Non- tariff Barriers of International Trade

Introduction:

Trade across political boundaries is interrupted by a bucket of barriers which do not let the countries to exploit their comparative advantages. Whenever a good crosses the international lines a set of duties known to as tariff coupled with some non-tariff restrictions emerge to limit the spirit of international trade.

What is ‘Non-Tariff-Barriers’

Non-Tariff Barriers are obstacle to international trade which are not an import or export duty. They may take the form of import licensing, rules for valuation of goods at customs, pre-shipment inspections, subsidies, customs delays, technical barriers, trade prepared investment measures import quotas or other systems preventing trade.

Discussion

Non-tariff barriers can be discussed by classifying them in the following headings

1.       Protectionist policies

2.       Assistance policies

3.       Non-protectionist policies

Protectionist Policies

Restricting import is a way to protect domestic firms. Protectionist policy helps domestic firms at the expense of other countries. Example of this form of barrier includes Import quotas; local content requirements; public procurement practices etc. Quota limits the trade in physical terms, imposed on import and export of certain goods for a certain period of time. 

Assistance Policies

The instruments included in this category are meant for the help of domestic firms and enterprises irrelevant to the expense of other countries. Examples are -Domestic subsidies, antidumping laws etc. Because of subsidy production cost in a nation falls significantly and prices go down which outcompetes the existing exporters.

Non-protectionist policies

This type of trade-barrier is for the protection of the health and safety of people and the environment. Licensing, packaging, and labeling requirements, sanitary and phytosanitary (SPS) rules, food, plant and animal inspections, import bans based on objectionable fishing or harvesting methods are some of the prominent examples of this type of barrier. The most common instrument is the licensing. It requires that the authority issues permits for foreign trade transactions of import and export commodities included in the lists of licensed merchandises.