5_Trade Barriers

1. Developed countries are expected to give more

2. Developing countries are not required to offer the same level of concessions in return. → This is called "relative reciprocity"

Swiss formula (Doha Round)

• A way to reduce customs duties (import taxes).

• It says: → Higher tariffs must be cut more deeply than lower ones. → This makes trade fairer by reducing protectionism where it is strongest.

• Classification -> by Harmonized System

• Valuation -> primary basis: transaction value (the price actually paid/payable – normally on invoice/contract/purchase order)

• Origin of the Good

What is Quota Rent?

A quota is a limit on the amount of a product that can be imported into a country. When a quota is set, the supply is artificially restricted, but demand stays the same. As a result, the price of the imported product increases.

The importers who are allowed to bring in the limited quantity can now sell at higher prices than under normal market conditions. The extra profit they earn due to the higher price — caused by the quota — is called a quota rent.

Example:

Let’s say cheese from France normally costs €5 per kilo. If Austria sets a quota and allows only a small amount of French cheese to enter, but many people still want to buy it → the price might go up to €8. Importers make more money just because the quota exists. That extra profit is the quota rent.

Balance of payment is summary of a country’s economy’s transactions with the rest of the world for a specified time period

Balance-of-payments (BoP) problems happen when a country spends more money abroad than it earns — for example, by importing more than it exports. This can cause a shortage of foreign currency, making it hard to pay for important imports like fuel or food. BoP problems can lead to economic trouble, such as rising debt, currency devaluation, or needing help from international organizations like the IMF.

Art XI Exceptions Art XI:2

• (temporarily) to relieve critical shortages (a)

• restrictions necessary to apply certain commodity or quality standards (b)

• balance-of-payments problems (Art XII and XVII

enquiry points = Informations-/Anlaufstellen

• How is the service at hand being supplied in a given market?

• Whosupplies this service?

• Howdoes the measure at hand affect the supply of the services