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Question 1 of 1
1. Question
1 points
Consider the following:
1. Import quota
2. Arbitrarily applied Sanitary and phytosanitary conditions
3. Ad-valorem Duty
4. Local Content Requirement
5. Countervailing Duty
Which of the above are considered as non-Tariff barriers in International Trade?
Correct
Non-Tariff Barriers refer to restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products difficult and/or costly. It arises from different measures taken by governments and authorities in the form of government laws, regulations, policies, conditions, restrictions or specific requirements, and private sector business practices, or prohibitions that protect the domestic industries from foreign competition.
Statement 1 is correct. An import quota is a restriction placed on the amount of a particular good that can be imported. This sort of barrier is often associated with the issuance of licenses.
A license is granted to a business by the government and allows the business to import a certain type of good into the country.
Statement 2 is correct. The Agreement on the Application of Sanitary and Phytosanitary Measures sets out the basic rules for food safety and animal and plant health standards. It allows countries to set their own standards. But it also says regulations must be based on science. They should be applied only to the extent necessary to protect human, animal or plant life or health. And they should not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail. So, only if Sanitary and Phytosanitary Measures are unjustified, then it will be considered as non-tariff barrier.
Statement 3 and 5 is incorrect. When two countries trade in the goods, a certain amount is charged as a fee by the country in which goods are entered. This fee is in the form of tax or duty, which is called a tariff barrier. It includes: Export Duties, Import Duties, Transit Duties, Specific Duties, Ad-valorem Duties, Protective Tariffs, Countervailing and Anti-dumping Duties.
Statement 4 is correct. Instead of placing a quota on the number of goods that can be imported, the government can require that a certain percentage of a good be made domestically (known as Local Content Requirement). The restriction can be a percentage of the good itself or a percentage of the value of the good.
Incorrect
Non-Tariff Barriers refer to restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products difficult and/or costly. It arises from different measures taken by governments and authorities in the form of government laws, regulations, policies, conditions, restrictions or specific requirements, and private sector business practices, or prohibitions that protect the domestic industries from foreign competition.
Statement 1 is correct. An import quota is a restriction placed on the amount of a particular good that can be imported. This sort of barrier is often associated with the issuance of licenses.
A license is granted to a business by the government and allows the business to import a certain type of good into the country.
Statement 2 is correct. The Agreement on the Application of Sanitary and Phytosanitary Measures sets out the basic rules for food safety and animal and plant health standards. It allows countries to set their own standards. But it also says regulations must be based on science. They should be applied only to the extent necessary to protect human, animal or plant life or health. And they should not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail. So, only if Sanitary and Phytosanitary Measures are unjustified, then it will be considered as non-tariff barrier.
Statement 3 and 5 is incorrect. When two countries trade in the goods, a certain amount is charged as a fee by the country in which goods are entered. This fee is in the form of tax or duty, which is called a tariff barrier. It includes: Export Duties, Import Duties, Transit Duties, Specific Duties, Ad-valorem Duties, Protective Tariffs, Countervailing and Anti-dumping Duties.
Statement 4 is correct. Instead of placing a quota on the number of goods that can be imported, the government can require that a certain percentage of a good be made domestically (known as Local Content Requirement). The restriction can be a percentage of the good itself or a percentage of the value of the good.
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