5.1 Types of Non-Tariff Barriers

As tariffs have come down due to the GATT/WTO negotiations that have sought to promote international trade, countries have increasingly resorted to the use of non-tariff barriers in order to provide protection to their producers. A non-tariff barrier is any policy that is aimed at reducing imports other than a simple tariff (Carbaugh, 2015; Pugel, 2020). Non-tariff barriers include import quotas, voluntary export restraints (VERs), product standards, domestic content requirements, and government procurement policies.

Perhaps the most popular non-tariff barrier is an (absolute) import quota, which limits the quantity of imports during a particular period to a level below that which would normally occur under free trade. As countries increasingly liberalized international trade under the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO), there was international agreement to phase out absolute import quotas.

Current international trade rules do not permit the use of absolute import quotas for manufactured goods and absolute quotas have been replaced by tariff rate quotas in the case of agricultural products. Other non-tariff barriers, such as product standards, domestic content requirements, and government procurement policies, limit imports by increasing costs and creating uncertainty regarding the conditions under which imports occur.

References

Carbaugh, R.J. (2015). International economics, (15th ed.). Cengage Learning.

Pugel, T. A. (2020). International economics, (17th ed.). McGraw-Hill.