This article throws light upon the two main types of trade barriers. The types are: 1. Tariff Barriers 2. Non-Tariff Barriers.
Trade Barrier: Type # 1. Tariff Barriers:
These barriers are meant for price protection of the domestic industry.
It is imposed in any of the following three forms or a combination of them:
Ad Valorem Duties:
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It is a customs duty or tax as percentage of value of the goods/services meant for import and/or export.
Direct Duties:
It is a net figure of tax irrespective of value of the goods, it is a flat rate customs duty.
Compounded Duties:
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It is a combination of ad-valorem and direct duties.
Trade Barrier: Type # 2. Non-Tariff Barriers:
These are indirect barriers and numerous in numbers, innovations continue in this direction by interested countries to put hurdles to slow/suspend/restrict imports.
The known such hurdles are:
Quota system or quantitative restrictions (textile quota system imposed on developing countries by the developed countries).
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Voluntary Export Restrictions (VER). Under this system the exporting country puts voluntary export restriction to specific markets for specific products. These restrictions are imposed on countries which are heavily dependent on exports.
Japan stands out as the pillar of example, during the eighties the USA and EU put up resistance to Japanese exports of automobiles, steel, chemicals etc. forcing Japan to opt for voluntary export restriction to these markets.
The system worked well till the time Japanese devised ways to bypass these self-imposed restrictions, they started putting up production units in or near to the destination markets. Examples: Automobile plants in Mexico for entry in to USA using NAFTA channels.
Antidumping Duties:
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These refer to special import restriction tariffs imposed by the country on specific imports if it feels the exporting country is exporting at less than fair price, or at a price much lower than what it is charging in the home country. The World Trade Organization (and also ITC) has provisions for listing investigation on this account and has well laid out procedure.
Most of the cases under this category were filed by USA and EC against Japan and other exporting countries. In India there has been cases against Koreans for Hot Rolled Coils, PTA against Japan, and Magnesium against China. India too has faced restriction under this provision when USA clamped antidumping duties against Indian exporters of stainless steel coils and steel wire rope.
Govt, subsidies, local content restrictions, technical standards, health regulations, environmental protection conditions, labeling & packaging, quality standards, child labour conditions, process usage conditions, lengthy documentation, non-transparent bureaucratic procedures, religious and/or cultural conditions or restrictions etc.
The subsidies, import quotas, export restrictions, restrictive standards, customs valuation system, lengthy and voluminous paper work to discourage foreigners to enter the home market, un-necessary governmental clearances and licenses, specific labeling standards etc.
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Direct restrictions are easy to detect and challenge under specific forum of WTO, but non-tariff barriers are difficult proposition and takes lengthy time and money to prove and get redressal.