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Non Tariff Barriers and New Protectionism

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					  Non Tariff Barriers and New
        Protectionism
                Introduction
•Since the birth of GATT, in 1947, tariffs have
          been negotiated downwards
 •New measures of protection such as import
  quotas, voluntary export restraints and anti-
        dumping actions have come in.
               Import Quotas

• Quota- quantitative restriction on the amount of a
  commodity to be imported/exported.
• Effects of a Quota.-used usually to protect,
  domestic industry or for BOP reasons
Partial Equilibrium effects -Quota
                    Quota
• Before Quota
-Nation consumes 70X(AB), 10X(AC) produced
  domestically and 60X imported(CB) is imported
Quota
-Imposition of an import quota of 30X(JH) raises,
  the price to $2 so that Demand can match 20X
  domestically produced plus30X(JH), allowed by
  the imposition of a quota
-Consumption is reduced by 20X and domestic pdn
  is increased by 10X.
               Tariff & Qouta
• With a given import quota, increase in dd will result
  in higher domestic prices than an equivalent tariff
• Also with a given import tariff an increase in dd will
  not change domestic price and pdn, but results in
  higher consumption and imports than quota
• Involves distribution of import licenses, which may
  result in rent seeking and monopoly profits
• Quota-limits imports to specific levels, while trade
  effect of a tariff is uncertain.
         Other Non-Tariff Barriers
• 1.Voluntary export restraint (VER)- Negotiated
    settlement, e.g in clothing, steel
•   2.Technical, Administrative and other Regulations
•   Safety regulations-automobile and electrical
•   Health regulations-food
•   Labeling regulations-showing origin and contents
•   Procurement policies
•   Border taxes-rebates of internal taxes given to exporters of a
    commodity
•   International commodity agreements and multiple exchange
    rates.
          International Cartel

• International agreement in the restriction of
  output and exports among countries. E.g
  OPEC.
                      Dumping
• It is the sale of a commodity at below cost or at least the
  sale of a commodity at a lower price abroad than
  domestically
• Examples
• Persistent Dumping-continuous tendency of monopolist
  selling a product more expensive in a domestic market than
  international(face competition)
• Predatory-selling cheaply abroad to drive out local
  producers and raise prices after death of local industry.
• Sporadic-once off to off load unexpected production
          Export Subsidies
• Direct payments to nation exporters/ low
  interest loans to boost nation exports.
• Form of dumping
   If a subsidy is imposed, domestic consumers suffer as
domestic prices rise from 3.5 to 4 after imposition of a export
                           subsidy
                    GATT
• General Agreement on Tariffs and Trade
• Created to promote free trade
• Principles included, non
  discrimination,elimination of non tariff trade
  barriers,consultation among nations to resolve
  trade disputes,
• Many other meetings followed including Tokyo
  Round,Uruguay Round , Marrakech Agreement
           Uruguay Round-1993

•   Focused on Tariffs
•   1-Qouta
•   2-Anti-dumping
•    Subsidies
•   Safeguards
•   Intellectual property
•   Services
•   Other Industry Provisions
•   Trade related investment measures
•   WTO.