chapter6 - Chapter 6 Non-tariff Barriers Understand what a...

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Chapter 6 Non-tariff Barriers Understand what a quota is and why it is used. Understand and be able to explain the welfare effects of a quota on a country. Understand how quotas can have welfare costs even greater than tariffs. This is why quotas have been greatly reduced under the WTO. Understand what an export subsidy is. Understand the effects of export subsidies on prices, the amount of trade, and welfare. Understand what a production subsidy is. Understand the difference between an export subsidy and a production subsidy. Understand the effect of a production subsidy on prices, the amount of trade, and welfare. Understand why the WTO is focused more on eliminating export subsidies and less on production subsidies. Quota is a government-mandated limitation on either the quantity or the value of total imports in a product. e.g., limits imports of sugar to no more than 1.25 million tons in a particular year. Quotas on most manufactured products have been outlawed by the World Trade Organization (WTO). Tariff rate quotas are policies that allow a certain quantity of a good into a country at low (often zero) tariff rates, but then apply higher tariffs to quantities that exceed the quota. As of 2000, the United States had import quotas on many types of textiles and
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chapter6 - Chapter 6 Non-tariff Barriers Understand what a...

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