TRADE BARRIERS TARIFF AND NON-TARIFF

TEAM MEMBERSSECTION-B(2016-18)• VEERANJANEYULU 16091• MANOHAR REDDY 16093• PRASUNA SAI RAJ 16074• HAREESH 16189 • SNEHA BHARGAVI 16055• G.V.S.N.N VARMA 16098

TARIFF BARRIERS• A Tariff is a tax.• It adds to the cost of imported goods and is one of

several trade policies that a country can enact.• The most important of tariff barriers is the customs

duty imposed by the importing country. • A tax may also be imposed by the exporting country

on its exports. However, governments rarely impose tariff on exports, because, countries want to sell as much as possible to other countries

CONTD..• Tariffs are often created to protect infant industries and

developing economies, but are also used by more advanced economies with developed industries. Here are five of the top reasons tariffs are used

  

Protecting Domestic Employment 

Protecting Consumers 

Infant Industries

National Security

Retaliation 

CONTD..• The benefits of tariffs are uneven.• Unfortunately for consumers - both individual

consumers and businesses - higher import prices mean higher prices for goods.

• In the long term, businesses may see a decline in efficiency due to a lack of competition, and may also see a reduction in profits due to the emergence of substitutes for their products.

PRICE WITHOUT THE INFLUENCE OF TARIFF

DS

price

quantityQo Qw

P-

P

DD

Domestic production imports WS

PRICE WITH THE INFLUENCE OF TARIFF

Ws + Tariff

price

quantity

Domestic production

DD DS

imports

Qo Qw

P1

P+

WS

IMPORTANT TARIFF BARRIERS • Specific Duty

• Ad valorem Duty • Combined or Compound Duty

• Sliding Scale Duty

• Countervailing Duty

• Revenue Tariff

• Anti-dumping Duty

• Protective Tariff

NON TARIFF BARRIERS• Nontariff barriers are another way for an economy to

control the amount of trade that it conducts with another economy, either for selfish or altruistic purposes. Non tariff barriers are mostly imposed by developing countries.

• A non tariff barrier is any barrier other than a tariff, that raises an obstacle to free flow of goods in overseas markets.

• Non-tariff barriers, do not affect the price of the imported goods, but only the quantity of imports

• It includes quotas, embargoes, sanctions, levies

ADVANTAGESTechnological innovation

Social benefits

Environmental benefits

Managerial innovation

Competitive advantages

Integration of regional blocks

Review of legislation

IMPORTANT NON TARIFF BARRIERSQuota System

Product Standards

Domestic Content Requirements

Product Labeling

Packaging Requirements

Consular Formalities

State Trading

Preferential Arrangements

Foreign Exchange Regulations

license

EXAMPLES

New Zealand's apples account for a third of its agriculture exports but have been banned from Australia since 1921 due to fears about the spread of fire blight, a crop pest.

Philippine mangoes and bananas have to meet strict phytosanitary requirements from the US and Australia.

BIBLIOGRAPHY• http://www.investopedia.com/articles/economics/08/tariff-tra

de-barrier-basics.asp• www.acdemia.edu• Class notes

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