Tariff and Non Tariff Barriers in Global

Trade

PRESENTED BY:-
Lakshit Shyam
Sugandha Sharma
 Trade Barriers
Trade barriers are government-induced restrictions on international trade, which generally
decrease overall economic efficiency. Trade barriers cause a limited choice of products
and, therefore, would force customers to pay higher prices and accept inferior quality.Trade
barriers generally favor rich countries because these countries tend to set international trade
policies and standards. If two or more nations repeatedly use trade barriers against each
other, then a trade war results.

Man-made trade barriers come in several forms, including:

● Tariffs
● Non-tariff barriers to trade
● Import licenses
●
 Tariff
● Tariffs are duties on imports imposed by
governments to raise revenue, protect
domestic industries, or exert political
leverage over another country.
● Tariffs often result in unwanted side
effects, such as higher consumer prices.
● Tariffs have historically been a tool for
governments to collect revenues, but
they are also a way to protect domestic
industry and production.
 How a Tariff Works
Tariffs are used to restrict imports by increasing the
price of goods and services purchased from another
country, making them less attractive to domestic
consumers. By making foreign-produced goods
more expensive, tariffs can make domestically
produced alternatives seem more attractive. An
example of a tariff could be a tariff on steel. This
means that any steel imported from another country
would incur a tariff, for example, 5% of the value of
the imported goods, paid by the individual or
business importing the goods.

https://www.youtube.com/watch?v=LKCMnCZyxiQ
 Common Types of Tariffs
Specific Tariffs
A fixed fee levied on one unit of an imported good is
referred to as a specific tariff. This tariff can vary
according to the type of goods imported.

Ad Valorem Tariffs
The phrase "ad valorem" is Latin for "according to
value," and this type of tariff is levied on a good based
on a percentage of that good's value.

Licenses
A license is granted to a business by the government
and allows the business to import a certain type of
good into the country.
 How Do Tariffs Affect
Prices?
Tariffs increase the prices of imported goods.
Because of this, domestic producers are not forced
to reduce their prices from increased competition,
and domestic consumers are left paying higher
prices as a result. Tariffs also reduce efficiencies by
allowing companies that would not exist in a more
competitive market to remain open. The figure
below illustrates the effects of world trade without
the presence of a tariff. When a tariff or other price-
increasing policy is put in place, the effect is to increase
prices and limit the volume of imports. In the figure
below, price increases from the non-tariff P* to P' as In the graph, DS means domestic supply and DD
means domestic demand. The price of goods at home is
shown in figure. Because the price has increased, more
found at price P, while the world price is found at P*. At
domestic companies are willing to produce the good, so
a lower price, domestic consumers will consume Qw
Qd moves right. This also shifts Qw left. The overall worth of goods, but because the home country can only
effect is a reduction in imports, increased domestic produce up to Qd, it must import Qw-Qd worth of goods.
production, and higher consumer prices.
 Non Tariff Barrier
Non tariff barriers are trade barriers that restrict the import or
export of goods through means others than tariffs. The World
Trade organization identifies various non tariff barriers to trade,
including import licensing, pre shipment inspections, rules of
origin, custom delayers and other mechanisms that prevent or
restrict trade.
Developed countries use non tariff barriers as an economic strategy to
control the level of trade they conduct with other countries. When
making decisions on the non tariff barriers on the availability of goods
and services for import and export as well as existing political alliances
with other trade partners. Developed countries may elect to release
other countries from being subjected to additional taxes on imported or
exported goods and subjected to additional taxes on imported or
exported goods, and instead create other non tariff barriers with a
different monetary effect.
 Types of Non Tariff Barriers
1. Protection Barriers- Protection barriers are designed to protect certain sectors of domestic
industries at the expenses of other countries. The restrictions make it difficult for other countries to
compete favorably with locally produced goods and services. The barriers may take the form of
licensing requirement, allocation of quotas, antidumping duties etc.
2. Assistive Policies- Although assistive policies are designed to protect domestic companies and
enterprises, they do not directly restrict trade with other countries but they implement actions that can
impede free trade with other countries. For example custom procedure, packaging and labeling
requirements, technical standards and norms etc. International companies must meet the requirements
before they can be allowed to export or import certain goods into the market. The government also help
domestic companies by providing subsidies and bailouts so that they can be competitive in the
domestic and international markets.
3. Non-protectionist policies- It is not designed to directly restrict the import or export of goods and
services but the overall outcomes may lead free trade restrictions. The policies are primarily designed to
protect the health and safety of people and animals while maintaining the integrity of the environment.
For example licensing, packaging and labelling requirements etc.
 Example of Non Tariff Barriers
1. Licenses
Licenses are one of the most common instruments that countries use to regulate the importation of goods. A license system allows
authorized companies to import specific commodities that are included in the list of licensed goods.
Product licenses can either be a general license or a one-time license. The general license allows importation and exportation of
permitted goods for a specified period. The one-time license allows a specific product importer to import a specified quantity of
the product, and it specifies the cost, country of origin, and the customs point through which the importation will be carried out.
 
2. Quotas
Quotas are quantitative restrictions that are imposed on imports and exports of a specific product for a specified period. Countries
use quotas as direct forms of administrative regulation of foreign trade, and it narrows down the range of countries where firms
can trade certain commodities. It caps the number of goods that can be imported or exported at any given time.
 
3. Embargoes
Embargoes are total bans of trade on specific commodities and may be imposed on imports or exports of specific goods that are
supplied to or from specific countries. They are considered legal barriers to trade, and governments may implement such
measures to achieve specific economic and political goals.
 
4. Import deposit
Import deposit is a form of foreign trade regulation that requires importers to pay the central bank of the country a specified sum
of money for a definite period. The amount paid should be equal to the cost of imported goods.
 Changing Role Of Rural Sector In India
Rural Economy
India is known as an Agricultural
country, as most of the population of village
depends on agriculture. It forms the backbone of
the country economy. The agricultural sectors
contributes most to the overall economies
development of the country. During the past forty
years, rural reconstruction and development have
been the major thrust of economic planning, which
has caused a rapid transformation in rural India
economic structure.
 Features Of Rural Economy
Some of the distinguished features of the present day rural economy contributes to changing Indian Economy are as
follows:

1.Commercialization of Agriculture: In the present days, a large part of rural economy has been opened up, which has
made commercialization of agricul­ture possible. The extent of commercialization of agriculture in rural economy marks the
stage of its development.

2. Rural Society under the Impact of Urbanism: Ur­banism has induced the disintegration of traditional joint family,
disappearance of neighbourhood, sophistication, emergence of individualism, etc. Urbanism also created new social
institutions, which were absent in the traditional rural set up. Urbanism has also brought about modernization.
Contacts between the rural and urban areas have been increased due to the development of the means of transportation.

3. Institutional Participation: After independence, the state had taken the responsibility of rural reconstruction and
development. It had brought about important changes in the production relations. Abolition of intermediaries, security of
tenancy, ceiling on holdings, etc., were some of the important leg­islations made, which improved the relations of
production. A number of rural development programmes were taken up. These programmes also con­tributed in bringing
about modernization in villages.
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