Question

Explain how a TRQ works in international trade law.

Answer 1

TRQ refers to the Tariff Rate Quota.

It is works in an international trade as:

• It allows a set quantity of specific products to be imported at a low or zero rate of duty. TRQs are established under trade agreements between countries in international trade.

• An important aspect of TRQ is that the quota component works together with a specified tariff level in order to provide the desired degree of import protection.

• Imports entering within the quota portion of a TRQ are subject to a lower tariff rate called the tariff quota rate or TRQ rate

• The limited volumes of sensitive products can enter the market at a low tariff, whereas the tariff outside the TRQ quantity is kept high to offer a degree of protection to the domestic producers.

• Most importantly the TRQs are a compromise. On one side, they protect domestic producers from having to face competition from large quantities of imports. While on the opposite, they allow consumers and producers in the importing country to enjoy benefits, albeit a limited one, of lower priced products.

• The TRQs have now become a way of reaching a consensus with the trading partners in order to sign up trade deals.