Import Quotas PDF

Import quotas What is an import quota? A quota is a physical limit on New Zealand is allowed to the quantity of goods imported import up to 230,000 tons of or exported for example only sheep and goat meat a year to 10,000 units a year the EU Imposing a limit o...

Import quotas What is an import quota? A quota is a physical limit on New Zealand is allowed to the quantity of goods imported import up to 230,000 tons of or exported for example only sheep and goat meat a year to 10,000 units a year the EU Imposing a limit on the quantity of goods that are imported will increase the share of the market available for domestic products (made in the home country) Why are quotas imposed? When an import quota is set, it allows a country to be sure of the amount of the good imported from the foreign country When there is a tariff, if the supply curve of the foreign country is unknown, the quantity of the good imported may not be predictable, quotas are predictable because the actual amount is known Benefits of import quotas Import quotas are imposed to: A. Protect jobs of domestic producers B. Act as a bargaining chip to be used in negotiations on trade C. Protect strategic industries such as defence and agriculture. In market environments where imports are on the rise, quotas are more protective than tariffs. Drawbacks of quotas When one country uses quotas, its trading partners do the same and the end result is is fewer exporting opportunities for all producers and higher prices for all consumers Quotas are also complex for the country using them. They require a lot of paperwork indicating the exact amounts of products for each country facing a quota It is also difficult to measure the precise degree of protection quotas offer