Scribd
Upload
54 views6 pages

International Business and Practices

Tariff and non-tariff barriers are imposed by governments for various reasons such as national security, retaliation, protecting jobs and industries, and protecting customers. Tariff barriers include customs duties on imported goods, while non-tariff barriers consist of regulations and policies that restrict trade, such as quotas, subsidies, embargoes, and local content requirements. Common tariff barriers are import and export duties, while non-tariff barriers also include administration procedures, currency controls, product standards, and voluntary export restraints.

Uploaded by

Chirag Agarwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
54 views6 pages

International Business and Practices

Tariff and non-tariff barriers are imposed by governments for various reasons such as national security, retaliation, protecting jobs and industries, and protecting customers. Tariff barriers include customs duties on imported goods, while non-tariff barriers consist of regulations and policies that restrict trade, such as quotas, subsidies, embargoes, and local content requirements. Common tariff barriers are import and export duties, while non-tariff barriers also include administration procedures, currency controls, product standards, and voluntary export restraints.

Uploaded by

Chirag Agarwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 6

International Business and Practices

Name – Chirag Agarwal


MBA Semester – II
Enrolment No. – 079
Year 2019 - 2021
Tariff barriers can include a customs levy or tariff on goods entering
a country and are imposed by a government. Free trade agreements
seek to reduce tariff barriers.

Non-tariff barriers can include excessive red tape, onerous


regulations, unfair rules or decisions, or anything else that is stopping
you from competing effectively. On-tariff barriers can affect all
forms of goods and services exports – from food and manufactured
products, through to digital services.

Tariff and non-tariff barriers are imposed for various reasons such as
– 

(I) National Security – Countries enforce tariff and non-tariff


barriers to protect the security of the nation. E.g. Defence sector in
India 

(ii) Retaliation – Government of a country intervenes in the trade


policies in order to act as a bargaining tool. Retaliation agreements
help countries to allow free trade among them. 

(iii) Protecting Jobs – Government aims to protect domestic


employment. Domestic employment is affected from foreign
competition as domestic industries start to import services from
abroad in order to keep up with the competition. 

(iv) Protecting Infant industries – Competition form imported goods


threatens the infant industries of a country. In order to develop and
grow certain industries government may impose heavy tariffs on
imported goods to increase prices and help the infant industries. 

(v) Protecting customers – Government may levy a heavy tax on goods


which are against the welfare of the country and its citizens. 
Tariff Barriers 

Tariff is a custom, duty or a tax imposed on products that move


across borders. The words tariff/custom/duty are interchangeable.
It is the most common instrument used for controlling imports and
exports. 

♦ Import tariff/duty – It is the custom duty imposed by the importing


country i.e. the tax imposed on goods imported. It is levied to raise revenue and
protect domestic industries. 

♦ Export tariff – It is the duty imposed on goods by the exporting country


on its exports. Generally certain mineral and agricultural products are taxed. 

♦ Transit duties – It is levied on commodities that originate in one country,


cross another and are consigned to another. Transit duties are levied by the
country through which the goods pass. It results in increased cost of products
and reduction in amount of commodities traded. 
Other Tariff barriers 

♦ Specific duty – It is based on (specific attribute) physical characteristics


of goods. It is a fixed or specific amount of money that is levied as tax keeping
in view the weight(quantity)/measurement (volume) of the commodity. 

♦ Ad valorem duty – These are duties that are imposed according to the value
of commodities traded between countries. It is generally a fixed percentage of
the invoice value of the goods traded. 

♦ Compound duty – It is a combination of specific duty and ad valorem duty on


a single product. It is partly based on quantity and partly on the value of goods.

Non-Tariff Barriers 
These are non-tax restrictions such as (a) government regulation and
policies (b) government procedures which effect the overseas trade.
It can be in form of quotas, subsidies, embargo etc. 

♦ Quotas – It is a numerical limit on the quantity of goods that can be


imported or exported during a specified time period. The quantity may be
stated in the license of the firm. If the importer imports more than specified
amount, he has to pay a penalty or fine. 

♦ VER (voluntary export restraint) – It is a quota on exports fixed by


the exporting country on the request of the importing country. The exporting
country fixes a quota regarding the maximum amount of quantity that will be
exported to the concerned nation. 

♦ Subsidies – It is the payment made by the government to the domestic


producer so that they can compete against foreign goods. It can be a cash
grant, subsidized input prices, tax holiday, government equity participation etc.
It helps a local firm to reduce costs and gain control over the market.

Other Barriers 
♦ Administration dealings – These are regulatory controls and
bureaucratic rules and regulations which affect the flow of imports. It can be a
delay at custom offices, safety inspection, environment regulatory inspection
etc. 

♦ Local content requirement – Legal content requirement is a legal


regulation which states that a specified amount of commodity must be supplied
in the domestic market by the producer. It is used to help local labour and
domestic suppliers of goods. Government may state a – (a) labour requirement
(b) input requirement or (c) component required at a local level. 

♦ Currency Control – Government may impose restrictions on currency


convertibility. In order to import goods countries, have to make payment in
foreign currency which is acceptable worldwide i.e. US dollar, European Euro or
Japanese Yen. The government can put a limit on the amount of money that can
be converted in foreign currency or ask a company to apply for a license to
obtain such currency. 

♦ Embargo – It means a complete ban on certain commodities. A country may


ban import and export of certain goods in order to achieve some political or
religious goals. 

♦ Product testing and standardization – Standards are set for health,


welfare, safety, quality, size and measurements which have to be complied with
in order to enter a foreign market. The products have to meet international
quality standards. All Products must meet the quality standards of the
domestic county before they are offered for trade. Inspection is very
extensive in case of electronic goods, vehicles and machinery. 

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy