The following points highlight the top six types of non-tariff barriers.
The barriers are: 1. Quantity Restrictions, Quotas and Licensing Procedures 2. Foreign Exchange Restrictions 3. Technical and Administrative Regulations 4. Consular Formalities 5. State Trading 6. Preferential Arrangement.
Non-Tariff Barriers # 1. Quantity Restrictions, Quotas and Licensing Procedures:
Under this system, the maximum quantity of different commodities which would be allowed to be imported over a period of time from various countries is fixed in advance.
The quantity allowed to be imported or quota fixed normally depends upon the relations of the two countries and the need of the importing country.
ADVERTISEMENTS:
Quotas are very often combined with Licensing System to regulate the flow of imports over the quota period as also to allocate them between various importers and supplying countries. In this system a license or a permit has to be obtained from the Government to import the goods mentioning the quantity and the country from which to import.
Non-Tariff Barriers # 2. Foreign Exchange Restrictions:
Under this system the importer must be sure that adequate foreign exchange would be made available for the imports of goods by obtaining a clearance from the exchange control authorities of the country before concluding the contract with the supplier.
Non-Tariff Barriers # 3. Technical and Administrative Regulations:
The imposition of technical production, technical specifications etc. to which an importing commodity must conform. Such type of technical restrictions is imposed in case of pharmaceutical products etc. Besides technical restrictions, administrative restrictions such as adherence to certain documentary procedure are adopted to regulate imports. These measures impede the free flow of trade to a large extent.
Non-Tariff Barriers # 4. Consular Formalities:
Large number of countries demands that shipping documents must accompany the consular documents such as:
ADVERTISEMENTS:
(a) Certificate of origin,
(b) Certified invoices,
(c) Import certificates etc.
Sometimes, it is also insisted that such documents should be drawn in the language of importing countries. In case the documentation is faculty and is not drawn in the language of the importing country heavy penalties are imposed. Fees charged for such documentation are quite heavy.
Non-Tariff Barriers # 5. State Trading:
ADVERTISEMENTS:
In socialistic countries import and export transactions are handled by certain State Agencies. These agencies carry international trade strictly according to Government Policies. In India some articles decided by the government is imported only through the State Trading Corporation (STC). Export of raw materials such as iron ore, mica are handled by MMTC (Minerals and Metals Trading Corporation).
Non-Tariff Barriers # 6. Preferential Arrangement:
The member countries of the group negotiate and arrive at a settlement of preferential tariff rate to carry on trade amongst themselves. These rates are much lower than the ordinary tariff rates and applicable only to the member nations of the small group. This preferential arrangements made outside the purview of the GATT and EEC etc.