Import Quotas, Product Standards and Subsidies

Import Quotas, Product Standards and Subsidies

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Import Quotas - Import quotas refer to the non-tariff barriers that restrict the number of goods that can be imported over a predetermined time frame. The restriction of an exporter's supply of a particular product to an importer is the goal of quotas. Typically, this is a less drastic measure that only has a small impact on prices and raises demand for domestic businesses to make up the shortfall. Additionally, quotas can be implemented to prevent dumping, which occurs when foreign producers export goods at prices that are lower than the costs of production. The most severe type of quota is an embargo, which prohibits all imports of specific goods.

Product Standards - When enacting product standards, product safety and low-quality products or materials are typically the top concerns. Product standard protectionism can stifle imports by relying on a nation's internal controls. In the areas of material production, intellectual property enforcement, or food preparation, some nations may have lower regulatory standards. This could result in a standard requirement for a product or a restriction on certain imports as a result of regulatory enforcement. In general, increasing domestic production can frequently result from import restrictions enforced through product standards. Consider French cheeses made with raw milk instead of pasteurized milk, which must be aged for at least 60 days before being imported into the United States. Because the process of making many French cheeses typically requires aging for 50 days or less, some of the most well-known French cheeses cannot be imported into the United States, giving American producers an advantage.

Subsidies - Subsidies from the Government can Take Various Forms They can typically be either direct or indirect. Cash payments are made to businesses through direct subsidies. Special savings, such as interest-free loans and tax breaks, constitute indirect subsidies. Government officials may choose to offer direct or indirect subsidies in a variety of areas, including property, employment, taxation, production, and other areas. Subsidies for exports can also be offered to businesses in an effort to improve a nation's trade balance. Export subsidies encourage domestic businesses to increase international exports as a means of global expansion.