Tariff and non tarif measures

INTERNATIONAL BUSINESS
PRESENTATION
TARIFF AND NON-TARIFF
MEASURES
SUBMITTED BY – ROHIT SINGH
MEENA(243),
MANISH
KUMAR(245),

INTRODUCTION
 Interconnections with global
economy brings introduction to
import and exports of supplies
between countries, this is known as
international trade.
 International trade have both
advantages and disadvantages. It
affect the development and growth
of economy.
 On the one hand it increases the number of goods that domestic consumers
can choose from and allows domestic industries to ship their products abroad .
While on the other hand it increases competition and affect the sale of domestic
products in home country.

EFFECTS OF TRADE BARRIERS
POSITVES:
For the protection of domestic industry, employment, balance of payment
position , protection of consumer’s rights, preservation of national identity
and culture of country government has to take measures against international
trade. Tariff and non tariff measures are one of the measures taken by
government against international trade.
NEGATIVES:
Protection and control of trade from foreign countries is one thing but
Overprotection of trade can also cause problems such as:-
1. Protection is against the interest of consumers as it increases price and
reduces variety and choices.
2. Protection makes producers and sellers less quantity conscious.
3. It encourages domestic companies to participate in monopolies.
4. It leave market open to companies to do whatever they want or in other
words corruption.

TARIFF
MEASURESTariff measures are the most common duty type of
trade control. It is the tax levied or imposed by
government on good when it crosses national
boundaries.
Tariff measures are imposed for the purpose of :-
 To increase inflationary pressures.
 To increase special interests privileges.
 For government control and political
considerations
in economic matters.
 To maintain balance of payments position.
 To weaken supply and demand patterns.
 To maintain international relations.
Tariff measures are also known as Import Restraints
, because they limit the amounts of goods which can

Types of Tariff
On Basis of
Incidence
Import Tariff
Export Tariff
Transit Tariff
On Basis if
Calculation
Specific Tariff
Ad-valorem Tariff
Compound Tariff
On Basis of revenue
to government
Revenue Tariff
Protective Tariff
On Basis of Tariff
Systems
Single Column Tariff
Preferential Tariff
On Basis of
Quantum
Prohibitive Tariff
Non-prohibitive
Tariff
TYPES OF TARIFF MEASURES

 On Basis of Incidence-
1. Export tariff - Tariff collected by the exporting country for export of goods
are called export tariff.
2. Import tariff - Tariff collected by the importing country for import of goods
are called import tariff.
3. Transit tariff - Tariff collected by the country through which the goods have
passed is called transit tariff.
 On basis of Calculation-
1. Specific tariff - These are fixed fee levied on per-unit of imported
exporters acquired goods . This tariff is imposed according to the direction ,
purpose , rate, time, structure. Eg- levy of $15 on shoes but $300 on
computer imports.
2. Ad Valorem tariff - This type of tariff is levied on goods based on percentage
of that good’s value. Eg- 15% tariff levied by India on U.S. automobiles.
3. Compound tariff - tariff assessed as both specific duty and an ad valorem
duty on the same product is called compound tariff .

 On Basis of revenue of government-
1. Revenue tariff - Tariff imposed principally to raise government revenue
rather than to protect domestic industries.
2. Protective tariff - Tariff that are imposed on imports to raise their price,
making them less attractive to customers because of protecting domestic
industries from foreign competition.
 On basis of tariff system-
1. Single column tariff – A tariff system where the tariff rate assessed on a
particular product depends on its country of origin.
2. Preferential tariff - A tariff schedule under which one or more nations are
given lower rates or other advantages over others.
 On Basis of Quantum-
1. Prohibitive Tariff - Tariff is imposed at such a high rate that discourages
the importers of goods. Eg- levy 900% tariff on good to keep it out of
country.
2. Non-prohibitive Tariff - Serving or tending to prohibit or forbid something

IMPACT OF TARIFF BARRIERS
D = downward-sloping demand curve
S = upward-sloping supply curve
Intersection of S and D illustrates the equilibrium
price (P2) and (Q1).
P1= price after tax (P2 + tax on P2)
Q2= quantity after tax
As the custom duty or tariff barriers are imposed it
directly affect the price of goods and increase its
price. As a consequence, the amount consumers are
willing to buy will fall from Q1 to Q2 .
Price rise does not benefit the producers, since it
goes to government as taxes rather than profits.
Tariff barriers restrict the imports sells because
producers sells less and are unable to raise their
price because tax has already increased it .

NON-TARIFF
MEASURES
Non –tariff measures are the trade measures that restricts imports and export
of goods other than the simple imposition of tariff.
These are the restrictions that arise from different measures taken by the
government and authorities in the form of government laws, regulations,
policies ,conditions and specified market requirements in order to make import
and export difficult and costly.
Non-tariff is divided into six types and these are:-
1. Specific limitation on trade
2. Customs and administrative entry procedures
3. Standards
4. Government participation in trade
5. Charges on imports
6. Other non tariff measures

TYPES OF NON-TARIFF MEASURES
 Specific limitations on trade:-
1. Import quotas - It is a direct restriction placed on the amount of particular
good that can be imported. It restrict a limit on the quantity of import rather
than a tax.
2. Import licensing requirements - it is an import license document issued by a
national government which authorize the importation of certain goods into
national territory. Eg- betel nut was restricted in India prior 1 April 2000.
3. Local content requirements - It is a requirement that some specific fraction of
good be produced domestically. Eg- In US if 51% of product value comprises
of locally manufactured components then it is deemed as “American”.
4. Embargoes- It is partial or complete prohibition of trade with particular
country or a group of countries.
 Other non-tariff measures:-
1. Voluntary export restraints- It is a limit on the quantity of some category of
goods that can be exported to a specified country during a specified period of
time. Eg-India and china placed VCR on goods voluntary which will increase
price of goods but protects domestic industries.
2. Orderly marketing arrangements- It is an arrangement between two

 Standards:-
1. Standard disparities- countries creates specific standards to protect health
of its citizens. Purpose of these is to promote the sale of domestic products
and complicates the sale of foreign product. Eg- US stipulate that any cloth
altered in another country must identify that country on its label.
2. Packaging, labelling and marketing- standard of packaging , labelling and
marketing to create common knowledge of product. Eg- Using of two
languages on products according to country.
3. Intergovernmental acceptances of testing methods and standards- creation
of common testing practices and standards between governments.
 Government participation in trade:-
1. Export subsidies- subsidy to domestic companies to increase exports is
provided by government in form of cash grant, low-interest loans and tax
breaks.
2. Countervailing duties- It is an import tax imposed under WTO rules on
certain goods in order to prevent dumping or neutralize the negative effects
of subsidies.
3. Government procurement policy- It is the procurement of goods and

 Customs and Administrative Entry Procedures:-
1. Anti-dumping practices- This tariff is imposed by domestic government to
protect the goods which are priced below fair market value (Dumping).
2. Documentation requirements- Documents are mandatory to get
verification or authentication before landing of goods by governments. Eg-
India has made it mandatory to procure a permit from plant and quarantine
department of ministry of agriculture prior to landing of goods .
3. Tariff classifications- Tariff is levied according to products classification .
It decides the whether imported goods would enjoy concession , if yes then
does it enjoy any special treatment. Eg- japan had high duty on rice but on
Sushi (contains 80% of rice) it is very low .
 Charges on imports:-
1. Prior import deposit subsidies
2. Administrative fees
3. Special supplementary duties
4. Import credit discrimination
5. Variable levies
6. Border taxes

IMPACT OF NON- TARIFF BARRIERS
D = downward-sloping demand curve
S = upward-sloping supply curve
Intersection of S and D illustrates the equilibrium
price (P1) and (Q1).
P2= price after tax (P1 + tax on P1)
Q2= quantity after tax
S1 = new supply curve
As the non-tariff barriers are imposed it directly
affect the supply or sells of goods and gave rises to a
new supply curve. As impact , the quantity sold falls
from Q1 to Q2 but because of upward-sloping
supply curve price also rises from P1 to P2.
In trade control by non-tariff measure, Sellers raise
the price which helps compensate them for the
decline in quantity sold.

TARIFF MEASURES V/S NON TARIFF MEASURES
 Revenue is received by
government.
 Customs authorities do valuation
procedures and classification.
 Levied of import duty restricts the
monopolistic actions by
monopolistic organisations.
 Subject to legislative enactment
under terms of general Agreement
on Tariff and Trade (GATT) and
inflexible.
 Importers exploitation of more
profits supressed and retrained.
 Simple to operate administratively.
 Favours efficiency of firms.
 There is no revenue receipts but
only protection of domestic
industry.
 There is no valuation procedure
and classification .
 Monopolistic organisations
command high prices through
low output.
 Flexible and discussed at officials
levels only.
 Importers make more profits and
exploit the market.
 More official involved and less
simple.
 Discriminates against new
organisations.

Practical applications
U.S. steel industries 2002
In 2002, the Bush administration imposed tariffs of
up to 25% on imported steel products. This action
1) Reduced the supply of steel in the domestic
market and led to higher steel prices.
2) Increased U.S. employment because it saved jobs
in the steel industry.
3) Reduced employment in the U.S. steel container
industry because the higher steel prices made it
more difficult for them to compete with foreign
rivals.Infant Computer Industries 1970
1) Brazil largely barred imports of computer products for several decades
2) This policy guaranteed increased sales for Brazilian computers.
3) By the mid-1980s, due to lack of international competition, Brazil had a
backward and out-of-date industry
4) Brazil’s computer industry never competed effectively on world markets

INDIA AND INTERNATIONAL TRADE
India is the sixth largest economy in the world, but it has managed to position itself
only as the 16th largest exporter in value terms which accounts for around USD
260.32 billion and the 12th largest importer demanding USD 356.7 billion in 2016.
In 2016 India has 23 tariff agreement with duty free imports of 118.81 billion .

INDIA AND CHINA TRADE
From 1980 to 2014 trade , Increase in imports of china in India then exports are threat to domestic
industries, employment, balance of payments positions, national identity and cultures and most of
all our economy.

In May 2015, PM Modi’s three-day visit
to China. Prime Minister Narendra Modi held
talks with Chinese premier Li Keqiang. India
and China have signed 24 agreements worth
over 10 billion dollars in Beijing. Which
consist of two trade agreement of:-
1. Memorandum of Understanding (MOU)
between the Government of Republic of
India and the Government of the People’s
Republic of China. The MOU aims to
strengthen and develop cooperation
INDIA AND CHINA 2015 AGREEMENT
between the two countries in the field of multilateral trade negotiations at the
WTO.
2. Protocol on Health and Safety Regulations on Importing Indian Rapeseed Meal.
The Protocol will govern the health and safety standards for the rapeseed meal to
be exported from India to China. It paves the way for export of rapeseed meal
from India to China.

CURRENT AFFAIR OF
TARIFF MEASURES

SOURCE : 24-MARCH-2018, ECONOMICS
TIMES

1
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2.
3
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Source: Times Of
India
Dated: 27 March
2018,Tuesday

REFERENCES
 https://docs.lib.purdue.edu/cgi/viewcontent.cgi?referer=https://www.google.co.in/&httpsredi
r=1&article=1143&context=ciberwp
 http://www.tradebarriers.org/measures
 https://en.wikipedia.org/wiki/Non-tariff_barriers_to_trade
 https://www.slideshare.net/ZalakSukhadia/tariff-and-nontariff-barriers
 www.meti.go.jp/english/report/downloadfiles/gCT0004e.pdf
 http://son.roundrobin.co/non-tariff-barriers/chapter6.html
 https://www.instituteforgovernment.org.uk/explainers/non-tariff-barriers
 international business : beauty das
 Internation business :sumati verma

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