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International Economics 17th Edition

International Economics (17th Edition)

Book Edition17th Edition
Author(s)Carbaugh
ISBN9781337558938
PublisherCengage
SubjectEconomics
Chapter 5, End of Chapter, Study Questions, Exercise 1
Page 186

In the past two decades, nontariff trade barriers have gained in importance as protectionist devices. What are the major nontariff trade barriers?

Here is a tip:

Nontariff trade barriers are used to restrict international trade through methods which do not include tariffs.

Explanation

The major nontariff trade barriers are as follows:

 

  • Import Quotas: This is a form of restriction which puts limits on the total quantity of goods that a country can import, in a particular period of time.
  • Export Quota: Under export quota, a pact is signed called orderly marketing agreement whose primary purpose is to moderate the intensity of the competition from international producers, thereby supporting small domestic producers.
  • Domestic content requirements: This states a minimum percentage of a product's total value, that must be produced domestically, to ensure that the product considered can qualify for zero tariffs. This requirement ensures the use of domestic inputs in the production of those products.
  • Subsidies: These provide cost advantage to the domestic producers.

 

  • Anti dumping regulation: These refer to rules stated by a country which reduces the amount of dumping by other countries in the law imposing country. Dumping refers to the tendency of foreign countries to sell their stock of goods at cheaper rates in the domestic country. This reduces demand for domestically produced goods. Thus, anti dumping duties reduce the tendency of foreign countries to dump, and thus increases domestic sales.

 

  • Government procurement practices: This is a form of preference provided by the government to domestic suppliers, in the form of policies which support the purchase of domestically produced goods. These laws explicitly discriminate against the use of foreign goods.

 

  • Social regulation: These refer to certain rules and regulations imposed by the trading countries, related to safety and health issues, which are to be met by the trading partners. 

Verified Answer

Some of the nontariff trade barriers are: absolute import quotas, export quota, domestic content requirements, subsidies, antidumping regulations, discriminatory government procurement practices, and social regulations.

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