Import Quota

Examples of Import Quota in the following topics:

• Quotas

  • There are two main types of import quota: the absolute quota and the tariff-rate quota.
  • Once the quota has been fulfilled, no other goods may be imported into the country.
  • Once the initial quota is surpassed, imports are not stopped; instead, more of the good may be imported, but at a higher tariff rate .
  • By restricting imports, quotas minimize the impact of such activities.
  • Import quotas may promote administrative corruption, especially in countries where import quotas are given to selected importers.

• Promoting Free Trade

  • Government can promote free trade by reducing tariffs, quotas, and non-tariff barriers.
  • Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports), subsidies (to exports), or quotas.
  • There are a number of barriers to free trade that governments can mitigate, most importantly, tariffs (government imposed import taxes) and quotas (government imposed limits on the quantity of a good that can be imported).
  • In addition to tariffs and quotas, there are a number of other barriers to free trade that countries use.
  • NTBs act just like tariffs and quotas in that they are barriers to free trade.

• Evaluating Policies

  • International Trading Environment: Global agricultural trade is a complex issue, with quality control, pricing (dumping), and import/export tariffs.
  • Resource Access: Ensuring access to land and biodiversity is another important component to a successful agricultural industry.
  • Protection of environmental land and the overall ecosystem is an important policy consideration.
  • Import Quotas: Policy makers often implement quotas in agriculture to retain more control over prices and protect domestic incumbents.
  • Quotas, like other forms of trade protection, benefit the local industry.

• Costs of Trade

  • Free trade is a policy where governments do not discriminate against imports and exports; creates a large net gain for society.
  • Free trade is a policy where governments do not discriminate against exports and imports.
  • Free trade is beneficial to society because it eliminates import and export tariffs.
  • Free trade policies consist of eliminating export tariffs, import quotas, and export quotas; all of which cause more losses than benefits for a country.
  • With free trade in place, the producers of the exported good in exporting countries and the consumers in importing countries all benefit.

• Farm Policies and World Trade

  • In a narrow sense, it is understandable why a country might try to solve an agricultural overproduction problem by seeking to export its surplus freely while restricting imports.
  • In practice, however, such a strategy is not possible; other countries are understandably reluctant to allow imports from countries that do not open their markets in turn.
  • The United States especially wanted a commitment for eventual elimination of European farm subsidies and the end to Japanese bans on rice imports.
  • The Uruguay Round was finally completed in 1995, with participants pledging to curb their farm and export subsidies and making some other changes designed to move toward freer trade (such as converting import quotas to more easily reduceable tariffs).

• Imports: The Economics Impacts of Buying Goods from Other Countries

  • The domestic purchaser of the good or service is called an importer.
  • Due to the economic importance of imports, countries enact specific laws, barriers, and policies in order to regulate international trade.
  • Protectionism is the economic policy of restraining trade between countries through tariffs on imported goods, restrictive quotas, and government regulations.
  • Instead of importing Chinese labor, the U.S. imports goods that were produced in China by Chinese labor.
  • The map shows the largest importers on an international scale.

• From Protectionism to Liberalized Trade

  • At times in its history, the country has had a strong impulse toward economic protectionism (the practice of using tariffs or quotas to limit imports of foreign goods in order to protect native industry).
  • U.S. aid was important to this recovery, but these nations also needed export markets -- particularly the huge U.S. market -- in order to regain economic independence and achieve economic growth.

• Thinking about Efficiency

  • Governments can institute any number of policies that prevent markets from achieving the free market equilibrium price and quantity: taxes raise prices, quotas limit the quantity sold, and regulations affect the supply and demand curves.
  • Economists often seek to maximize efficiency, but it is important to contextualize such aims.

• Quotas

  • To prevent over-fishing, a negative externality, governments may impose individual fishing quotas (IFQs), which set an allowable catch limit for fisheries.
  • To address the problem of negative externalities, governments may use a quota system to try and limit them.
  • In a quota system, the negative externality is capped at a certain amount.
  • In the example of pollution, the government may put a quota on the amount of pollution a factory can produce by issuing tradable permits.

• Other Barriers

  • In addition to tariffs and quotas, other barriers to trade exist.
  • Embargoes are prohibitions on trade ban imports or exports, and may apply to certain categories of products, or strictly to goods supplied by certain countries .
  • Countervailing duties: Countervailing duties, or anti-subsidy duties, are extra duties levied on imports in order to neutralize an export subsidy.
  • In that respect, countervailing duties are similar to anti-dumping duties in that they both bring a imported product's value closer to the "normal value. "