abhishreshthaa
Abhijeet S
QUOTA SYSTEM:
Meaning:
Quota system or quantitative restriction is one important non-tariff trade barrier. Under quota system, the country fixes in advance the limit of import quantity of a commodity that would be permitted from various countries during a given period.
Such quotas are usually administered by requiring importers to have licenses to import particular commodities. The impact of quotas on imports is direct as the imports are not allowed over and above a specific limit fixed.
Tariffs restrict imports in an indirect manner. In this sense, quotas are superior to tariffs. They are used in many developing countries in places of tariffs or in conjunction with tariffs.
Types of quotas:
There are different types of quotas and a country may introduce any type of quota as per the need of the situation. The types of quotas are as noted below:
(1)Tariff quotas: A tariff quota combines the features of the tariff as well as quota. Here, the imports of a commodity up to a specified volume are allowed duty free or at a special low rate duty.
Imports in excess of this limit are subject to a higher rate of duty.
(2)Unilateral quotas: In unilateral quota system, a country on its own fixes a ceiling on quantity of import of a particular commodity.
(3)Bilateral quotas: In bilateral quota, negotiations are made between the importing countries and a particular supplier country and the quantity to be imported is decided.
(4)Mixing quotas: Under the mixing quota, the producers are obliged to utilize domestic raw materials upto a certain proportion in the manufacturing of a finished product.
Effects of quotas:
QUOTAS, as an instrument of quantitative trade barrier, bring the following effects;
(1)Quotas bring down total imports to a country and thereby improves the balance of trade and balance of payments position of a country.
(2)Quotas reduce imports and this may lead to a scarcity of commodities and possible price rise in domestic marketing. There may be reduction in consumption of commodities by the consumers.
(3)Like tariffs, quotas give protection to domestic industries.
(4)Quotas give additional revenue to the government.
Meaning:
Quota system or quantitative restriction is one important non-tariff trade barrier. Under quota system, the country fixes in advance the limit of import quantity of a commodity that would be permitted from various countries during a given period.
Such quotas are usually administered by requiring importers to have licenses to import particular commodities. The impact of quotas on imports is direct as the imports are not allowed over and above a specific limit fixed.
Tariffs restrict imports in an indirect manner. In this sense, quotas are superior to tariffs. They are used in many developing countries in places of tariffs or in conjunction with tariffs.
Types of quotas:
There are different types of quotas and a country may introduce any type of quota as per the need of the situation. The types of quotas are as noted below:
(1)Tariff quotas: A tariff quota combines the features of the tariff as well as quota. Here, the imports of a commodity up to a specified volume are allowed duty free or at a special low rate duty.
Imports in excess of this limit are subject to a higher rate of duty.
(2)Unilateral quotas: In unilateral quota system, a country on its own fixes a ceiling on quantity of import of a particular commodity.
(3)Bilateral quotas: In bilateral quota, negotiations are made between the importing countries and a particular supplier country and the quantity to be imported is decided.
(4)Mixing quotas: Under the mixing quota, the producers are obliged to utilize domestic raw materials upto a certain proportion in the manufacturing of a finished product.
Effects of quotas:
QUOTAS, as an instrument of quantitative trade barrier, bring the following effects;
(1)Quotas bring down total imports to a country and thereby improves the balance of trade and balance of payments position of a country.
(2)Quotas reduce imports and this may lead to a scarcity of commodities and possible price rise in domestic marketing. There may be reduction in consumption of commodities by the consumers.
(3)Like tariffs, quotas give protection to domestic industries.
(4)Quotas give additional revenue to the government.