Trade barriers(7)
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Trade barriers(7)






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Trade barriers(7) Trade barriers(7) Presentation Transcript

  • Trade Barriers PGDIB - I
  • Trade Barriers
    • Trade Barriers can be classified as:
      • Tariff Barriers
      • Non – Tariff Barriers
      • Currency control
      • Administration delay
  • Tariff Barriers
    • Tariffs are the taxes on the goods that is traded internationally.
    • Tariff Barriers can be classified as:
      • Specific duty
      • Ad Valorem duty
      • Compound duty
      • Countervailing duty
  • Tariff Barriers
    • Specific duty:
      • It refers to the duty based on the value of goods. It is calculated on per unit basis.
      • Ex: Rs. 2 tax on 1 kg Sugar.
    • Ad Valorem duty:
      • It is the duty based on the value of the goods. It is calculated on the basis of percentage of value of good.
      • Ex: 5% tax on whatever volume purchased
  • Tariff Barriers
    • Compound duty:
      • When both type of tariffs are charged on the same product, it is known as compound duty.
      • It is based on both the unit and the value of the product.
    • Countervailing duty:
      • It refers to cancel out the impact of unfair business practices, such as subsidy.
  • Non - Tariff Barriers
    • Barriers influencing Prices :
      • Customs Valuation
      • Subsidies
      • Special Fee
    • Barriers influencing Quantity :
      • Quota
      • Embargo
      • Technical Barriers
  • Customs Valuation
    • Custom officials use a great deal of carefulness in valuing imported products.
    • Higher the value of the product, the greater the duty imposed on it & vice-versa.
    • Ex: Semi manufactured goods face lower rate of duty than manufactured goods.
  • Subsidies
    • Subsidy is the benefits provided by importing government to the domestic producers so as to reduce the production cost and thus the price of that good.
    • The provision of subsidy depends upon the budgetary resources.
    • Ex: Cash grants, Low-interest rates, Tax advantage etc.
  • Special Fee
    • Special is a kind of fee charged by the custom officials/authorities for custom clearance.
    • The greater the custom fee, the larger the value of imported good and more restricted its import will be.
  • Quota
    • It is the direct restriction on the quantity of some good that may be imported into a country.
    • The importing country prescribes specific quantum beyond which a commodity cannot be imported in a particular year.
  • Embargo
    • Embargo is an official ban on the trade with a particular country.
    • Due to strained political relation, a country imposes embargo on imports from a particular country, which normally includes all commodities.
    • Ex: UN imposing an embargo on imports from Haiti in 1993.
  • Technical Barriers
    • Technical Barriers can be classified as:
      • Product & Testing standards:
        • It requires foreign government to meet a country’s product/ testing standards before they are offered for sale in that country.
        • Ex: size, shape, design, performance, labeling, packaging, processes, etc.
        • Indian Exports face lot of such barriers for export of Rice, Yarn, Meat, Pharmaceuticals, etc.
  • Technical Barriers
      • “Buy local” legislation:
        • Under this at least Government departments are forbidden to use imported goods.
      • Import license:
        • Some countries have a legislation ensuring that a particular commodity can be imported only using import license.
  • Technical Barriers
      • Counter Trade:
        • Under counter trade some countries import goods only in exchange for their own products.
        • In such cases, the value of their imports are limited to the value of their exports.
        • It is the bilateral trade where one set of goods is exchanged for another set of goods.
        • It is an alternative means of carrying out an international transaction when conventional means of payment are difficult, or not possible.
  • Technical Barriers
      • Voluntary Export Restrain:
        • It is the voluntary restrain by the exporting country on the exports of a specified product to help the importing country to protect its domestic industry.
        • Ex: Limitation on auto exports to the US enforced by Japanese automobile producers in 1981.
  • References
    • International Business
      • By V. sharan