Barrier the Non-Tariff Barrier it Term Paper

  • Length: 6 pages
  • Subject: Economics
  • Type: Term Paper
  • Paper: #64735086

Excerpt from Term Paper :

If the quota were to be granted to a domestic resident, then the rent that would be generated would be kept within the domestic economy, and therefore it would be referred to as a 'domestic rent capture barrier'. (Non-tariff Barriers: The Reward of Curtailed Freedom)

However, the fact is that though the rent remains at home, what happens is that an inevitable 'income redistribution effect' takes place. This means that while rent is captured by a very few license holders, the imposition of a tariff would have the benefit of spreading the rent more liberally and equally. The tariff, however, accrues, at the outset, to only one party, the 'fiscus'. The advantage herein is that afterwards, it can be utilized in the various expenditures on public improvement projects that are undertaken by the government, so this means that this rent would benefit a large number of people, and not just a very few exclusive license holders. The holding of the quota is important, however, and cannot be discounted at all. Those individuals who feel that they are close to sources in the government via the means of 'lobbies' and the more dubious means of 'nepotism' would receive the rent, and what this signifies is that the wealth passes from the hands of the government to the hands of the wealthy, and not to the needy, as was its original purpose.

Thus, it can be stated that the quota system is rather disadvantageous in terms of the equal distribution of wealth, and this is despite the fact that it does give the government an innate political advantage of being able to favor its various and numerous supporters at every level. This type of dilemma of income distribution can only be solved by making the government sell the quotas, which would have the desired result of the regaining of control of the rent quotas, and also making available tax revenue under a tariff. In addition, the VER or the 'Voluntary Export Restraint' is actually a quota derivative that demonstrates the fact that the right to quota rent is very often ceded to various suppliers, in a foreign country, and the very transfer of quota rents brings about a welfare loss to the domestic country, and this in turn will result in greater losses. The VER, however, is often described as a 'foreign rent creating barrier'. The GATT can therefore be seen as limiting the policy instruments that are available at large to governments, and there would be innumerable welfare benefits were one to restrict one to the policies described within the GATT. (Non-tariff Barriers: The Reward of Curtailed Freedom)

Tariff negotiations have been going on for more than fifty long years in GATT, and then in the WTO, and these have served to significantly reduce the market access barriers for non-agricultural products. What must be remembered, however, is the fact that process oriented approaches to the problem, like for example, formulas, offers, and requests all apply to several different starting points, and this very principle of making allowances has resulted in the phenomenon of shaping the tariff structures around those members who are heterogeneous. This means that in developed countries, the tariff structures are often quite unjustifiable when other factors such as their own proclamation of liberalization and so on are taken into consideration. (Tariff and Non-Tariff Barriers: EC approach to Market Access for Non-agricultural Products)

At the present time, the European Union and the Mercosur countries are in the midst of the process of negotiating a comprehensive and a complete trade agreement that would include the lowering and the reduction of tariff as well as non-tariff barriers, and this would include all regulations, and these would ultimately serve to decrease the cost of the various European high technology products services, at the expense of the competitiveness of USA in the same regions. It may be true that the entire argument is not yet in place, but the EU has in fact declared that there are a large number of projects in progress right now at the present time, which is financed partly by the European Union, and these projects would hopefully bring the Mercosur countries at par with European standards. The fact that the diffusion of high tech services and products would bring about a great number of benefits to the several different countries and its citizens all over the world must be remembered at this time, and when tariffs and non-tariff barriers are effectively reduced and controlled, then the competitiveness and the productivity of other sectors would be reduced too. Now, non-tariff barriers are becoming front-stage market access concerns, and it is sometimes opined that certain regulatory requirements may end up impeding and obstructing the actual gains that can be achieved from trade liberalization. (AeA Response to U.S. Federal Register Notice (FR Doc. 03-2356) Concerning the Operation and Implementation of the World Trade Organization Agreement on Technical Barriers to Trade)


Blue, Gloria. AeA Response to U.S. Federal Register Notice (FR Doc. 03-2356) Concerning the Operation and Implementation of the World Trade Organization

Agreement on Technical Barriers to Trade. 28 February, 2003. Retrieved From" Accessed on 9 March, 2005

Faehn, Taran. Non-Tariff Barriers -- the Achilles Heel of Trade Policy Analyses. June, 1997. Retrieved at Accessed on 8 March, 2005

Neven, Damien J. Evaluating the Effects of Non-Tariff Barriers: The economic analysis of protection in WTO disputes. University of Lausanne and CEPR. April, 2000. Retrieved at Accessed on 8 March, 2005

Tariff and Non-Tariff Barriers: EC approach to Market Access for Non-agricultural Products. April 2000. Retrieved at Accessed on 8 March, 2005

Zunckel, Hilton. Non-tariff Barriers: The Reward of Curtailed Freedom. TRALAC. 27 February, 2003. Retrieved at on 8 March, 2005

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