Quota
Candlefocus EditorQuotas are a type of non-tariff barrier that limit the volume of goods imported or exported and come in three different forms. The most restrictive form, absolute quotas, limit the total number of goods that can be imported in a given period of time. Tariff-rate quotas are slightly less restrictive as they allow an increase in imports when the tariff rate reaches a certain level. The least restrictive type, tariff-preference level, is often seen in preferential trading arrangements between countries and allows goods from certain countries to receive a reduced tariff rate or be exempt from tariffs entirely.
Countries use quotas for multiple reasons. Quotas may be put in place to protect the domestic market from an influx of cheap foreign goods, to reduce trade tensions between two or more countries, ensure a fair share of global goods, or simply to increase the competitiveness of domestic producers. Moreover, certain goods and services may be considered of strategic or cultural importance and therefore need to be closely regulated.
Quotas are often considered a form of protectionism, which is the practice of shielding certain sectors or industries of the economy from competition. Critics of the practice argue that tariffs and quotas are generally detrimental to economic growth by limiting the availability of cheaper imports and discouraging innovations to reduce costs. Nevertheless, quotas can play an important role in managing international trade, protecting domestic industries, and creating a level playing field.