Chuong 3 Non Tariff Measures

You might also like

Download as pdf or txt
Download as pdf or txt
You are on page 1of 85

TOPIC 3

NON – TARIFF
MEASURES

FACULTY OF INTERNATIONAL BUSINESS 1


READING MATERIAL
• Chapter 9 (Feenstra and Taylor, 2017. International Trade.
Worth Publisher, Fouth edition)
• International Classification of Non-Tariff Measures, United
Nations Conference on Trade And Development, 2019 Version

FACULTY OF INTERNATIONAL BUSINESS 2


STRUCTURE
3.1. NTMs Definition
3.2. History of NTMs
3.3. NTMs classification
3.4. Why are NTMs necessary?
3.5. Effects of NTMs
3.6. Costs of NTM

FACULTY OF INTERNATIONAL BUSINESS 3


3.1. NTMs DEFINITION
Tariff is a financial charge in the form of tax, imposed at the
border on goods going from one custom territory to another

FACULTY OF INTERNATIONAL BUSINESS 4


3.1. NTMs DEFINITION
Non-tariff measures:
Policy measures other than ordinary customs tariffs that can
potentially have an economic effect on international trade in
goods, changing quantities traded, or prices or both.
(UNCTAD, 2010)

FACULTY OF INTERNATIONAL BUSINESS 5


3.1. NTMs DEFINITION
Non – tariff measures and Non – tariff barriers

Non – tariff Measures Non – tariff barriers

FACULTY OF INTERNATIONAL BUSINESS 6


3.2. HISTORY OF NTMs

1947- Kenedy Tokyo Doha


New era
1962 Round Round Round

FACULTY OF INTERNATIONAL BUSINESS 7


3.2. HISTORY OF NTMs
The changes in using different international trade barriers

Number of newly implemented protectionist interventions by type, 2009 – 2017


(Luisa Kinzius, Alexander Sandkamp, Erdal Yalcin, 2019)

FACULTY OF INTERNATIONAL BUSINESS 8


3.3. NTMs CLASSIFICATION
Classification way relating to border

Export (import)
NTMs at the
quota, Export
border
(import) taxes…
NTMs
Domestic taxes,
NTMs behind the
other charges,
border
and subsidies…

FACULTY OF INTERNATIONAL BUSINESS 9


3.3. NTMs CLASSIFICATION
Case study:
In order to protect citizens’ health, Vietnamese government
applies a non-tariff measure to the tobacco from USA. They
apply a 25% tax of value of each sale box of USA tobacco. If
you are invited to adjust this policy, what would you do?

FACULTY OF INTERNATIONAL BUSINESS 10


3.3. NTMs CLASSIFICATION
Classification way through Channel of effects:

Import quota, VER,


Quantity Government
Procurement…
NTMs
Technical and
product standards,
Non-Quantity
custom
procedure…

FACULTY OF INTERNATIONAL BUSINESS 11


3.3. NTMs CLASSIFICATION
Classification way through Channel of effects:
Kee et al (2009): Effects of NTMs
- Limit quantity of imports
- Increase the cost of getting imports into the market
- Creating uncertainty about the conditions under which imports
will be permitted

FACULTY OF INTERNATIONAL BUSINESS 12


3.3. NTMs CLASSIFICATION
NTMs What it is Channel of effects
Import quota Quantitative limit on imports Quantity

Voluntary export restraint -VER Quantitative limit on exports Quantity

Tariff - quota Allows imports to enter the Quantity (if the tariff for
country at a low or zero tariff up potential imports above the
to a specified quantity, imposes specified quantity is so higher
a higher tariff on imports above
that it is prohibitive, so that
this quantity
there are no imports above the
specified quantity

FACULTY OF INTERNATIONAL BUSINESS 13


3.3. NTMs CLASSIFICATION
NTMs What it is Channel of effects
Government Procurement Laws and government rules Quantity
that favor local products when
the Government is the buyer
Local content and mixing Require specified use of local Quantity
requirements labor, materials or other
products
Technical and Discriminate against imports - Cost to conform to
product standards by writing or enforcing standards or demonstrate
standards in a way that compliance
adversely affects imports more
- Uncertainty if approval
than domestic products
procedures are unclear
FACULTY OF INTERNATIONAL BUSINESS 14
3.3. NTMs CLASSIFICATION

FACULTY OF INTERNATIONAL BUSINESS 15


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
Definition:
To protect From
Human or animal life Risks arising from additives, contaminants,
toxins or diseases
Animal or plant life Pests, diseases, or diseases-causing organisms
Health of fish, wild fauna, and flora
To protect biodiversity
To prevent or limit damage
To a country from the entry, establishment or
spread of pets

FACULTY OF INTERNATIONAL BUSINESS 16


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
Definition:
Chapter A deals with sanitary and phytosanitary measures. The chapter
outlines measures such as those restricting substances, ensuring food safety
and preventing the dissemination of diseases or pests. Chapter A also
includes all conformity-assessment measures related to food safety, such as
certification, testing and inspection, and quarantine

FACULTY OF INTERNATIONAL BUSINESS 17


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
Structure:
- Sections A1 to A6: Technical regulations
- Sections A8: Conformity – assessment procedures

Where is A7?

FACULTY OF INTERNATIONAL BUSINESS 18


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A1. Prohibitions/restrictions of imports for sanitary and phytosanitary
reasons
A11: Prohibitions for sanitary and phytosanitary reasons
Measures included in this category are generally of an ad hoc and time-
bound nature
A12: Geographical restrictions on eligibility
Prohibition of imports of specified products from specific countries or regions
due to lack of evidence of sufficient safety conditions to avoid sanitary and
phytosanitary hazards.
FACULTY OF INTERNATIONAL BUSINESS 19
3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A13: System approach
An approach that combines two or more independent sanitary and phytosanitary measures
for the same product. The combined measures can be composed of any number of interrelated
measures and conformity-assessment requirements applied during all stages of production.

FACULTY OF INTERNATIONAL BUSINESS 20


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A14: Authorization requirement for sanitary and phytosanitary reasons
for importing certain products
Requirement that the authorization, permit, approval or license related to a
consignment shall be received from a relevant government agency for
sanitary and phytosanitary reasons, before the importation can take place.
A15: Authorization requirement for importers for sanitary and
phytosanitary reasons
Requirement that the importers (importing company) should be authorized,
registered and receive a permit, license or any other kind of approval to
engage in the business of importing certain products.

FACULTY OF INTERNATIONAL BUSINESS 21


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A19. Prohibitions or restrictions of imports for sanitary and
phytosanitary reasons, not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 22


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A2: Tolerance limits for residues and restricted use of
substances
A21: Tolerance limits for residues of or contamination by certain
(non-microbiological) substances.
Note: These substances are not only in the final products but also
in the production process.
A22: Restricted use of certain substances in foods and feeds and
their contact materials

FACULTY OF INTERNATIONAL BUSINESS 23


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A2: Tolerance limits for residues and restricted use of
substances

UNCTAD mentioned the term “Zero tolerance limit”


Why they use the term “Zero tolerance limit”?

FACULTY OF INTERNATIONAL BUSINESS 24


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A3: Labelling, marking and packaging requirements
A31: Labelling requirements
Measures defining the information directly related to food
safety, which should be provided to the consumer. Labelling is
any written, electronic or graphic communication on the
consumer packaging or on a separate but associated label.

FACULTY OF INTERNATIONAL BUSINESS 25


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A3: Labelling, marking and packaging requirements
A31: Labelling requirements

FACULTY OF INTERNATIONAL BUSINESS 26


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A32 Marking requirements
Measures defining the information for transport and customs that the
transport or distribution packaging of goods should carry that is directly
related to sanitary and phytosanitary conditions

FACULTY OF INTERNATIONAL BUSINESS 27


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A33 Packaging requirements
Measures regulating the mode in which goods must or cannot
be packed or defining the packaging materials to be used,
which are directly related to food safety

If researchers concluded that the nylon has some


substances affecting negatively raw meat. Should
we put it in the A33?

FACULTY OF INTERNATIONAL BUSINESS 28


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A4 Hygienic requirements related to sanitary and phytosanitary conditions
Requirements related to hygienic practices and microbiological criteria for food safety. These
requirements can also extend to non-food products as long as sanitary and phytosanitary risks
are at stake
A41: Microbiological criteria of the final product
A42: Hygienic practices during production related to sanitary and phytosanitary conditions
A49: Hygienic requirements not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 29


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A5: Treatment for elimination of plant and animal pests and disease-
causing organisms in the final product or prohibition of treatment
A51: Cold or heat treatment
A52: Irradiation
A53: Fumigation
A59: Treatments to eliminate plants and animal pests or disease-causing
organisms in the final product not elsewhere specified or prohibition of
treatment

FACULTY OF INTERNATIONAL BUSINESS 30


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A6: Other requirements relating to production or postproduction
processes
A61: Plant-growth processes
A62: Animal-raising or -catching processes
A63: Food and feed processing
A64: Storage and transport conditions
A69: Other requirements relating to production or postproduction
processes not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 31


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A8 Conformity assessment related to sanitary and phytosanitary
conditions
A81 Product registration and approval requirement
Requirement that the product shall be registered or approved before it can be
imported
A82 Testing requirements
A83 Certification requirements Testing and Inspection?
A84 Inspection requirements

FACULTY OF INTERNATIONAL BUSINESS 32


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A85 Traceability requirements
Information disclosure requirements that make it possible to track a product
through the stages of production, processing and distribution. This measure
includes recordkeeping requirements.
A851 Origin of materials and parts
A852 Processing history
A853 Distribution and location of products after delivery
A859 Traceability requirements not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 33


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
A86 Quarantine requirements
Requirements to detain or isolate animals, plants or their products on arrival
in a port or place for a given period to prevent the spread of infectious or
contagious disease or contamination.
A89 Conformity assessment related to sanitary and phytosanitary
conditions not elsewhere specified
A9 Sanitary and phytosanitary measures not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 34


3.3. NTMs CLASSIFICATION
Chapter A: Sanitary and Phytosanitary Measures
Summary:
Scientific evidence: Do we need Scientific evidence to adopt SPS measure?
Application on MFN basis: Does the application of SPS Measures follow the MFN basis?
International standards: Does SPS measures need to follow the International standard?
Precautionary measures: Does WTO allow Precautionary SPS measures?

FACULTY OF INTERNATIONAL BUSINESS 35


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
Definition
Measures referring to technical regulations and procedures of
assessment of conformity with technical regulations,
excluding measures covered by the chapter on sanitary and
phytosanitary measures

FACULTY OF INTERNATIONAL BUSINESS 36


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
Technical regulation

Charateristics
Set out Related process
Production method

FACULTY OF INTERNATIONAL BUSINESS 37


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
Structure:
Sections B1 to B7: Technical regulations
Section B8: Conformity – assessment procedures
=> The TBT doesn’t have the section B5

FACULTY OF INTERNATIONAL BUSINESS 38


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
B1: Import authorization/licensing related to technical barriers to trade
B14 Authorization requirements for importing certain products
Under these requirements, authorization, permits, approvals or licenses related to a
consignment must be received from a relevant government agency before the
importation can take place in order to comply with relevant technical regulations or
conformity-assessment procedures
B15 Authorization requirements for importers
Requirements to the effect that the importers (for example, the importing
company) should be authorized, registered, receive a permit, license or any other
kind of approval to engage in the business of importing certain products to comply
with relevant technical regulations or conformity-assessment

FACULTY OF INTERNATIONAL BUSINESS 39


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
B2 Tolerance limits for residues and restricted use of
substances
B21 Tolerance limits for residues of or contamination by
certain substances
B22 Restricted use of certain substances

FACULTY OF INTERNATIONAL BUSINESS 40


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
B3 Labelling, marking and packaging requirements
B31 Labelling requirements
Measures regulating the kind, color and size of printing on packages and labels and defining the
information that should be provided to the consumer.
B32 Marking requirements
Measures defining the information for transport and customs that the transport or distribution
packaging of goods should carry.
B33 Packaging requirements
Measures regulating the mode in which goods must be or cannot be packed and defining the
packaging materials to be used

FACULTY OF INTERNATIONAL BUSINESS 41


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
B4 Production or post-production requirements
B6 Product identity requirements
Conditions to be satisfied in order to identify a product with a certain
denomination, including biological or organic labels.
For example: For a product to be identified as chocolate, it must contain a
minimum of 30 per cent cocoa.

How can we identify a product is suitable for its name?

FACULTY OF INTERNATIONAL BUSINESS 42


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
B6 Product identity requirements

Which is toy with human figure?

FACULTY OF INTERNATIONAL BUSINESS 43


3.3. NTMs CLASSIFICATION
Chapter B: Technical Barrier to Trade
B7 Product quality, safety or performance requirements
Final product requirements concerning safety (for example, fire resistance),
performance (effectiveness in achieving the intended or claimed result),
quality (for example, content of defined ingredients and durability) or other
reasons relating to technical barriers to trade not covered under other
measures.
B8 Conformity assessment related to technical barriers to trade
B9 Technical barriers to trade measures not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 44


3.3. NTMs CLASSIFICATION
Compare the SPS and TBT
SPS TBT
Name
Purposes
Scientific evidence
Application on
MFN basis
International
standard
Precautionary
measures

FACULTY OF INTERNATIONAL BUSINESS 45


3.3. NTMs CLASSIFICATION
Chapter C: Pre-shipment inspection and other formalities
Definition:
This chapter classifies the measures related to pre-shipment inspections and
other customs formalities.
(UNCTAD 2019)

FACULTY OF INTERNATIONAL BUSINESS 46


3.3. NTMs CLASSIFICATION
Chapter C: Pre-shipment inspection and other formalities
Structure:
- C1 to C4: relates to technical measures.
- C9: Other formalities not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 47


3.3. NTMs CLASSIFICATION
Chapter C: Pre-shipment inspection and other formalities
C1 Pre-shipment inspection
Compulsory quality, quantity and price control of goods prior
to shipment from the exporting country, conducted by an
independent inspecting agency mandated by the authorities of
the importing country

Do we need to add the term services?

FACULTY OF INTERNATIONAL BUSINESS 48


3.3. NTMs CLASSIFICATION
Chapter C: Pre-shipment inspection and other formalities
C2 Direct consignment requirements
Requirements to the effect that goods must be shipped directly
from the country of origin, without stopping in a third country.

Why they need to do that?

FACULTY OF INTERNATIONAL BUSINESS 49


3.3. NTMs CLASSIFICATION
Chapter C: Pre-shipment inspection and other formalities
C3 Requirement to pass through specified port of customs
Obligation for imports to pass through a designated entry point
and/or customs office for inspection, testing and the like.

C4: Import monitoring, surveillance and automatic licensing


measures
Administrative measures that seek to monitor the import value or
volume of specified products.
FACULTY OF INTERNATIONAL BUSINESS 50
3.3. NTMs CLASSIFICATION
Chapter C: Pre-shipment inspection and other formalities

Automatic license Non-automatic license


Use for
Processing application
Valid of license

What is automatic license?

FACULTY OF INTERNATIONAL BUSINESS 51


3.3. NTMs CLASSIFICATION
Chapter D: Contingent trade – protective measures
Definition
Measures implemented to counteract adverse effects of imports in the
market of the importing country, including measures aimed at unfair
foreign trade practices, contingent upon the fulfilment of certain procedural
and substantive requirements.

In lawful term:
The word contingent denotes that there is no present interest or right but only a conditional
one which will become effective upon the happening of the designated condition.

FACULTY OF INTERNATIONAL BUSINESS 52


3.3. NTMs CLASSIFICATION
Chapter D: Contingent trade – protective measures
Structure:
D1. Anti-dumping measures
D2. Countervailing measures
D3. Safeguard measures

Border measures
FACULTY OF INTERNATIONAL BUSINESS 53
3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS,
PROHIBITIONS, QUANTITY-CONTROL MEASURES AND OTHER
RESTRICTIONS NOT INCLUDING PHYTOSANITARY MEASURES OR
MEASURES RELATING TO TECHNICAL BARRIERS TO TRADE
Structuture:
E1. Non – automatic import – licensing procedures other than authorizations covered
under the chapters on SPS and TBT.
E2. Quotas
E3. Prohibitions
E5. Export – restraint arrangement
E6. Tariff rate quotas
FACULTY OF INTERNATIONAL BUSINESS 54
3.3. NTMs CLASSIFICATIONt
Chapter E: NON-AUTOMATIC IMPORT LICENSING,
QUOTAS, PROHIBITIONS, QUANTITY-CONTROL
MEASURES AND OTHER RESTRICTIONS
E1: Non-automatic import-licensing procedures other than
authorizations covered under the chapters on sanitary and
phytosanitary measures and technical barriers to trade

What is Non – automatic import licensing?

FACULTY OF INTERNATIONAL BUSINESS 55


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS
E11 Licensing for economic reasons
E111 Licensing procedure with no specific ex ante criteria
Licensing procedure where approval is granted at the discretion of the issuing authority. This
measure is also referred to as a discretionary license.
Example: Imports of textile products are subject to a discretionary license.
E112 Licensing for specified use
E113 Licensing linked with local production
E119 Licensing for economic reasons not elsewhere specifieds

FACULTY OF INTERNATIONAL BUSINESS 56


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS
E12 Licensing for non-economic reasons
E121 Licensing for religious, moral or cultural reasons
E122 Licensing for political reasons
E123 Licensing for the protection of the environment
E124 Licensing for security reasons
E125 Licensing for the protection of public health
E129 Licensing for non-economic reasons not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 57


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS
E2 Quotas
Restriction of importation of specified products through the setting of a maximum quantity or
value that is authorized for import. No imports are allowed beyond those maximums.
Expections for a country to use Quotas (VCCI, 2010)

Public purpose Safeguard

FACULTY OF INTERNATIONAL BUSINESS 58


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS

Permanent Seasonal quotas Temporary

• Global • Global • Global


allocation allocation allocation
• Country • Country • Country
allocation allocation allocation

FACULTY OF INTERNATIONAL BUSINESS 59


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS
E3: Prohibition
Prohibition on the importation of specific products except for those covered by the chapter on
sanitary and phytosanitary measures.

What are cases that prohibition are allowed by WTO?

FACULTY OF INTERNATIONAL BUSINESS 60


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS

Prohibition for economic reasons Prohibition for non economic reasons

• Full prohibition • Prohibition for religious, moral, or cultural


• Seasonal prohibition reasons
• Temporary prohibition • Prohibition for political reasons (embargo)
• Prohibition of importation in bulk • Prohibition for the protection of environment
• Prohibition of used, repaired or remanufactured • Prohibition for security reasons
goods • Prohibition for the protection of public health

FACULTY OF INTERNATIONAL BUSINESS 61


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS

Being embargoed by

FACULTY OF INTERNATIONAL BUSINESS 62


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS,
PROHIBITIONS, QUANTITY-CONTROL MEASURES AND OTHER
RESTRICTIONS
E5: Export-restraint arrangements
Arrangements whereby an exporter agrees to limit exports to avoid the
imposition of restrictions by the importing country, such as quotas, raised
tariffs or any other import controls. Such arrangements may be concluded at
either the government or industry level and are formally prohibited by WTO
agreements.
E51 Voluntary export-restraint arrangements (VERs)
E59 Export-restraint arrangements not elsewhere specified
FACULTY OF INTERNATIONAL BUSINESS 63
3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS,
PROHIBITIONS, QUANTITY-CONTROL MEASURES AND OTHER
RESTRICTIONS
E6: Tariff-rate quotas
A system of multiple tariff rates applicable to a same product. The lower
rates apply up to a certain value or volume of imports; the higher rates are
charged on imports that exceed this amount.
Example: Rice may be imported free of duty up to the first 100,000 tons, after
which it is subject to a tariff rate of $1.50 per kg.

FACULTY OF INTERNATIONAL BUSINESS 64


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS

Mixed tariff Tarff rate quota


Applied type of tariff
(Ad valorem or
Specific)
Number of rates to
calculate
Number of rates to
apply

FACULTY OF INTERNATIONAL BUSINESS 65


3.3. NTMs CLASSIFICATION
Chapter E: NON-AUTOMATIC IMPORT LICENSING, QUOTAS, PROHIBITIONS,
QUANTITY-CONTROL MEASURES AND OTHER RESTRICTIONS
E6: Tariff-rate quotas
Based on the origin of the product, the measures will be divided:

WTO-bound tariff-rate quotas, Other tariff-rate quotas included on


included WTO schedules other trade agreements
• Global allocation • Global allocation
• Country allocation • Country allocation

FACULTY OF INTERNATIONAL BUSINESS 66


3.3. NTMs CLASSIFICATION
Chapter F: Price-control measures, including additional taxes and
charges
Measures implemented to control or affect the prices of imported goods to,
inter alia, support the domestic price of certain products when the import
prices of these goods are lower; establish the domestic price of certain
products because of price fluctuation in domestic markets or price instability
in a foreign market; or to increase or preserve tax revenue.

Tariff and Taxes at the border?

FACULTY OF INTERNATIONAL BUSINESS 67


3.3. NTMs CLASSIFICATION
Chapter G: Finance measures
Measures that are intended to regulate the access to and cost of
foreign exchange for imports and define the terms of payment.
Finance measures may increase import costs in the same manner as
tariff measures
Structure:
G1. Advance payment requirements
G2. Multiple exchange rates
G3. Regulations on official foreign exchange rate allocation
G4. Regulations concerning terms of payment for imports

FACULTY OF INTERNATIONAL BUSINESS 68


3.3. NTMs CLASSIFICATION
Chapter G: Finance measures
G1. Advance payment requirements
Requirements that relate to the value of the import transaction and/or related import taxes.
Advance payments are made when an application is submitted or when an import license is
issued.
G11 Advance import deposits
G12 Cash margin requirements
G13 Advance payment of customs duties
G14 Refundable deposits for sensitive products categories

FACULTY OF INTERNATIONAL BUSINESS 69


3.3. NTMs CLASSIFICATION
Chapter G: Finance measures
G2. Multiple exchange rates
Varying exchange rates for imports, depending on the product category. In
general, the official rate is reserved for essential commodities, while other
goods must be paid at commercial rates or occasionally by buying foreign
exchange through auctions. Under the Articles of Agreement of the
International Monetary Fund, article VIII, section 3, members are
prohibited from engaging in any discriminatory arrangements or
multiple currency practices without the Fund’s approval.
Example: Only the payment for infant food and staple food imports may be
made at the official exchange rate
FACULTY OF INTERNATIONAL BUSINESS 70
3.3. NTMs CLASSIFICATION
Chapter G: Finance measures
G3. Regulations on official foreign exchange rate allocation
G31 Prohibition of foreign exchange allocation
Measure to the effect that official foreign exchange allocations cannot be used
to pay for imports.
G32 Bank authorization
A requirement to obtain a special import authorization from the central bank.
G33 Authorization linked with non-official foreign exchange
Licence granted only if non-official foreign exchange is used for an import
payment.

FACULTY OF INTERNATIONAL BUSINESS 71


3.3. NTMs CLASSIFICATION
Chapter G: Finance measures
G4. Regulations concerning terms of payment for imports
Regulations related to conditions of payment of imports and the
obtaining and use of foreign or domestic credit to finance
imports.
Example: No more than 50 per cent of the transaction value can
be paid in advance of the arrival of goods in the port of entry

FACULTY OF INTERNATIONAL BUSINESS 72


3.3. NTMs CLASSIFICATION
Chapter H: Measures affecting competition
Measures granting exclusive or special preferences or privileges to one or more limited groups of
economic operators.
H1. State-trading enterprises, for importing; other selective import channels
H11 State-trading enterprises, for importing
Enterprises (whether or not State-owned or -controlled) with special rights and privileges not
available to other entities, which influence through their purchases and sales the level or direction
of imports of particular products.
Such enterprises include statutory marketing boards with exclusive rights to control the imports of
certain grains, canalizing agencies with an exclusive right to distribute petroleum, sole
importing agencies or importation reserved for specific importers regarding certain
categories of goods.

FACULTY OF INTERNATIONAL BUSINESS 73


3.3. NTMs CLASSIFICATION
Chapter H: Measures affecting competition
H2 Compulsory use of national services
H21 Compulsory national insurance
H22 Compulsory national transport
H29 Compulsory national service not elsewhere specified

FACULTY OF INTERNATIONAL BUSINESS 74


3.3. NTMs CLASSIFICATION
Chapter I: Trade – related investment measures
I1 Local content measures
Requirements to purchase or use certain minimum levels or types of domestically produced or sourced
products or restrictions on the purchase or use of imported products based on the volume or value of
exports of local products .
Example: In the production of automobiles, locally produced components must account for at least 50
per cent of the value of the components used.
I2 Trade – balancing measures
Restrictions on the importation of products used in or related to local production, including in relation
to the amount of local products exported, or limitations on access to foreign exchange used for such
importation based on the foreign exchange inflows attributable to the enterprise in question.
Example: A company may import materials and other products only up to 80 per cent of its export
earnings of the previous year.

FACULTY OF INTERNATIONAL BUSINESS 75


3.3. NTMs CLASSIFICATION
Chapter J. Distribution restrictions
Chapter K. Restrictions on post – sales services
Chapter L. Subsidies and other forms of support

FACULTY OF INTERNATIONAL BUSINESS 76


3.3. NTMs CLASSIFICATION
Chapter M: Government procurement restrictions
Restrictive measures that bidders may encounter when trying to sell their products and services to
a foreign government
Chapter N: Intellectual property
This chapter contains measures related to intellectual property rights in trade. Intellectual property
legislation covers patents, trademarks, industrial designs, layout designs of integrated circuits,
copyrights, geographical indications and trade secrets.
The rights granted are registered in national offices and collected in the database of the World
Intellectual Property Organization. It is sometimes difficult to associate a final traded product
with precise intellectual property rights, for example the knowledge of a certain patent may be
used for an input or a process produced nationally that will not appear in the trade statistics.

FACULTY OF INTERNATIONAL BUSINESS 77


3.3. NTMs CLASSIFICATION
Chapter O: Rules of origin
Rules of origin cover laws, regulations and administrative determinations of
general application applied by the Governments of importing countries to
determine the country of origin of goods. Rules of origin are important in
implementing trade policy instruments such as anti-dumping and
countervailing duties, origin marking and safeguard measures.
Example: Machinery products manufactured in a country face difficulty in
fulfilling the rules of origin to qualify for the reduced tariff rate of the
importing country, as the parts and materials originate in different countries.

FACULTY OF INTERNATIONAL BUSINESS 78


3.3. NTMs CLASSIFICATION
Chapter P: Export – related measures
Measures applied to exported goods by the Government of the
exporting country

Do you think that the export related measures are popular?

FACULTY OF INTERNATIONAL BUSINESS 79


3.4. WHY ARE NTMs NECESSARY?

Health and safety of


consumers and
consumer choice

Pollution and the


environment

Infant industry
protection

FACULTY OF INTERNATIONAL BUSINESS 80


3.4. WHY ARE NTMs NECESSARY?
Case study:
Country A (home country) specializing in high-quality products.
Country B (foreign country) specializes in low-quality.
Countries A, B differ in the safety or quality of the goods that
they produce. Consumers in both countries differ in their taste for
quality, with some willing to pay more for high - quality
products, and others unwilling to pay more.
1. What happen to consumers’ choice?
2. How can country A’s benefits harm?
3. How can NTMs used to protect consumers?

FACULTY OF INTERNATIONAL BUSINESS 81


3.5. EFFECTS OF NTMs
Effects of quotas

Small countries Large countries

What are differences between them?

FACULTY OF INTERNATIONAL BUSINESS 82


3.5. EFFECTS OF NTMs
Small countries

S
S(Q)
Rise in Consumer surplus: - (a+b+c+d)
Rise in Producer surplus: + a
Rise in government revenue: Quota rent (c)
Pq
a b c d
Pw
D

Sw Sq Dq Dw

FACULTY OF INTERNATIONAL BUSINESS 83


3.5. EFFECTS OF NTMs
Quota rent
- Allocation free to foreign exporters: Quota rent will belong to the domestic
importers
- Allocation with fees: Quota rent will belong to the domestic government
- Auctioning the quota: Quota rent will belong to the domestic government

Net effect on Home’s welfare: - (b + d)

Who earns the quota rent in the VERs cases?

FACULTY OF INTERNATIONAL BUSINESS 84


3.6. COSTS OF NTMs
Net national loss from non-tariff measures

𝑁𝑒𝑡 𝑛𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑙𝑜𝑠𝑠 𝑓𝑟𝑜𝑚 𝑡ℎ𝑒 𝑁𝑇𝑀𝑠


𝐺𝐷𝑃
1 𝐼𝑚𝑝𝑜𝑟𝑡 𝑣𝑎𝑙𝑢𝑒
= 𝑥 𝑇𝑎𝑟𝑖𝑓𝑓 𝑟𝑎𝑡𝑒 𝑥 𝑝𝑒𝑟𝑐𝑒𝑛𝑡 𝑟𝑒𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑖𝑛 𝑖𝑚𝑝𝑜𝑟𝑡 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑥 x 100%
2 𝐺𝐷𝑃

FACULTY OF INTERNATIONAL BUSINESS 85

You might also like