Thursday, June 2, 2011

Import Quotas Types defination

The system of import quotas may be classified into five major groups: (1) the tariff or custom quota (2)the unilateral quota, (3) the bilateral quota (4) the mixing quota and (5) import licensing.

The tariff quota

The tariff or custom quota is a widely acclaimed measure. Under this system, imports of a commodity upto a specified quantity are allowed to be imported duty-free or at a special low rate of duty. But imports in excess of this fixed limit are changed a higher rate of duty. The tariff quota thus combines the features of a tariff with those of quota flexibility is another advantage of this system.

However, the system has the following drawbacks:

(i) When imports tend to bemire than the fixed limit assigned under low duty rate the entire gains from the low rate are shared by the exporting country.and it is the part of the economics Homework help

(ii) It brings a rush of imports in the beginning of each new tariff quota, which may disturb domestic price levels of the importing country.

The unilateral quota

Under this system a county places an absolute limit on the importation of a commodity during a given period. It is imposed without prior negotiation with foreign governments.

The quota so fixed may be either global or allocated. Under a global quota, the commodity can be imported from any country upto the full amount of the quota under an allocated quota system; however, the total of the quota is distributed among specified supplying countries.

The bilateral quota

Under this system quotas are set through negotiation between the importing county and the exporting country (or foreign export groups) it has the following merits:

(i) Quotas are decided by mutual agreement.

(ii) It minimises the suspicion in imports;

(iii) It avoids excessive fluctuation in imports;

(iv) It excludes export monopolies by agreement

The mixing quota

It is type of regulation which requires producers to utilize a certain proportion of domestic raw materials along with imported parts to produce finished goods domestically. It thus sets limits on the proportion of foreign made raw materials to be (imported and) used in domestic production. In Brazil, for instance there is a stipulation that a certain percentage of bread weight must consist of domestic mandioca flour.you can find online tutoring

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