Trade barriers(7)


Published on

1 Comment
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Trade barriers(7)

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