Types of Tariff and Non-Tariff Barriers

in International-business

Explain various types of tariff and non-tariff barriers. What are the objectives of these barriers?

Ans. International trade is affected by a number of factors including government policies.  The government endeavor to promote export and import in many countries are hit by protectionism and trade barriers.

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Types : There are two types of barriers :

(a) Tariff Barriers : Tariff in international trade refers to the duties or taxes imposed on the import traded goods when they cross the national borders.  After Second World War, there has been a reduction in the average level of Tariffs in the advanced countries.  Tariff rates are generally high in developing countries.  With the recent economic liberalization across the world, many developing countries have reduced the tariff as a part of their trade liberalization. in most economies and organisation like WTO prefers tariff to non-tariff barriers because tariff are transparent and less regressive than non-tariff barriers.  The developed countries tariff continues to be very strenuously loaded against the developing ones.

Characteristic:

  • Tariff applied on to consumer goods are often higher than on the cheaper goods of luxury version.
  • There is also tariff escalation, when tariff increases with degree of processing involved in the product.

(b)   Non-Tariff Barriers :  Non-tariff barriers are new protectionism measures that have grown considerably, particularly since around the beginning of 1980s.  The export growth of many developing countries has been seriously affected by non-tariff barriers.

Categories of NTBs

(i) Those which are generally adopted by developing countries to prevent foreign outflow or result from their chosen strategy of economic development.

These are mostly traditional NTBs like import licensing, import quotas, foreign exchange regulations and canalization imports.

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(ii) Those which are mostly used by developed countries to protect domestic industries which have lost international competitiveness or which are politically sensitive for government.  For example Import Prohibition, Quantitative Restrictions, Variable Levi’s, Multi-Fiber Arrangements, Voluntary Export Restraint and Non-Automatic Licensing.  Example of NTBs excluded from the group includes technical barriers (including health and safety restriction and standards), Minimum Pricing Regulations and Use of Price Investigation and Pricing Surveillance.

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Types of Tariff and Non-Tariff Barriers

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This article was published on 2012/03/26