Difference Between Tariff Barriers and Non Tariff Barriers
All countries are dependent on other countries for some products and services and no country can ever hope to be completely self reliant. There are countries with abundant mineral resources such as minerals and oil, but they lack in technology to convert them in the refined commodities. Then there are countries that face a lack of manpower and services. All these shortcomings can be overcome by international trade. While this sounds easy but import of goods from foreign countries at lower rates affects the domestic markets adversely. The taxes imposed by countries on goods coming from abroad in order to maintain the price difference between imported goods and domestic goods are known as tariff barriers. There are other barriers too, known as non tariff barriers and they create hindrance in free international trade. This article will attempt to discover the differences between the tariff and non tariff barriers.
Tariffs are taxes that are put in place not only to protect infant industries at home, but also prevent unemployment because of shutting down of home industries. Second, the rates provide a source of revenue to the Government although it denies consumers of their right to enjoy the goods at a lower price. There are exceptional tariffs with the aim of are levying just one time tax on goods. It’s different for different categories of goods. Ad Valorem tariffs are the tariffs that keep imported items costly. This is done to encourage domestic producers producing similar goods.
Non Tariff Barriers
Tariff barriers are not enough to protect domestic industries and this is why countries resort to non-tariff barriers that prevent foreign goods from coming inside the country. One of these non-tariff barriers is to create licenses. It grants licenses for companies to import goods and services. But adequate restrictions are imposed on new contenders so that there is less competition and very few companies are actually able to import goods in certain categories. This keeps the extent of imported items under control and protects domestic producers.
Import quotas are another trick used by countries to place a barrier to entry of foreign goods in certain categories. This allows a government to put a limit on the amount of goods imported into a particular category. As soon as this limit is crossed, any importer may import additional quantities of goods.
Non tariff barriers are sometimes retaliatory in nature, as when a country is against a particular country does not allow goods to be imported from that particular country. There are cases where restrictions are placed on weak grounds. For example, when the western countries pose restrictions on goods imported from third world countries for the reasons of human rights or child labor. They also put up barriers by giving environmental reasons.