NON TARIFF BARRIERS

When International business is made free between different countries then the importing countries have
to face problems, for example: competition to domestic businesses, unfair competition, survival
problems of dometic companies etc. Hence importing countries will have to protect their domestic
companies against this. The importing countries will try to control their imports. In order to control
imports, countries are adopting certain barriers which are known as non-tariff barriers. Non-tariff
barriers are those barriers in which government controls foreign trade not by imposing duties and taxes,
but by other ways. These are as follows;
1. Quotas
Quota means quantity of import will be restricted. Under quota system, the maximum quantity of
different products is fixed in advance which would be allowed to import over a period of
time from various countries. This type of quantity restriction is known as QUOTA.
Import quota is the amount of goods that the government of importing country will allow to import.
Import quotas is based annually or based on country.
Export quota is the amount of goods that the government of exporting country will allow to export.
The purpose of export quota is to stop more exports because the product is more in demand in our own
country. For example onions, sugar, cement etc.
2. Licensing
Under this system, license or permit is to be obtained from the government to import the goods. A
license is granted to a company by the government, and allows the company to import a
certain type of good into the country. For example, there could be a restriction on imported
cheese, and licenses would be granted to certain companies allowing them to import cheese.
3. Foreign exchange restrictions and foreign exchange controls
Foreign exchange is very useful for importing various products from different countries. Hence,
every country government tries to control its foreign exchange. Government takes certain
measures to control its foreign exchange. Government tries to control imports by
restricting foreign exchange availability to importers. Hence less import is made. As a
result of this our balance of payment position is under control.
4. Environmental Protection Laws:Sometimes government controls import by creating strict environmental protection laws. For
example, once USA government did not import shrimps from India just because the fishing

technology used by India was harmful for the sea turtles. Turtles are endangered species.
Hence in the name of environment protection, USA government could control their
imports. Hence environmental protection laws can be a type of non-tariff barriers.
5. Customs procedure:Sometimes certain countries have very lengthy customs procedure for export and import of goods.
As a result of this lengthy and complex procedure, many companies avoid international
business. Hence government controls international business by creating lengthy and
complex customs procedure. E.g. frequent changes in Japans customs rules have become a
very big trade barrier to its exports.
6. Technical regulation
Many times the importing country specifies certain high quality technical standards for products.
And if such high quality products are not available in international market, then
government does not allow to buy such products from the international market. Hence this
is a type of non-tariff barrier. EXAMPLE: Sometimes technical restrictions are imposed in
case pharmaceutical products.
All the above types of controls / restrictions are known as non-tariff barriers.