Measures of non-tariff regulation of foreign trade activity. Classification of non-tariff measures

Each state seeks to develop national industry. But how is this best done? The dispute between advocates of protectionism and free trade has not stopped for many centuries. In different time periods the leading states tended to one side or the other. There are two ways to control export-import flows: customs duties and measures of non-tariff regulation. The latter will be discussed in the article.

Classification of non-tariff measures

National trade policy can be protectionist, moderate or open (free). This division into groups is relatively relative, but it greatly helps in the analysis. To determine the rigidity of trade policy, not only duties and quotas are taken into account, but also measures of non-tariff regulation introduced by the country. And the latter are much harder to notice and appreciate, so they are so popular today. The following measures of non-tariff regulation are distinguished:

1. Quantitative. This group includes importation (quoting) of imports, licensing of incoming and outgoing commodity flows and so-called "voluntary" export restrictions.
2. Hidden measures of non-tariff regulation. This group includes public procurement, presentation of requirements for the content of local components, the introduction of technical barriers, taxes and fees. Hidden measures of non-tariff regulation are aimed at import regulation.
3. Financial. This group includes subsidizing, lending to national producers and dumping. Financial methods serve to regulate exports.

This concludes with the economic measures of non-tariff regulation. Separately, it is necessary to distinguish legal instruments that are closely related to international trade.

Measurement of non-tariff methods

The quantitative, hidden, and financial constraints are poorly valued, so they are often poorly represented in statistical data. However, several indices are usually used to measure non-tariff methods. Among the most famous:

• Frequency index. It shows how much of the commodity items are covered by non-tariff measures. The advantage of this indicator is the possibility of assessing the level of restrictions using it. However, it will not allow to measure the relative importance of the measures applied and their impact on the economy.
• Trade coverage index. This indicator characterizes the cost share of exports and imports, which are subject to non-tariff restrictions. Its downside is that it usually underestimates the impact of intensive non-tariff barriers.
• Price impact index. This indicator shows how the introduced non-tariff measures affect the economy. It characterizes the ratio of world and domestic prices of goods. The downside of this index is that it does not take into account the fact that market value is affected not only by the introduction of non-tariff measures, but also by many other factors.

The most common methods

Direct quantitative restrictions are the administrative form of non-tariff regulation of trade flows by the state, which determines the number of goods allowed for export or import. It must be understood that the imposed quota becomes a restriction only when it is reached. Tariff is always valid. Often, governments give preference to quotas. This is due to the fact that it is much easier to immediately establish a threshold volume than to calculate which tariff will lead to the export or import of this necessary quantity of goods. Quantitative restrictions can be imposed both by the decision of the government of one country, and on the basis of international agreements that regulate the trade in certain products. These include quotas, licensing and "voluntary" export restrictions.

Quoting

Methods from the first subgroup are used most often. The quota and contingent are synonymous terms. The only difference is that the second one has a shade of seasonality. A quota is a quantitative non-tariff measure that involves restricting imports or exports to a certain volume (amount). It is superimposed on a certain amount of time. On the basis of the quota are export and import. The former are usually introduced in accordance with international agreements or with a deficit in the domestic market. The imports are aimed at protecting the national producer and maintaining a positive trade balance. In terms of coverage, global and individual quotas are allocated. The former are imposed on the export or import of a certain commodity, and its origin is not taken into account. Individual quotas are superimposed within the global and specify the country.

Licensing

This kind of quantitative restrictions is closely related to quotas. Licensing involves the issuance by the government of special permits for the export or import of a certain number of goods. This procedure can be performed both separately and within the quota. There are several types of licenses:

• One-time. It involves permission for one transaction, which is valid for not more than a year.
• General license. This permission is without the number of transactions, but which is valid for not more than a year.
• Automatic license. It issues promptly, and the application can not be rejected by the state authorities.

Voluntary restrictions on export flows

Large states have many levers of pressure on weaker countries. "Voluntary" export restriction is one of them. A weak country introduces it to its own detriment, in fact defending the national producer of a large state. Its effect is similar to import quotas. The difference is that one state imposes a restriction on another.

Hidden methods of protectionism

There are a huge number of measures that can be attributed to this group. Among them there are:

• Technical barriers. They are administrative rules and regulations that are designed to prevent the importation of foreign goods.
• Taxes and fees in the domestic market. They are aimed at increasing the price of a foreign product in order to reduce its competitiveness.
• Policy of public procurement. This type of hidden mechanisms of non-tariff regulation presupposes the establishment of obligations to purchase certain goods manufactured in the national market.
• Requirements for the content of local components. They assume the establishment of a share of the final product for sale in the domestic market of the country, which must be manufactured by national producers.

Financial arrangements

This group of methods is aimed at increasing exports. Financial mechanisms help in lowering the price of goods, which increases its competitiveness in the world market. In response to them, special anti-dumping and countervailing customs duties are introduced. The following financial methods are distinguished:

• Subsidies.
• Crediting.
• Dumping.

The latter type implies a reduction in export prices due to the resources of firms with the aim of promoting goods to the foreign market. Anti-dumping measures are used to combat such non-tariff policy. They represent a temporary fee, which is aimed at covering the difference between an understated price and a normal one. Anti-dumping measures neutralize the negative consequences of unfair competition.