota’ to be allowed from other countries. The quota is fixed for a given period for certain products and certain manufactures.
Example: Great Britain limits imported television sets; Germany has established quotas on Japanese ball bearings; Italy restricts Japanese motorcycles; and the United States has quotas on sugar, textiles, and, of all things, peanuts.
Quotas put an absolute restriction on the quantity of a specific item that can be imported. When the Japanese first let foreign rice into their country, it was on a quota basis, but since 2000 the quotas have been replaced by tariffs.
In early 2010, as Avatar dominated cinema around the world, China ordered its movie houses to limit showings to the 3D version only. There are 5 types of import quota including import licensing. Tariff quota (it is the combination of both tariff and quota); unilateral quota; bilateral quota; mixing quota; Import licensing.
b. Voluntary Export Restraints. Similar to quotas are the voluntary export restraints (VERs) or orderly market agreements (OMAs). Common in textiles, clothing, steel, agriculture, and automobiles, the VER is an agreement between the importing country and the exporting country for a restriction on the volume of exports.
Examples: For many years Japan had a VER on automobiles to the United States; that is, Japan agreed to export a fixed number of automobiles annually. When televisions were still manufactured in the United States, Japan signed an OMA limiting Japanese color television exports to the United States to 1.56 million units per year.
c. Boycotts and Embargoes: A government boycott is an absolute restriction against the purchase and importation of certain goods and/or services from other countries. This restriction can even include travel bans, like the one currently in place for Chinese tourists to Canadian destination.
Example: The Beijing government refuses to designate Canada as an approved tourism destination because of unrelenting criticism of Chinese human rights policy by Canadian government.
d. Monetary Barriers. A government can effectively regulate its international trade position by various forms of exchange-control restrictions. A government may enact such restrictions to preserve its balance-of-payments position or specifically for the advantage or encouragement of particular industries. Such barriers are
• Blocked currency: Blockage is accomplished by refusing to allow importers to exchange its national currency for the sellers’ currency.
• Differential exchange rates: It encourages the importation of goods the government deems desirable and discourages importation of goods the government does not want by adjusting the exchange rate. The exchange rate for importation of a desirable product is favorable and vice-versa
• Government approval: In countries where there is a severe shortage of foreign exchange, an exchange permit to import foreign goods is required from the government
e. Standards: Nontariff barriers of this category include standards to protect health, safety, and product quality.
Example: In Spain, imported condensed milk must be labeled to show fat content if it is less than 8 percent fat;
And in the European Union, strict import controls have been placed on beef and beef products imported from the United Kingdom because of mad cow disease.
f. Antidumping Penalties: Historically, tariffs and nontariff trade barriers have impeded free trade, but over the years, they have been eliminated or lowered through the efforts of the GATT and WTO. Now there is a new nontariff barrier: antidumping laws that have emerged as a way of keeping foreign goods out of a market. Antidumping laws were designed to prevent foreign producers from “predatory pricing,” a practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market.
