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Nontariff Distortions to Trade

Nontariff Distortions to Trade - Quotas Quotas restrict...

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1 Nontariff Distortions to Trade Tutional BBA International Economics. 2 Quotas Quotas restrict imports of a good to a certain quantitative level. Quotas are considered such an extreme from of protectionism that they are banned under international trade rules. Nevertheless, quotas still exist in various forms for five reasons. 1. Not all countries are member of the WTO. - Use of a quota as a mean of conserving foreign exchange. 2. New members of the WTO are allowed to maintain their previously existing quotas for a specified period of time. 3. Quotas on some goods in defiance of WTO rules. 4. International trade in textiles and apparel was distorted by the Multifibre Arrangement (MFA) 5. Agri products was not covered by WTO. 3 Voluntary export restraint (VER) VER is an agreement in which exporting country agrees to limit its export to another country to a certain number of units. In this form, the quota (VER) on imported goods technically was legal under WTO regulations.
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