Question

With the establishment of the World Trade Organization (WTO) in 1995 (previously General Agreement on Tariffs and Trade (GATT)) tariffs applied by many countries have been significantly reduced. Nevertheless businesses do still face problem because of the mushrooming of Non-Tariff Measures. discuss

Answer 1

Tariffs are taxes on imports imposed as a trade protectionism measure . But there are certain non-tariff measures also . As for example strict quality control measures , import quotas , unreasonable restrictions on labeling packaging etc , minimum price support on imported goods , restrictive trade licensing etc . These are not taxes or duty on imported goods but are other measures to curb imports and protect domestic industries . Non-tariff measures are many in number and can be applied indirectly . Let us take a practical example that a highly developed country restricts goods to be imported from such countries who do not follow standard labor laws or do not have developed working conditions . This in a way hampers trade and growth of less developed countries since some less developed countries use cheap labor as a measure of comparative advantage and seek gains from trade . But developed countries which have stringent labor laws and high wages , protect their own jobs and industries by such non-tariff measures .