Tariff, Quotas, Non-Tariff Barrier in International Marketing

Verified

Added on  2023/01/10

|6
|1092
|61
AI Summary
This document discusses the concepts of Tariffs, Quotas, and Non-Tariff Barriers in International Marketing. It explains how these trade restrictions are imposed by governments to limit imports and protect domestic industries. The document provides examples and discusses the impact of these barriers on trade and the economy.

Contribute Materials

Your contribution can guide someone’s learning journey. Share your documents today.
Document Page
Running head: INTERNATIONAL MARKETING
International Marketing
3/31/2019

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
INTERNATIONAL MARKETING 1
Tariff
Tariffs are imposed by the government of all the nations to restrict the level of imports by
augmenting the services and goods prices bought from an international supplier and reflecting
them as very less attractive to the customers (Nunn & Trefler, 2010). For instance, major
tariffs in the United States are imposed on industrial goods, like 30-50% of tariff is imposed
on washing machines and solar panels (United States Trade Representative, 2019).
Quotas
The quota is imposed by the government of the country as a restriction on the trade that
works as the limitation on the goods or service monetary value that can be imported or
exported by a nation in specific time duration. The example of Quota:
Document Page
INTERNATIONAL MARKETING 2
Source [(United States Department of Agriculture, 2016)]
Non-Tariff Barrier
A non-tariff barrier is one of the ways that is used to limit the trade by using trade barrier in a
type other than a tariff. Non-Tariff includes levies, embargoes, quotas, and sanctions. For
instance, according to Reuters, there is a round of UN sanctions in contradiction of North
Korea and Kim Jong Un regime adopted in 2017 in the month of December. The sanctions
were introduced in order to cut down exports of diesel, gasoline, and different products
manufactured through refined oil to the country, and banned the Industrial equipment,
machinery vehicle, and industrial metals, to North Korea (Reuters, 2017).
The government of the nation places restrictions on the trade of goods and services, to
support the local industries in their development stages. Governments also limit trade to raise
business at domestic level in place of inspiring businesses to shift out of the nation. These
protective strategies work towards maintaining the high prices which support domestic
businesses to develop (International Trade, 2019).
NAFTA
North American Free Trade Agreement worked towards eliminating a number of tariffs from
the trade between the US, Canada, and Mexico, which introduced in the year 1994. A number
of tariffs, specifically linked to textiles, automobiles, and agriculture, were progressively
phased out in the time duration of 1994 and 2008. With the introduction of NAFTA, a debate
was continuously related to the impact of this agreement on the signatory nations. From its
initial phase, the agreement resulted in the relocation of the U.S jobs to Mexico, in spite of its
supplementary NAALC (Amadeo, 2019). NAFTA influenced a number of auto workers in
Document Page
INTERNATIONAL MARKETING 3
the United States. For instance, numerous businesses shifted their manufacturing units to
different countries like Mexico that have lower labor costs.
Trump announced in a campaign to revoke NAFTA and different agreements of trade which
he feels to be unfair with the US. In 2018, he declared a new trade deal with Mexico in order
to replace NAFTA. The U.S.-Mexico Trade Agreement, uphold access free duty for the
goods of the agricultural sector of both the countries and eradicate NTBs by inspiring
increased agricultural trade between both the nations (Amadeo, 2019).
CAFTA
The Central American-Dominican Republic Free Trade Agreement is established between the
US and the other six nations of the Central American zone. It is said to be the very first
multifaceted free trade agreement among different nations like the US and small emerging
nations. The agreement was signed in 2004 (Amadeo, 2018).
CAFTA has one of the largest markets of export of America which is placed in Latin
America, after Brazil and Mexico. The number of product’s exports of U.S was benefited
from this agreement like textiles, paper, plastic, and petroleum products along with the motor
vehicle, electronic products, medical equipment, and machinery manufacturing. In addition,
the growers of corn, rice, cotton, and wheat have also experienced improved exports.
However, CAFTA has a number of the same undermining influence on the nations of Central
America that NAFTA did in Mexico. It is just because the agribusiness of the United States is
supported and subsidized by the country’s federal government (Amadeo, 2018).

Secure Best Marks with AI Grader

Need help grading? Try our AI Grader for instant feedback on your assignments.
Document Page
INTERNATIONAL MARKETING 4
SAFTA
SAFTA also was known as the South Asian Free Trade Agreement was framed in 2004, in
the month of January at the 12th SAARC summit took place in Pakistan. The agreement
predicts the formation of a free trade area model in the member nations. The seven-member
nations are comprised of Nepal, Bangladesh, India, Maldives, Afghanistan, Sri Lanka, and Sri
Lanka (Economy Watch, 2010).
The agreement was established with the motive of charging zero customs duty for the
products trading by 2012. The agreement executed after the validation received from the
member countries. The reason for the establishment of this agreement was that many of the
nations of South Asia placed major priority over import activities in place of moving or
encouraging export activities. This inclination dropped productivity in diverse economic
segments.
Document Page
INTERNATIONAL MARKETING 5
References
Amadeo, K. (2018). CAFTA Explained, With Its Pros and Cons. Retrieved from
https://www.thebalance.com/what-is-cafta-3305580
Amadeo, K. (2019). Six Problems With NAFTA. Retrieved from
https://www.thebalance.com/disadvantages-of-nafta-3306273
Economy Watch. (2010). SAFTA. Retrieved from http://www.economywatch.com/country-
grouping/safta.html
International Trade. (2019). Trade and the Country. Retrieved from
https://www.sparknotes.com/economics/macro/trade/section4/
Nunn, N., & Trefler, D. (2010). The Structure of Tariffs and Long-Term Growth. American
Economic Journal: Macroeconomics, 2(4), 158-149.
Reuters. (2017). U.N. Security Council imposes new sanctions on North Korea over missile
test. Retrieved from https://www.reuters.com/article/us-northkorea-missiles/u-n-
security-council-imposes-new-sanctions-on-north-korea-over-missile-test-
idUSKBN1EG0HV
United States Department of Agriculture. (2016). A Review of U.S. Tariff Rate Quotas for
Beef Imports. Retrieved from https://www.fas.usda.gov/data/review-us-tariff-rate-
quotas-beef-imports
United States Trade Representative. (2019). Industrial Tariffs. Retrieved from
https://ustr.gov/issue-areas/industry-manufacturing/industrial-tariffs
1 out of 6
circle_padding
hide_on_mobile
zoom_out_icon
[object Object]

Your All-in-One AI-Powered Toolkit for Academic Success.

Available 24*7 on WhatsApp / Email

[object Object]