What is Nontariff Barrier?

1387 reads · Last updated: December 5, 2024

A nontariff barrier is a way to restrict trade using trade barriers in a form other than a tariff. Nontariff barriers include quotas, embargoes, sanctions, and levies. As part of their political or economic strategy, some countries frequently use nontariff barriers to restrict the amount of trade they conduct with other countries.

Definition

Non-tariff barriers refer to trade barriers that restrict trade through means other than tariffs. These include quotas, embargoes, sanctions, and levies. Countries often use non-tariff barriers as part of their political or economic strategy to limit trade volumes with other nations.

Origin

The concept of non-tariff barriers developed alongside the growth of international trade. In the mid-20th century, as globalization accelerated, countries began seeking more sophisticated means to protect their economic interests, making non-tariff barriers an important trade policy tool.

Categories and Features

Non-tariff barriers are mainly categorized into quantitative restrictions, price controls, and other restrictive measures. Quantitative restrictions include import quotas and voluntary export restraints; price controls involve anti-dumping duties and subsidies; other measures include technical standards and licensing systems. These measures are characterized by their indirect impact on trade flows, often being harder to detect and quantify.

Case Studies

A typical case is the U.S. imposing technical standard restrictions on Chinese tech products, which limits the entry of Chinese high-tech goods into the U.S. market. Another example is the European Union's stringent sanitary standards on agricultural products, which restrict imports from developing countries.

Common Issues

Investors often misunderstand the impact of non-tariff barriers, viewing them merely as manifestations of trade protectionism. In reality, non-tariff barriers can also be used to protect consumer safety and environmental standards. Another common issue is underestimating the complex effects of these barriers on international trade, which can lead to market entry obstacles and increased costs.

Suggested for You

Refresh

A direct quote is a foreign exchange rate quoted in fixed units of foreign currency in variable amounts of the domestic currency. In other words, a direct currency quote asks what amount of domestic currency is needed to buy one unit of the foreign currency—most commonly the U.S. dollar (USD) in forex markets. In a direct quote, the foreign currency is the base currency, while the domestic currency is the counter currency or quote currency.This can be contrasted with an indirect quote, in which the price of the domestic currency is expressed in terms of a foreign currency, or what is the amount of domestic currency received when one unit of the foreign currency is sold. Note that a quote involving two foreign currencies (or one not involving USD) is called a cross currency quote.

Direct Quote

A direct quote is a foreign exchange rate quoted in fixed units of foreign currency in variable amounts of the domestic currency. In other words, a direct currency quote asks what amount of domestic currency is needed to buy one unit of the foreign currency—most commonly the U.S. dollar (USD) in forex markets. In a direct quote, the foreign currency is the base currency, while the domestic currency is the counter currency or quote currency.This can be contrasted with an indirect quote, in which the price of the domestic currency is expressed in terms of a foreign currency, or what is the amount of domestic currency received when one unit of the foreign currency is sold. Note that a quote involving two foreign currencies (or one not involving USD) is called a cross currency quote.

Intellectual Capital

Intellectual capital is the value of a company's employee knowledge, skills, business training, or any proprietary information that may provide the company with a competitive advantage.Intellectual capital is considered an asset. It is the sum of employee expertise, organizational processes, and other intangibles that contribute to a company's bottom line.Some of the subsets of intellectual capital include human capital, information capital, brand awareness, and instructional capital.

Intellectual Capital

Intellectual capital is the value of a company's employee knowledge, skills, business training, or any proprietary information that may provide the company with a competitive advantage.Intellectual capital is considered an asset. It is the sum of employee expertise, organizational processes, and other intangibles that contribute to a company's bottom line.Some of the subsets of intellectual capital include human capital, information capital, brand awareness, and instructional capital.

Political risk is the risk an investment's returns could suffer as a result of political changes or instability in a country. Instability affecting investment returns could stem from a change in government, legislative bodies, other foreign policymakers or military control. Political risk is also known as "geopolitical risk".

Political Risk

Political risk is the risk an investment's returns could suffer as a result of political changes or instability in a country. Instability affecting investment returns could stem from a change in government, legislative bodies, other foreign policymakers or military control. Political risk is also known as "geopolitical risk".

Long-Term Assets

Long-term assets are assets, whether tangible or non-tangible, that will benefit the company for more that one year. Also known as non-current assets, long-term assets can include fixed assets such as a company's property, plant, and equipment, but can also include other assets such as long term investments, patents, copyright, franchises, goodwill, trademarks, and trade names, as well as software. Long-term assets can be contrasted with current assets, which can be conveniently sold, consumed, used, or exhausted through standard business operations with one year.

Long-Term Assets

Long-term assets are assets, whether tangible or non-tangible, that will benefit the company for more that one year. Also known as non-current assets, long-term assets can include fixed assets such as a company's property, plant, and equipment, but can also include other assets such as long term investments, patents, copyright, franchises, goodwill, trademarks, and trade names, as well as software. Long-term assets can be contrasted with current assets, which can be conveniently sold, consumed, used, or exhausted through standard business operations with one year.

Long-term debt is debt that matures in more than one year. Long-term debt can be viewed from two perspectives: financial statement reporting by the issuer and financial investing. In financial statement reporting, companies must record long-term debt issuance and all of its associated payment obligations on its financial statements. On the flip side, investing in long-term debt includes putting money into debt investments with maturities of more than one year.

Long-Term Debt

Long-term debt is debt that matures in more than one year. Long-term debt can be viewed from two perspectives: financial statement reporting by the issuer and financial investing. In financial statement reporting, companies must record long-term debt issuance and all of its associated payment obligations on its financial statements. On the flip side, investing in long-term debt includes putting money into debt investments with maturities of more than one year.

Evergreen Contract

Evergreen Contract refers to a contract that automatically renews itself without a specified end date. Unless one party provides notice of termination within the period stipulated in the contract, the contract remains in effect and renews automatically. These types of contracts are often used in service agreements, lease agreements, or long-term supply agreements, helping to simplify contract management and avoid service interruptions after the contract's expiration.

Evergreen Contract

Evergreen Contract refers to a contract that automatically renews itself without a specified end date. Unless one party provides notice of termination within the period stipulated in the contract, the contract remains in effect and renews automatically. These types of contracts are often used in service agreements, lease agreements, or long-term supply agreements, helping to simplify contract management and avoid service interruptions after the contract's expiration.