Import quota

The import quota, as well as the export quota, refers to one of the non-tariff methods of import restriction and is widely used in economic practice. This indicator also characterizes the importance of importing products for the entire national economy of the country, and for any particular industry. At its core, the import quota is the maximum amount or value of a product that is allowed to be imported into the country for a specific period of time.

When calculating the size of this restrictive measure, certain norms are observed. Thus, the annual value of the import quota should not be less than the average annual value of the volume of goods imported into the country during the previous period. Restrictions on imports in a smaller amount can be established only when such a volume is needed in order to prevent or eliminate the damage to the national economy by too many imported goods.

An import quota can also be established for an individual state. However, the sum of all such protective measures should not exceed the limit value of the annual volume of this protective measure.

Quoting is mainly done through the issuance of licenses. Those firms that obtained licenses to import a specific type of goods for a certain period, can freely engage in import. For the rest of the enterprises, unlicensed trade is prohibited.

The mechanism for the distribution of licenses can be of three types:

• Clear preference. In this case, licenses are granted to the most authoritative enterprises from the point of view of the government.
• Open tender. With this distribution, the state receives revenue from their sale.
• The cost method. Licenses are issued to those firms that have the best production capacity, more qualified personnel and other resources.

The import quota acts like a customs tariff. The difference is that the latter brings additional funds to the state, and the quota partially or completely directs additional income to the pockets of importers. Why does the state then use import quotas? The matter is that this is a more flexible and operative policy tool, since tariffs are regulated by various national laws, as well as international agreements. In addition, the import quota gives a guarantee, as importers can bypass duties through a reduction in the prices of goods. Another advantage is that it has a selective character, that is, it allows supporting specific individual enterprises.

Since the import quota restricts the supply of goods, the adoption of such a measure leads to an increase in prices for the products of the domestic producer. This, in turn, will stimulate local entrepreneurs to develop their businesses and increase the competitiveness of manufactured goods. In the short term, residents of the country are harmed when the government decides to introduce any import quotas. After all, they now have to buy more expensive and, often, less quality domestic products. But in the medium and long term they will benefit, since the protection of national producers will favorably affect the balance of payments, which means that it will allow the government to make social payments, to spend the necessary expenses, not to mention that increasing the competitiveness of goods and protectionism is considered one of the most effective Means to stimulate the economy to growth.

At the same time, we note that the import quota can lead to such negative consequences as monopolization of the economy and increased corruption in government bodies, since the issuance of licenses and the criteria by which they are issued are not always clear and clear.