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International Economics By Robert J. Carbaugh 9th Edition

International Economics By Robert J. Carbaugh 9th Edition. Chapter 5: Nontariff Trade Barriers. Types of non-tariff barriers. Import quotas. Quotas are a restriction on the quantity of a good that may be imported in any one period (usually below free-trade levels)

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International Economics By Robert J. Carbaugh 9th Edition

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  1. International EconomicsBy Robert J. Carbaugh9th Edition Chapter 5: Nontariff Trade Barriers

  2. Types of non-tariff barriers Import quotas • Quotas are a restriction on the quantity of a good that may be imported in any one period (usually below free-trade levels) • Global quotas restrict the total quantity of an import, regardless of origin • Selective quotas restrict the quantity of a good coming from a particular country Carbaugh, Chap. 6

  3. Types of non-tariff barriers Import quota: trade & welfare effects Carbaugh, Chap. 6

  4. Types of non-tariff barriers Effects of a quota on sugar imports Carbaugh, Chap. 6

  5. Types of non-tariff barriers Comparing tariffs and quotas Carbaugh, Chap. 6

  6. Types of non-tariff barriers Tariff-rate quota • The tariff-rate quota is a two-tiered tariff • A specified number of goods (up to the quota limit) may be imported at one (lower) tariff rate, while imports in excess of the quota face a higher tariff rate Carbaugh, Chap. 6

  7. Types of non-tariff barriers Tariff-rate quota: trade & welfare effects Carbaugh, Chap. 6

  8. Types of non-tariff barriers Orderly marketing agreements • Market sharing pact signed by trading partners • Intended to protect less efficient domestic producers • Usually involve voluntary export restraints, or export quotas • Recent trade negotiations have restricted the use of these agreements Carbaugh, Chap. 6

  9. Types of non-tariff barriers Effects of a voluntary export quota Carbaugh, Chap. 6

  10. Types of non-tariff barriers Domestic content requirements • Rules that require a certain percentage of a product’s total value to be produced domestically • Often has the effect of forcing lower-priced imports to include higher-cost domestic components or be assembled in a higher-cost domestic market Carbaugh, Chap. 6

  11. Types of non-tariff barriers Domestic content: trade & welfare effects Carbaugh, Chap. 6

  12. Types of non-tariff barriers Subsidies • Domestic subsidy • Payments made to import-competing producers to raise the price they receive above the market price • Export subsidy • Payments and incentives offered to export producers intended to raise the volume of exports Carbaugh, Chap. 6

  13. Types of non-tariff barriers Subsidies: trade & welfare effects Carbaugh, Chap. 6

  14. Types of non-tariff barriers Subsidies: trade & welfare effects Carbaugh, Chap. 6

  15. Types of non-tariff barriers Dumping • The practice of selling a product at a lower price in export markets than at home (or exporting at prices below production cost) • Sporadic dumping - to clear unwanted inventories or cope with excess capacity • Predatory dumping - to undermine foreign competitors • Persistent dumping - reaping greater profits by engaging in price discrimination Carbaugh, Chap. 6

  16. Types of non-tariff barriers Other NTBs • Government procurement policies • Social regulations (health, environmental and safety rules can also restrict trade) • Sea transport and freight restrictions Carbaugh, Chap. 6

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