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Difference between Tariff and Non-Tariff Barriers

Difference between Tariff and Non-Tariff Barriers | Barriers to international trade

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Difference between Tariff and Non-Tariff Barriers

Tariff barrier is a kind of barrier to trade between certain countries or geographical areas which takes the form of abnormally high taxes levied by a government on imports or occasionally exports for purposes of protection, support of the balance of payments, or the raising of revenue.Non-Tariff Barriers(NTBs) refer to restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products difficult and/or costly.

NTBs arise from different measures taken by governments and authorities in the form of government laws, regulations, policies, conditions, restrictions or specific requirements, and private sector business practices, or prohibitions that protect the domestic industries from foreign competition.Trade economics is a concept involving the buying and selling of goods and services, with compensation paid by a buyer to a seller, or the exchange of goods or services between parties.

Some of the major differences between tariff and non tariff barriers are as follows:


Difference between Tariff and Non-Tariff Barriers 
Basis

Tariff Barriers

Non Tariff Barriers 
Definition Tariff barriers refer to duties and taxes imposed by the government on the goods imported from abroad.  Non tariff barriers are various quantitative and exchange control restrictions imposed in order to restrict imports. 
Types Tariff barriers examples include import duties, specific duties, and valor-em duties protective duties, etc. Non tariff barriers examples includes import licensing , import quota, consular formalities,etc.
Effectiveness Tariff barriers are not very effective as they arise the price but the effect on demand may be limited. Non tariff barriers are more effective as they restrict imports within the required limits.
Flexibility Tariffs are not flexible. They can be imposed quickly but it is difficult to remove due to the opposition of powerful vested interests. Non tariff barriers tend to be more flexible more easily imposed and more easily remove.
Effect on import Tariff barriers restrict imports indirectly. Non tariff barriers restrict imports directly.
Revenue With tariff barriers the Government receives huge revenue. With non tariff barriers the Government receives no revenue.
Monopoly formation Tariff barriers do not facilitate the formation of monopolistic group of production.  Non tariff barriers encourage the formation of the monopolistic group of procedures for their benefit.
Effect on Price  In tariff barrier price differentiation will be equal to the cost of tariff and transportation between exporting and importing countries. In non-tariff barrier the price differences will be greater in two countries because there is no free flow of imports.
Operation Tariffs are simple to operate. Tariff rates once fixed through legislation require no individual allocation of licensing quotas or exchange. For non-tariff measures numbers of authorities are there to administer. It may result in political interference or corruption.
Time for effect  Changes in tariff are quick and give immediate effect in terms of import reduction. Non tariff barriers take longer time for introduction of changes as compared to tariff.

 

 

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