Tariff and Non – Tariff Barriers

Overview
Trade Barriers
• Used to encourage and protect existing
domestic industry
• Trade barriers are Tariffs that
• Increase Trade
• Weaken Trade
• Restrict Trade
– Quotas
– Boycotts and Embargoes
Impact of Tariff (Tax) Barriers

Tariff Barriers tend to Increase:

2. Inflationary pressures
3. Special interests’ privileges
4. Government control and political considerations in
economic matters
5. The number of tariffs they beget via reciprocity

Tariff Barriers tend to Weaken:

6. Balance-of-payments positions
7. Supply-and-demand patterns
8. International relations (they can start trade wars)
Non Tariff - Trade Barriers
Non Tariff barriers - are another way for an
country to control the amount of trade that it
conducts with another country, either for
selfish or altruistic purposes. Any barrier to
trade creates an economic loss, which means
it does not allow the markets to function
properly.
Six Types of Non-Tariff Barriers
1) Specific Limitations on Trade
• Quotas
• Import Licensing requirements
• Proportion restrictions of foreign to
domestic goods (local content
• requirements)
• Minimum import price limits
Embargoes
2) Customs and Administrative Entry
Procedures:
• Valuation systems
• Antidumping practices
• Tariff classifications
• Documentation requirements
• Fees
Six Types of Non-Tariff Barriers
(cont'd.)
(3 ) S ta n d a r d s :
2. Standard disparities
3. Intergovernmental acceptances of
testing methods and standards
4. Packaging, labeling, and marking
(4 ) G o v e r n m e n t
P a r t ic ip a t io n in T r a d
e:
2. Government procurement policies
3. Export subsidies
4. Countervailing duties
5. Domestic assistance programs
Six Types of Non-Tariff Barriers
(cont'd.)
5) Charges on imports:
• Prior import deposit subsidies
• Administrative fees
• Special supplementary duties
• Import credit discriminations
• Variable levies
• Border taxes

6) Others:
• Voluntary export restraints
• Orderly marketing agreements
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 By Doug Latimer in Sydney
Published: 1:00AM BST 13 Apr 2010
crop pest.
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. (Karon, 2002)
 General Agreement on Tariffs and Trade

• Paved the way for the first effective worldwide tariff agreement.
• Basic Elements of the GATT:
– Trade shall be conducted on a non-discriminatory basis.
– Protection shall be afforded domestic industries through
customs tariffs, not through such commercial measures as
import quotas.
– Consultation shall be the primary method used to solve global
trade problems.
• Eliminating barriers to international trade (Uruguay Round):
– The General Agreement on Trade in Services (GATS)
– Trade-Related Investment Measures (TRIMs)
– Trade-Related Aspects of Intellectual Property Rights (TRIPs)
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.
• The agricultural sector has had its
high share of discriminatory trade
practices to protect inefficient
producers.
• Tariffs distort trade flows
You are welcome to contact Nigel Bairstow at B2B
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