Trade Barrier

Narender Singh
MBA 2nd SEM
Roll no 1209
Trade Barrier
Tariff and Non Tariff
 A little Introduction
• What is Trade
Trade involves the transfer of goods or services from
one person or entity to another, often in exchange for money. 
• What is Trade Barrier
Trade barriers are government-induced restrictions on
transfer of goods or services
Tariff Non
Tariff
 What is Tariff
• a tax on imports, often known as a duty or a trade barrier.
• It adds to the cost of imported goods and is one of
several trade policies that a country can enact.
• Import Limitation
• Promote Domestic Economy
 Why Tariff ?
• Raise the cost of Import
• Reduce the amount of goods imported
• Quantitative in Nature
• Counter Trade Barriers
• Promote Domestic Goods
• A Policy of Protectionism
European Great Depression in 1870-72
• Who collects Tariff
Tariffs are paid to the customs authority of the country
imposing the tariff.
India : CBIC (Central board of Indirect Taxes and Customes )
USA: Customs and Border Protection, acting on behalf of the
Commerce Department
UK: HM Revenue & Customs (HMRC)
 Types of Tariffs

Ad
Specific
valorem Licenses
tariffs
tariffs
Local
Voluntary
Import content
export
quotas requireme
restraints
nts
• 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 good imported.
For example, a country could levy a $15 tariff on each
pair of shoes imported, but levy a $300 tariff on each
computer imported.
• Ad Valorem Tariffs
"according to value,"
this type of tariff is levied on a good based on a
percentage of that good’s value
a 15% tariff levied by Japan on U.S. automobiles. The 15%
is a price increase on the value of the automobile, so a
$10,000 vehicle now costs $11,500 to Japanese
consumers.
• 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.
There could be a restriction on imported cheese, and
licenses would be granted to certain companies allowing
them to act as importers.
• Import Quotas
An import quota is a restriction placed on the amount of a
particular good that can be imported.
Voluntary Export Restraints (VER)
This type of trade barrier is "voluntary" in that it is created
by the exporting country rather than the importing one.
(Could be accompanied by a reciprocal )
 Non-tariff barriers
(NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff.

• Types of Non Teriff

• Quotas
• Embargoes
• Standards
• Government Participation in Trade
• Charges on imports
• Anti Dumping Duties
How Do Tariffs Affect Prices?
 Difference B/W Tariff and Non
Tariff
Tariff Non Tariff
Government receives the revenue no revenue
Less Protective measures than Non More protective Measures than Tariffs
tariffs
Effects prices of Foreign products More Price intensive for domestic
product
Imposition of tariff and amendments More Flexible than tariffs
are subject to legislative enactment
Favours Efficiency of Firms Discriminates against new comers
More Transparent Country Specific
Quantitative in Nature Qualitative aspect
 Role Of WTO(World Trade
Organisation)
• The World Trade Organization (WTO) is an international
institution that oversees the global trade rules between
nations.
• The WTO is based on agreements signed by the majority
of the world's trading nations.
• The main function of the organization is to help producers
of goods and services, exporters, and importers protect
and manage their businesses.
Formation 1 January 1995; 24 years ago

Headquarters Centre William Rappard, Geneva, 

Membership Switzerland
164 member states[1]
Official language English, French, Spanish[
Director-General Roberto Azevêdo
• The WTO is essentially a mediation entity that upholds
the international rules of trade between nations.
• WTO has fuelled globalization with both positive and
adverse effects.
• Two School of Thoughts
WTO is Good
WTO is BAD
 How it Works
• The WTO provides a platform that allows member governments to
negotiate and resolve trade issues with other members
• WTO's main focus is to provide open lines of communication
concerning trade between its members
• WTO has lowered trade barriers and increased trade among member
countries and also maintained trade barriers when it makes sense to
do so in the global context
• WTO attempts to provide negotiation mediation that benefits the
global economy.
• After Negotiation , Agreement is in Place .
• WTO then offers to interpret that agreement in the event
of a future dispute
• All WTO agreements include a settlement process,
whereby the organization legally conducts neutral conflict
resolution
 Trade Barriers in INDIA
• Import Licensing : certain products face licensing related
trade barriers. 
Import licenses for motorcycles are provided to only foreign
nationals permanently residing in India, working in India for
foreign firms that hold greater than 30% equity or to foreign
nations working at embassies and foreign missions.
• India maintains a "negative list" of imported products
subject to various forms of nontariff regulation. 
• The negative list is currently divided into three categories:
banned or prohibited items (e.g., tallow, fat, and oils of
animal origin); restricted items that require an import
license (e.g., livestock products and certain chemicals);
and "canalized" items (e.g., some pharmaceuticals)
importable only by government trading monopolies and
subject to cabinet approval regarding import timing and
quantity.
• Standards, testing, labeling & certification
The Indian government has identified 109 commodities that must be
certified by its National Standards body, the Bureau of Indian Standards (BIS)

Food Safety and Standard Authority of India (laying down standards for articles
of food and regulating manufacturing, processing, distribution, sale and import
of food. )

Bharat Standards (Automobiles )

 Others
• Anti-dumping and Countervailing Measures
• Export Subsidies and Domestic Support
• Implementation of Policies
• Service Barriers
• Other Barriers
Conclusion