1、Unit 10Text:Nontariff Barriers（非关税壁垒）1.Key words2.Definition of nontariff barriers to trade3.The import quotas4.Voluntary export restraints(VERs)5.Product standards6.Domestic content requirements7.Government procurement provisions8.European border taxes9.Administrative classification10.Restrictions
2、on services trade11.Trade-related investment measures12.Additional restrictions13.Additional domestic policies that affect trade14.Questionsnontariff barriers(NTBs)import quotatake bribesvoluntary export restraints(VERs)rear-guard actionmachine tooldomestic content requirementsmixing requirementgove
3、rnment procurement provisionsthe European Communitypublic utilitiesad valorem tariff European Border Taxesvalue-added tax(VAT)personal income taxon an equal footingadministrative classificationcomparative advantagetrade related investment measures(TRIMs)performance requirements trade-related intelle
4、ctual property rights(TRIPs)Besides the use of tariffs to distort the free-trade allocation of resources,government policymakers have become very adept at using other,less visible,forms of trade barriers.These are usually called nontariff barriers(NTBs)to trade.3.1 Definition of import quotas3.2 Rea
5、sons for import quotasThe import quota is a limit on the total quantity of imports allowed into a country each year.One way or another,the government gives out a limited number of licenses to import items legally and prohibits importing without a license.As long as the quantity of licensed imports i
6、s less than the quantity that people would want to import without the quota,the quota not only cuts the quantity imported but also drives the domestic price of the good up above the world price at which the license holders buy the good abroad.The first is as insurance against further increases in im
7、port competition(protectionist insurance)and import spending(balance-of-payment insurance).Quotas are also chosen in part because they give government officials greater administrative flexibility and power in dealing with domestic firms.The voluntary export restraints(VERs)are arrangements by which
8、the government of an importing country coerces foreign exporters to agree“voluntarily”to restrict their exports into that country.VERs are used by large,powerful countries as a rear-guard action to protect their industries that are having trouble competing against a rising tide of imports.Restrictiv
9、e laws and regulations pertaining to product quality are usually enforced in the name of health,sanitation,safety,and the environment.Such standards can be noble efforts to enhance societys well-being,and they need not discriminate against imports.But,if a government is determined to protect local p
10、roducers,it can always write rules that can be met only by local products.Quality standards do not raise tariff or tax revenues for the importing countrys government.On the contrary,enforcing these rules with border inspections uses up government resources.From the viewpoint of the world as a whole,
11、the quality standards may bring a gain to the extent that they truly protect health and safety.Yet it is easy for governments to disguise costly protectionism in virtuous clothing.Domestic content requirements mandate that a product assembled or produced in the country must have a specified amount o
12、f domestic value,in the form of wages paid to local workers or materials and components sourced from domestic producers.Domestic content requirements thus limit the import of materials and components that otherwise would have been used in making the product.A closely related NTB,sometimes called a m
13、ixing requirement,stipulates that an importer must buy a certain percentage of the product locally.Like quality standards,domestic content and mixing requirements do not generate any tariff or tax revenue for the government.The gains on the implicit price markups are captured by the protected home-c
14、ountry sellers of the protected products.The world as a whole suffers the usual deadweight loss because the local products are either less desired or more costly to produce.In general,these provisions restrict the purchasing of foreign products by home government agencies.For example,the“Buy America
15、n”Act stipulated that federal government agencies must purchase from home U.S.firms unless the firms product price was more than 6 percent above the foreign suppliers price.This figure was 12 percent for some Department of Defense purchases,and,for a time a 50 percent figure was used.8.1 Value-added
16、 tax8.2 Border taxThe value-added tax(VAT)common in Western Europe is what economists call an“indirect”tax.With the value-added tax,any firm that works on components at any stage of the production process,adds value to them,and then sells them in a more finished form,must pay a tax on the value adde
17、d.This tax is passed on to the buyer of the more finished good.Ultimately,the final price to the consumer incorporates the accumulation of valueadded taxes paid through the production process.Under WTO rules,any import coming into the country must pay the equivalent tax since it too is destined for
18、consumption,and both goods will then be on an equal footing.To U.S.firms trying to sell to Europe,this border tax that matches the value-added tax looks suspiciously like a tariff,even though it is not labeled as such.Because tariffs on goods coming into a country differ by type of good,the actual t
19、ax charged can vary according to the category into which a good is classified.There is some leeway for customs officials.Many nontariff regulations restrict services trade.For example,foreign insurance companies may be restricted in the types of policies they can sell in a home country,foreign ships
20、 may be barred from carrying cargo between purely domestic ports(as is the case in the United States),landing rights for foreign aircraft may be limited,and developing countries may reserve data processing services for their own firms.These restrictions are less visible or transparent than many rest
21、rictions on goods.However,since services are growing in world trade,restrictions on them are becoming more serious as sources of departure from comparative advantage.Trade related investment measures(TRIMs)consist of various policy steps of a trade nature that are associated with foreign investment
22、activity within a country.Examples would be“performance requirements,”whereby the foreign investor must export a certain percentage of output(and thus earn foreign exchange for the host country),and requirements mandating that a specified percentage of inputs into the foreign investors final product
23、 be of domestic origin.Developing countries facing a need to conserve on scarce foreign exchange reserves may resort to generalized exchange control.In the extreme,exporters in the developing countries are required to sell their foreign exchange earnings to the central bank,which in turn parcels out
24、 the foreign exchange to importers on the basis of the“essentiality”of the import purchases.Thus,free importation cannot take place because foreign exchange is rationed.This form of restriction can result in a severe distortion of imports from the free trade pattern.Advance deposit requirements are
25、sometimes used by developing countries.In this situation,a license to import is awarded only if the importing firm deposits funds with the government equal to a specified percentage of the value of the future import.Governments require that all products,foreign and domestic,meet certain packaging an
26、d labeling requirements.Inconsistent treatment of intellectual property rights(through patents,copyrights,etc.)across countries can distort international trade flows.Subsidies to domestic firms also have direct implications for trade.Although a particular subsidy may not be intended to affect trade,
27、a subsidy that reduces a firms cost may stimulate exports.Similarly,government-provided managerial assistance,retraining programs,R&D financing,investment tax credits or special tax benefits to domestic firms that are producing traded goods can have a direct impact on relative cost competitiveness a
28、nd international trade.In addition,spillovers from government-financed defense,space,and nonmilitary expenditures can influence the international competitiveness of affected firms by their impact on relative costs or product characteristics.The effect of such government programs or policies on trade
29、 flows will be even greater when such programs of policies allow firms to experience economies of scale and be even more cost-competitive.(1)Why do you suppose that there has been such a proliferation of differentinstruments of protection?(2)What are import quotas?Why do many governments use them in
30、stead of just using tariffs to restrict imports by the same amounts?(3)What is voluntary export restraint(VER)?Why do many governments force foreign exporters into them instead of just using quotas or tariffs to restrict imports by the same amounts?(4)Define each of the following import policies,and describe its likely effects on the welfare of the importing country as a whole:(a)product standards and(b)domestic content requirements.
