Quotas are anticipated to foster domestic producers, hence saving domestic jobs and diminishing the effect of world trade on the environment.
Job Protection: Quotas foster domestic jobs by assuring that to meet the current demand, foreign products cannot be imported in sufficient number. This warrants that domestic companies withhold a percentage of the existing market shares. Retaining domestic companies competitive prevent them from closing plants and draining their work forces.
Government Benefits: Quotas avail the government because domestic enterprises keep the employment of people. This not only abridges the urge for government assistance but it assures that people are able to pay sales, property and income taxes.
Consumer Benefits: Quotas appear to be harming consumers by nurturing higher prices. However, protecting domestic job strengthens the economy by repressing increases in unemployment. Manufacturers still must be prudent not to enlarge their prices so that supply does not exceed demand and quotas in a way help them to compensate for subordinate overhead costs incurred by manufacturers from abroad.
Environmental Benefits: several environmental concerns are raised due to international trade, including pollution resulting from transportation and the over shadiness of natural resources in developing countries. The environment is fostered by quotas by increasing export prices which lessen demand and therefore moderate the need for raw materials either to transport or manufacture goods.
However, quotas require companies, organizations and individuals to accomplish a quantitative goal by a specific time the disadvantages of quotas are numerous.
Production: Although quotas often help maintain companies profitable, they also affect production negatively. When companies set quotas, poor product quality is resulted in as employees endeavor to produce a large number of products as quickly as possible. If the government set the quotas, the number of products produced is often limited. This can decrease the supply, which can heighten prices for consumers.
Import: import quotas are set by the government in an effort to restore domestic production. Although local economies are boosted, it can also have a negative consequence. Companies will sometimes delve to hinder quotas by bribing officials. A widespread corruption is resulted as rapacious companies procure, and smaller companies cannot compete. A black market for products is created due to quotas, as consumers turn to illegal ways of acquiring the goods they desire.
Hiring: When employees are hired in a new company, quotas are usually set. Many people argue that corporations and organizations should delegate a set of people from different population demographics. For example, there should be approximately an equivalent number of men and women in a company. Others dispute that this policy honors people who do not deserve the job. Companies may dominate candidates if they do not fit into one of the demographic quotas. If this occurs, the company's output will be poorer.
Aid: When quotas are set for aid organizations, the quality of the service is neglected as there are a large number of people they must help. Since, these organizations pursue to help a large number of people; they often set quotas for these people. However, if an organization inquires to provide shelter to as many people as possible, the quality of these shelters may be deterred. Often, the only way to encounter this problem is to spend more and increment the quotas.
Bans
The bans are often used to prevent importation of all products that the county is inferred to be capable of producing by oneself. Those secured by the bans argue that the countries' lack of infrastructure, especially energy, means that they cannot be challenged adequately with imports without protection. The import bans enhance the situation of domestic producers since they contract the amount of goods that are available on the official market and hence restrict competition for domestic firms. As a result, prices for these products are greater in the domestic market than they are in the national market. However, this impacted negatively on consumers of these products who have lesser conglomerations to select from and have to pay more. The well-being of consumers is typically not well structured in scrutiny and decisions on trade policy measures. Moreover, import bans augment the input prices to producing industries, including those with the supreme growth and potential of employees. Building materials such as cement, steel, timber and concrete blocks are an example of how trade policy can have a consequence throughout the value chain, as these materials are secured by high tariffs, while structural timber imports are banned. The growth of this industry is fastened by increases in construction costs which have considerable employment potential.
However, bans have negative effects. Import bans strike poor people by raising the cost of living; there is an increasing number of people who live below the poverty line. Many of banned goods are basic products for which there is strong demand from the poor who cannot afford such heightened prices. Licences which are allocated are very opaque and has recently drawn criticism by giving potentially huge earnings to the particular individuals granted licences. Nevertheless, both these approaches for importing banned products involve costs and the demand cannot be met with the level of imports that would be present in the absence of the import bans. When bans are implemented they also entreat switching customs officials distant from routine duties of control at the border to halt smuggling. This has increasing hindrance at ports as endorsement times for regular imports increase, the prices of all imports has also increased. These further increments the charges for consumers and attenuate competitiveness of firms since critical inputs are more exhorbitant and delivery times uncertain.
Standards and Technical Regulations
The use of standards and technical regulations as instruments of commercial policy in unilateral, regional, and global trade contexts has increased as tariff and quota barriers continue to decline Standards and technical regulations are principally used to mitigate food, animal and plant safety risks, and to provide common norms for product characteristics. However, these technical requirements also can constitute barriers to trade by imposing unnecessary costly and time consuming tests or by laying out various requirements in different markets. These technical requirements are of particular concern to developing countries that are seeking to penetrate industrialized country markets.
Pre-shipment Inspection
Pre-Shipment Inspection (PSI) amplifies duty collections. When duty assessments are undertook in the country of export, importers have no room to force customs to assign lower rates. Without PSI, a reduction in revenue collections is observed when Agreement is introduced in countries. PSI assures that the implementation of the Agreement is done as desired by the WTO, and in a way that nurtures duty revenue collections. Trade facilitation: there are two import procedures that can delay trade and they are: inefficient Customs administrations and the failure of importers. Rapid Customs clearance is guaranteed by a pre-shipment certificate, by embarking the necessary physical and documentary inspections before the merchandise is executed. Capital flight in countries is deterred by PSI where inflated terriers are deliberately prevented by the existence of exchange controls. Foreign exchange reserves can be depleted, which can also diminish the taxable income declared by multinational companies. PSI significantly reduces the occurrence of illegal imports, such as radioactive waste, by supervising shipments in the country of export before delivering.
Market Imperfections
Abstracting from outright protectionism, regulations are designed to address market failures and imperfections. We consider three different types: 1) those affecting consumers; 2) those affecting producers; and 3) global commons issues, usually related to the conservation of valuable eco-systems. Many NTMs attempt to remedy external effects. Externalities occur when some agent's utility or production depends on the choices made by other agents, who do not factor these external effects into their decision making. As a consequence, there are costs, or benefits, associated with the externality that fall on some agent but are not reflected in market valuations. It is useful to characterize an externality by its point of impact in order to organize the discussion. When the external cost or benefit arises in consumption it will be referred to as a consumption externality, and similarly for production externalities. As an example, consider harmful chemical residues that arise in production of some food products for which their possible health impact occurs on the consumption side; this type of externality will be referred to as a consumption externality.
Bangladesh
Developing countries need to urgently emphasize on the removal of non-tariff barriers if they want trade and growth to be promoted.
India was demanded to remove para-tariff and non-tariff barriers and enhance Indian investment to Bangladesh to increase the trade between Bangladesh and India. Duty free and quota free market access were provided to Bangladesh. But these were not enough to pick up the benefits of such facility due to NTMs. This is why Bangladesh wants all the barriers to be removed to make import and export easier and also to reduce the trade gaps. Besides, the legalizing of cattle trade in borders was demanded by the former to prevent unexpected incidences by killing the Bangladeshi people.
Thailand
For the last two decades, Thailand's average tariff has been reduced to cope with its export-oriented trade policy. As a result, the rate of protection has been declined in general. Despite tariff rate reduction, a number of peak rate tariff is still applied in a wide range of products; automobile; dairy products (milk powder), etc. to provide protection for domestic (infant) industries. Besides, the tariff quotas are applied in several products such as dairy products. Increasing numbers of SPS and TBT measures along with an increase in varieties of traded products and the number of trading partners involve products imported to Thailand. Subsidies are also applied in several agricultural products under price intervention schemes. Anti dumping applied on Iron steel and stainless steel in Thailand and in 13 other countries and more products are recently been added namely: grass block, citric acid and many others.
Japan
India suggested Japan to remove all non-tariff barriers so that the domestic industry can be advantageous on the comprehensive free-trade agreement and augment its share in the Japanese market. According to the 44th ASEAN meeting, India came up with this suggestion so that the Cepa could shine. The Indian pharmaceutical industry will gain a major thrust with this deal. Apparently the exports from India for generic drugs have increased a great deal, but its share is still 1% of total Japanese pharmaceutical market. As the world's second largest market, Japan has agreed to remove duties on imports of Indian generic drugs. The biggest problems that the Indian companies are facing currently are non-tariff obstructions such as tedious registration process and language communication. Japan imports from India petroleum, gems and jewellery, transport equipment and machinery and exports iron and steel, electronic goods, chemicals and metals. Besides, Europe demanded Japan to remove its notoriously though NTBs such as trade licensing, declarations, inspections, labeling, certification, port clearance and other red-tape. If not, they will put the plug on the negotiations after one year.
