Global Framework for Export

Marketing

Trade Barriers

Restrictions imposed on movement of goods

between countries.
Imposed not only on imports but also on
exports.
Can be broadly divided into:
- Tariff barriers
- Non-tariff barriers

Tariff Barriers
A customs duty or tax on products that move
across borders.

Mostly imposed on imports.

Following are the TBs:
1.
Specific duty:
- Based on physical characteristics of goods.
- Fixed sum of money levied based on weight
or measurement of a commodity.
-Discourages cheap imports.
- Easy to administer as it does not involve
value of imported commodities.

2.

Ad Valorem duty:
- Duty is imposed according to value of
commodity.
- Fixed percent of value of a commodity is
added as tariff.
- Levied in case of goods whose values cannot
be determined on the basis of physical
characteristics.
- Eg: works of art, historic works

3.

4.

Combined duty:
- Combination of specific and ad valorem
duties.
Seasonal duty:
- Duties which vary with proces of
commodities.
- Purpose is to stabilise prices.
- If prices rise, lower duties and if prices fall,
higher duties.
- Eg: Agricultural products.

5.

6.

Countervailing duty:
- Imposed on imports that are subsidised by
the exporting country.
- As a result imports will become cheaper than
domestic goods.
- Levied as addition to normal duties to nullify
the effect of subsidy.
Revenue tariff:
- Provides revenue to government.
- Imposed on goods whose demand is
inelastic.
- Eg: Consumer goods, Luxury goods.

7.

8.

Anti-dumping duty:
- Exporters attempt to capture foreign markets
by selling goods at rock-bottom prices.
- As a result, domestic industries find it
difficult to compete.
- Hence duties are levied in addition to normal
duties.
Protective tariff:
- Levied to protect domestic industries from
outside competition.
- Normally very high duties are levied.

Non-tariff barriers

Any barrier other than a tariff that raises an

obstacle to free flow of goods.
It does not affect price of commodities, but
only the quantity of imports.

Types of NTBs are:

1.
Quota system:
- A country fixes in advance, the limit of
import quantity of a commodity for a given
period from various countries.

-Types of quotas are:

a. Tariff/Customs quota: Certain quantity of
imports are allowed duty free or at reduced
rate while additional imports are charged
increased rate of duty.
b. Unilateral quota: Quotas are fixed without
consulting exporting countries.
c. Bilateral quota: Quotas are fixed after
negotiations between importing and exporting
countries.
d. Multilateral quota: Group of countries come
together and fix both import and export quotas
for each country.

2.

3.

Consular formalities:
- Importing countries demand that shipping
documents should include the consular invoice
certified by their consulate in the exporting
country.
State Trading:
- Certain items are imported or exported only
through state owned canalising agencies like
MMTC in India.
- Individual exporters or importers are not
allowed to directly deal in these commodities.

4.

5.

Preferential agreements (Trading Blocs):

- Nations form trading groups and give
preferences to imports from member nations.
- Imports from non-members are subject to
various tariffs and regulations.
Foreign exchange regulations:
- The importer has to ensure that adequate
foreign exchange is available by obtaining
clearance from exchange control authorities
before finalising the contract with the exporter.

6.

7.

8.

Product standards:
- Developed countries impose product
standards for imported items and if they do
not meet those standards, imports are not
allowed.
Product labelling
- Specific labelling on products.
Eg: specific languages
Packaging requirements:
- Particular type of packaging materials.
Eg: recyclable packing materials by EU.

9.

10.

Domestic content requirements:

- Governments impose on companies to
purchase domestic contents rather than
import.
- Purpose is to boost domestic production.
Other NTBs:
- Others like health & safety regulations,
technical formalities, environmental
regulations etc.