This document discusses tariff and non-tariff barriers to international trade. It defines tariffs as taxes imposed on goods crossing national borders and notes that they are used to protect domestic industries by making imported goods more expensive. It also discusses different types of tariffs and their impacts. Non-tariff barriers are other restrictions beyond tariffs that limit imports or distort trade, such as quotas, import licensing, and customs procedures. Both tariff and non-tariff barriers can impact trade volumes, inflation, and international relations.

1. Tariff & Non- Tariff
barriers to Trade
Unit 3
Chapter 1

2. Introduction:
 International Trade policies deals with the
policies of the national governments relating to
exports of various goods and services in various
countries either on equal terms and conditions
or on discriminatory terms and conditions.
 Trade policies also aim at protecting the
domestic industry from the competition of the
advanced countries through imposing quotas
and build competencies by providing subsidies.

3. Instruments of Trade Policy:
 Broadly classified into…..
 Tariff
 Non-Tariff

4. Tariff Barriers
 What are tariff barriers?
 Refers to the tax imposed on the goods when they
enter or leave the national frontier or boundary.
 What is the purpose of tariffs?
 To protect the domestic industry by increasing the
cost of imported goods.
 Example : GoI imposed tariffs to protect
domestic automobile industry, sugar industry,
cement industry and steel industry.

5. Types of Tariffs:
 On the basis of Purpose:
 Revenue Tariff:
 To provide state with the revenue.

Levied on luxury goods.
 Protective Tariff:
 To maintain and encourage those branches
of home industry protected by the duties.

6.  On the Basis of Origin and Destination:
 Ad Valorem Duty:
 Levied as the percentage of the total
value of the imported common duty.
 Specific Duty:
 Levied per physical unit of the imported
commodity.
 Compound Duty:
 Levied a percentage ad valorem duty plus
a specific duty on each unit of the
commodity. Eg. 1 lac + 10% of the price.

7.  On the Basis of Country-wise
Discrimination:
 Single Column Tariff:
 A uniform rate of duty is imposed on all
similar commodities irrespective of the
country from which they are imported.
 Double Column Tariff:
 Two different rates of duty have been
imposed.
 Triple Column Tariff:
 Two or more tariff rates are levied on
each category of commodity.

8. Who Gain from Tariff?
 Government of the importing country earns
in the form of the revenue.
 Industries of the importing country would find
market for their products as the imported
goods will be expensive.
 Jobs in the domestic markets are saved.
 Business for the ancillary industry, servicing,
market intermediation etc. is also protected.

9. Who are adversely affected?
 Consumers
 Industries of the exporting country.

10. Other Impacts of Tariff Barriers
Tariff Barriers tend to Increase:
Tariff Barriers tend to Increase:
1. Inflationary pressures
1. Inflationary pressures
2. Special interests’ privileges
2. Special interests’ privileges
3. Government control and political considerations in
3. Government control and political considerations in
economic matters.
economic matters.
Tariff Barriers tend to Weaken:
Tariff Barriers tend to Weaken:
1. Balance-of-payments positions
1. Balance-of-payments positions
2. Supply-and-demand patterns
2. Supply-and-demand patterns
3. International relations (they can start trade wars)
3. International relations (they can start trade wars)
Tariff Barriers tend to Restrict:
Tariff Barriers tend to Restrict:
1. Manufacturer’ supply sources
1. Manufacturer’ supply sources
2. Choices available to consumers
2. Choices available to consumers
3. Competition
3. Competition

11. Non- Tariff Barriers
Non-Tariff measures include all
measures, other than tariffs, the effect
of which is to restrict imports, or to
significantly distort trade.

12. Different Types of Non-Tariff
Barriers:
(1) Specific Limitations on Trade:
(1) Specific Limitations on Trade:
1. Quotas
1. Quotas
2. Import Licensing requirements
2. Import Licensing requirements
3. Proportion restrictions of foreign to
3. Proportion restrictions of foreign to
domestic goods (local content requirements)
domestic goods (local content requirements)

13. (2) Customs and Administrative Entry Procedures:
(2) Customs and Administrative Entry Procedures:
1. Valuation systems
1. Valuation systems
2. Antidumping practices
2. Antidumping practices
3. Documentation requirements
3. Documentation requirements
4. Fees
4. Fees
(3) Government Participation in Trade:
(3) Government Participation in Trade:
1. Government procurement policies
1. Government procurement policies
2. Export subsidies
2. Export subsidies
3. Countervailing duties
3. Countervailing duties
4. Domestic assistance programs
4. Domestic assistance programs

14. (4) Charges on imports:
(4) Charges on imports:
1. Prior import deposit subsidies
1. Prior import deposit subsidies
2. Administrative fees
2. Administrative fees
3. Special supplementary duties
3. Special supplementary duties
4. Import credit discriminations
4. Import credit discriminations
5. Border taxes
5. Border taxes
(5) Others:
(5) Others:
1. Voluntary export restraints
1. Voluntary export restraints
2. Monetary Barriers
2. Monetary Barriers

15. Impact of NTBs:
 Have emerged as potent Protectionist
tool.
 It being less transparent, its difficult to
identify and quantify its impact.