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Flashcards in Chapter 5: Non Tariff Barriers Deck (38)
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Absolute quota

A physical restriction on the quantity of goods that can be imported during a specific time period.


Antidumping duty

A duty levied against commodities a home nation believes are being dumped into its markets from abroad.


Buy national policies

When a home nation's government, through explicit laws, openly discriminates against foreign suppliers in its purchasing decisions


Corporate average fuel economy (CAFE) standards

Fuel economy standards imposed by the U.S. government on automobile manufacturers.

- Social Regulation


Cost-based definition of dumping

When a foreign company sells a product in the U.S. market at a price below average total cost.


Domestic content requirements

Requirements that stipulate the minimum percentage of a product's total value that must be produced domestically if the product is to qualify for zero tariff rates.


Domestic production subsidy

A subsidy that is sometimes granted to producers of import-competing goods.



When foreign buyers are charged lower prices than domestic buyers for an identical product after allowing for transportation costs and tariff duties.


Export quotas

Limitations on export sales administered by one or more exporting nations or industries.


Export subsidy

A subsidy paid to exporters so they can sell goods abroad at the lower world price but still receive the higher support price.


Global quota

A technique permitting a specified number of goods to be imported each year, but does not specify where the product is shipped from or who is permitted to import.


Import license

Used to administer an import quota; a license specifying the volume of imports allowed.


License on demand allocation

A system in which licenses are required to import at the within-quota tariff.


Margin of dumping

The amount the domestic price of a firm's product exceeds its foreign price, or the amount the foreign price of a firm's product is less than the cost of producing it.


Nontariff trade barriers (NTBs)

Policies other than tariffs that restrict international trade.


Persistent dumping

When a producer consistently sells products abroad at lower prices than at home.


Predatory dumping

When a producer temporarily reduces the prices charged abroad to drive foreign competitors out of business.


Price-based definition of dumping

When a foreign company sells a product in the U.S. market at a price below that for which the same product sells in the home market.


Selective quota

An import quota allocated to specific countries.


Social regulation

Governmental attempts to correct a variety of undesirable side effects in an economy that relate to health, safety, and the environment.


Sporadic dumping

When a firm disposes of excess inventories on foreign markets by selling abroad at lower prices than at home.



Granted by governments to domestic producers to improve their trade competitiveness; include outright cash disbursements, tax concessions, insurance arrangements, and loans at below-market interest rates.


Tariff-rate quota

A device that allows a specified number of goods to be imported at one tariff rate (the within-quota rate), and any imports above that specified number to be imported at a higher tariff rate (the over-quota rate).


What happens to imports in excess of a specified quota?

1. Held for the opening of the next quota period by placing them in a bonded warehouse or foreign trade zone
2. Exported or destroyed under supervision of the government's customs department


What are the cons of global quota?

1. Rush of both domestic importers and foreign exporters to get their goods shipped into the country before the quota is filled
2. Accusations of favoritism


How may quotas lead to a domestic monopoly of production and higher prices?

A domestic firm realizes that foreign producers cannot surpass their quotas, it may raise its prices.


With an import quota, an increase in demand induces an _______ in product price, _______ in production, and _______ in consumption of the import-competing good

Increase, rise, and fall


Which is less restrictive? Import tariff or import quota?

Import tariff


Why is a tariff less restrictive s compared to a quota?

1. A tariff increases the domestic price, but it cannot limit the number of goods that can be imported into a country
2. Tariffs allow for some degree of competition.
3. Tariffs generate revenue for the government


What is the effect of the tariff-rate quota on domestic product prices?

Increases price in the domestic market