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International Trade Barriers by the learners
Imam Ali as
• Atta Hussain Syed 2k14/com/26
• Sanjay Kumar 2k14/com/93
• Ameer Hyder Memon 2k14/com/15
• Saddam Hussain Mengal 2k14/com/166
• Mian Iqrar Ahmed Soomro 2k14/com/126
International Trade Barriers by the learners
• Introduction to Trade
• Introduction to barrier
• Objectives of Trade Barrier
• Types of Trade Barriers
• Classification of Tariff Barriers
• Types of Non-Tariff Barriers
2k14-com-166
• What is trade?
• Trade is voluntary and non-fraudulent, exchange of
goods and services among people and countries.
• When trade occur between nations or cross border it is
called International Trade.
• When nothing hinders or gets in the way from two
nations trading with each other it termed as free trade
• The Barrier is any hurdle which creates resistance. Or a
structure or object that blocks free movement. simply it
is Hinderance in the flow of something.
• A trade barrier is defined as “any hurdle, obstacle or road
block that hampers the smooth flow of goods, services
and payments from one destination to another”.
• To protect domestic industries from foreign goods.
• To promote new industries and research and development activities by
providing a home market for domestic industries.
• To maintain favorable balance of payment, by restricting imports from
foreign countries.
• To conserve foreign exchange reserves of the country by restricting imports
from foreign countries.
• To protect the national economy from dumping by other countries with
surplus production.
• To mobilize additional revenue by imposing heavy duties on imports.
• This also restricts conspicuous consumption within the country.
• To counteract trade barriers imposed by other countries.
• To encourage domestic production in the domestic market and thereby make
the country strong and self-sufficient.
2k14-com-15
International Trade Barriers by the learners
Trade Barriers
Tariff
Barriers
Non-Tariff
Barriers
On the Bases of
Origin
1. Export Duty
2. Import Duty
3. Transit Duty
On the Basis of
Quantification
1. Specific Duty
2. Ad-Valorem Duty
3. Compound Duty
On the Basis of
purpose
1. Revenue Tariff
2. Protective Tariff
3. Anti Dumping
4. Counter-veiling
On the basis of
relations
1. Single Column
2. Double Column
3. Triple Column
• A tariff barrier is a levy collected on goods when they
enter a domestic tariff area (DTA) through customs. Tariff
refers to the duties imposed on internationally traded
commodities when they cross national boundaries.
• Governments impose tariffs only on imports and not on
exports as they are interested in export promotion. Only a
few exported items of any country are taxed
• Tariff collected by Pakistan government about Rupees 19
billion (2016-17).*1
• 1. Export Duty; An export duty is a tax levied by the
country of origin, on a commodity designated for use in
other countries.
• Export Duty levied on Primary products such as mineral
and agricultural products. Several resource-rich countries
depend upon export duties for much of their revenue.
• Export duties were first introduced in England by a statute
of 1275 that imposed them on hides and wool.
• In Pakistan export duty is not levied. *2
• 2. Import duty: An import duty is a tax imposed on a
commodity originating in another country by the country
for which the product is designated. The purpose of heavy
import duties is to earn revenue, to make imports costly
and to provide protection to domestic industries.
• The government has imposed regulatory duty on import
of 36 new products and raised its rates on the existing
240 items. *3
• 3. Transit duty: A transit duty is a tax imposed on a
commodity when it crosses the national frontier between
the originating country and the country which it is
cosigned to.
• 1. Single column tariff: A uniform rate of duty is imposed
on all similar commodities irrespective of the country from
which they are imported, also known as uni-linear
tariff provides a uniform rate of duty for all like commodities
without making any discrimination between countries.
• A set import duty paid on a specific item received from any
country or from any member country of a certain
international agreements.
• Example: NAFTA, WTO etc.
• 2. Double column tariff: Under this system two rates of duty are
fixed on all or some commodities. The lower rate is made applicable
to a friendly country or to a country with which the importing
country has a bilateral trade agreement. The higher rate is applicable
to all other countries.
• 3. Triple column tariff: Here, three different rates of duties are
fixed. They are general tariff, international tariff and preferential
tariff. The first two categories have minimum variance but the
preferential tariff is substantially lower than the general tariff and is
applicable to friendly countries where there is a bilateral relationship.
2k14-com-93
• Specific duty: A specific duty is a flat sum collected on
physical unit of the commodity imported. Here, the rate of the
duty is fixed and is collected on each unit imported.
• A specific rate duty is a tariff levied on imports, defined in
terms of a specific amount per unit, such weight, length or
number of units.
• For example, Rs. 800 on each TV set or washing machine or
Rs. 3000 per metric ton on cold rolled steel coils
• 2. Ad-valorem duty: (Latin for "according to value")
This duty is imposed at a fixed percentage on the value of
a commodity imported. Here the value of the commodity
on the invoice is taken as the base for calculation of the
duty.
• Example; Federal Government is pleased to levy
regulatory duty at the rate of twenty five percent ad-
valorem on the import of ware potato. (2009)
• 3. Compound duty: A tax placed on imported items, the
amount of which is based upon two types of duties: a
percentage of the value of the goods (called an ad valorem
duty ) and a specific tax per unit (called a specific duty) of the
goods (weight, numbers).
• The sum of these customs taxes is referred to as a compound
duty.
• An example will assist in understanding: Country A assesses a
compound duty on imports of car batteries. The duty consists
of 10 percent of the value plus $1.00 per battery.
• 1.Revenue tariff: tariff imposed principally to raise
government revenue rather than to protect domestic
industries.
• It aims at collecting substantial revenue for the government,
but does not really obstruct the flow of imported goods.
Here, the duty is imposed on items of mass consumption, but
the rate of duty is low.
• An example*4 of a revenue tariff in a business is the tax
applied to all imported oil in the United States.
• 2. Protective tariff: taxes, duties or other road blocks
(generally monetary fees) placed on foreign goods by a
national or state government in order to protect domestic
products and markets.
• This system is design to encourage consumers to purchase
more domestic products.
• This protective tariff is economical unethical in the eyes of
capitalist or free market forces.
• Protective tariff tries to ban imports to stop them competing
with local products
• 3. Anti-dumping duty: is a protectionist tariff that a domestic
government imposes on foreign imports that it believes are priced
below fair market value.
• Example: *5 In June 2015, American steel companies US Steel
Corp., Nucor Corp., Steel Dynamics Inc., ArcelorMittal USA, AK Steel
Corp. and California Steel Industries filed a complaint with the
Department of Commerce and the ITC alleging that China (and other
countries) were dumping steel on the U.S. market and keeping prices
unfairly low. A year later, the United States, after a review and much
public debate, announced that it would be imposing a 500% import
duty on certain steel imported from China.
• 4. Countervailing duty: Such duties are similar to anti-
dumping duties but are not so severe. Countervailing duties
are imposed to nullify the benefits offered, through cash
assistance or subsidies, by the foreign country to its
manufacturers. The rate of such duty will be proportional to
the extent of cash assistance or subsidy granted.
• Duties that are imposed in order to counter the negative
impact of import subsidies to protect domestic producers are
called countervailing duties.
Trade Barriers
Tariff
Barriers
Non-Tariff
Barriers
1. Quota
2. Licensing
3. Consular formalities
4. Trade blocs
5. Customs Regulations
6. State Trading
7. Forex Regulations
8. Health & Safety
• A non-tariff barrier is any barrier other than a tariff that
rises and obstacle to free flow of goods in overseas
markets
• Non-tariff barriers, do not affect the price of imported
goods but only the quantity (supply) of imports
• However, the net effects of tariffs and non-tariff barriers
are more or less the same. The impact of non-tariff
barriers is more direct and faster.
• 1. Quota: limits quantity of imported goods. For sake to
protect native industry.
• WTO prohibits.
• The quantity allowed to be imported or quota fixed
normally depends upon the relations of the two countries
and the need of the importing country.
• A permit has to be obtained from the Government to
import the goods mentioning the quantity and the
country from which to import.
• 2. Import Licensing: Import licensing is an alternative to
the quota system. In this system, imports are allowed
under license. Importers have to approach the licensing
authorities for permission to import certain commodities.
Import licensing may be used separately or along with the
quota system.
2k14-com-26
• 3. Consular formalities: Large number of countries
demands that shipping documents must accompany the
consular documents such as:
(a) Certificate of origin,
(b)Certified invoices,
(c) Import certificates etc.
• 4. Preferential treatment through trading blocs:
countries form regional groups and offer special
concessions and preference to member countries. As a
result, trade is developed among the member countries,
as a trading bloc acts as a trade barrier.
• Example: NAFTA, SAFTA, SAARAC etc.
• 5. Customs regulations: Customs regulations and
administrative regulations are very complicated in many
countries. There are a number of ‘Commodities Act,’
pertaining to the movement of drugs, medicines,
minerals, bullion etc. Restrictions under such acts are
useful to curtail imports. Tax administration also acts as
barrier to free marketing amongst countries.
• 6. State trading: State trading refers to import-export
activities conducted by the government or a government
agency. Stat trading is useful to restrict imports, as the final
decision is taken by the government. Such state trading acts
as a barrier, restricting the freedom of private parties.
• Example: In India some articles decided by the government
is imported only through the State Trading Corporation (STC).
Export of raw materials such as iron ore, mica are handled by
MMTC (Minerals and Metals Trading Corporation).
• 7. Foreign exchange regulations:
• Under this system the importer must be sure that adequate
foreign exchange would be made available for the imports of
goods by obtaining a clearance from the exchange control
authorities of the country before concluding the contract with
the supplier.
• Such restrictions have the following objectives.
• To restrict the demand for foreign exchange and to use the
foreign exchange reserves in the best possible manner.
• The government provides foreign exchange to the
businessmen as per priorities that are fixed periodically.
• 8.Health and safety measures: Many countries have
specific rules regarding health and safety regulations, which
are mainly applicable to raw materials and food items.
Imports are not allowed if the regulations are not followed
properly.
• Example: Article 20 of the General Agreement on Tariffs
and Trade (GATT) allows governments to act on trade in
order to protect human, animal or plant life or health,
provided they do not discriminate or use this as disguised
protectionism.
• 9. Miscellaneous non-tariff barriers: Such barriers
include;
• Prior import deposits,
• embargoes and
• All such measures act as non-tariff barriers as they restrict
the free flow of goods and services between countries.
International Trade Barriers by the learners
• *1, https://timesofislamabad.com/budget-2017-18-new-
taxes-worth-rs-120-billion-imposed-by-
government/2017/05/27/
• *2https://en.wikipedia.org/wiki/List_of_tariffs_in_Pakistan#Exp
ort_duty
• *3 https://www.dawn.com/news/1364509
• *4 http://www.businessdictionary.com/definition/revenue-
tariff.html
• *5 https://www.investopedia.com/terms/a/anti-dumping-
duty.asp
International Trade Barriers by the learners

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International Trade Barriers by the learners

  • 3. • Atta Hussain Syed 2k14/com/26 • Sanjay Kumar 2k14/com/93 • Ameer Hyder Memon 2k14/com/15 • Saddam Hussain Mengal 2k14/com/166 • Mian Iqrar Ahmed Soomro 2k14/com/126
  • 5. • Introduction to Trade • Introduction to barrier • Objectives of Trade Barrier • Types of Trade Barriers • Classification of Tariff Barriers • Types of Non-Tariff Barriers
  • 7. • What is trade? • Trade is voluntary and non-fraudulent, exchange of goods and services among people and countries. • When trade occur between nations or cross border it is called International Trade. • When nothing hinders or gets in the way from two nations trading with each other it termed as free trade
  • 8. • The Barrier is any hurdle which creates resistance. Or a structure or object that blocks free movement. simply it is Hinderance in the flow of something. • A trade barrier is defined as “any hurdle, obstacle or road block that hampers the smooth flow of goods, services and payments from one destination to another”.
  • 9. • To protect domestic industries from foreign goods. • To promote new industries and research and development activities by providing a home market for domestic industries. • To maintain favorable balance of payment, by restricting imports from foreign countries. • To conserve foreign exchange reserves of the country by restricting imports from foreign countries. • To protect the national economy from dumping by other countries with surplus production. • To mobilize additional revenue by imposing heavy duties on imports. • This also restricts conspicuous consumption within the country. • To counteract trade barriers imposed by other countries. • To encourage domestic production in the domestic market and thereby make the country strong and self-sufficient.
  • 12. Trade Barriers Tariff Barriers Non-Tariff Barriers On the Bases of Origin 1. Export Duty 2. Import Duty 3. Transit Duty On the Basis of Quantification 1. Specific Duty 2. Ad-Valorem Duty 3. Compound Duty On the Basis of purpose 1. Revenue Tariff 2. Protective Tariff 3. Anti Dumping 4. Counter-veiling On the basis of relations 1. Single Column 2. Double Column 3. Triple Column
  • 13. • A tariff barrier is a levy collected on goods when they enter a domestic tariff area (DTA) through customs. Tariff refers to the duties imposed on internationally traded commodities when they cross national boundaries. • Governments impose tariffs only on imports and not on exports as they are interested in export promotion. Only a few exported items of any country are taxed • Tariff collected by Pakistan government about Rupees 19 billion (2016-17).*1
  • 14. • 1. Export Duty; An export duty is a tax levied by the country of origin, on a commodity designated for use in other countries. • Export Duty levied on Primary products such as mineral and agricultural products. Several resource-rich countries depend upon export duties for much of their revenue. • Export duties were first introduced in England by a statute of 1275 that imposed them on hides and wool. • In Pakistan export duty is not levied. *2
  • 15. • 2. Import duty: An import duty is a tax imposed on a commodity originating in another country by the country for which the product is designated. The purpose of heavy import duties is to earn revenue, to make imports costly and to provide protection to domestic industries. • The government has imposed regulatory duty on import of 36 new products and raised its rates on the existing 240 items. *3
  • 16. • 3. Transit duty: A transit duty is a tax imposed on a commodity when it crosses the national frontier between the originating country and the country which it is cosigned to.
  • 17. • 1. Single column tariff: A uniform rate of duty is imposed on all similar commodities irrespective of the country from which they are imported, also known as uni-linear tariff provides a uniform rate of duty for all like commodities without making any discrimination between countries. • A set import duty paid on a specific item received from any country or from any member country of a certain international agreements. • Example: NAFTA, WTO etc.
  • 18. • 2. Double column tariff: Under this system two rates of duty are fixed on all or some commodities. The lower rate is made applicable to a friendly country or to a country with which the importing country has a bilateral trade agreement. The higher rate is applicable to all other countries. • 3. Triple column tariff: Here, three different rates of duties are fixed. They are general tariff, international tariff and preferential tariff. The first two categories have minimum variance but the preferential tariff is substantially lower than the general tariff and is applicable to friendly countries where there is a bilateral relationship.
  • 20. • Specific duty: A specific duty is a flat sum collected on physical unit of the commodity imported. Here, the rate of the duty is fixed and is collected on each unit imported. • A specific rate duty is a tariff levied on imports, defined in terms of a specific amount per unit, such weight, length or number of units. • For example, Rs. 800 on each TV set or washing machine or Rs. 3000 per metric ton on cold rolled steel coils
  • 21. • 2. Ad-valorem duty: (Latin for "according to value") This duty is imposed at a fixed percentage on the value of a commodity imported. Here the value of the commodity on the invoice is taken as the base for calculation of the duty. • Example; Federal Government is pleased to levy regulatory duty at the rate of twenty five percent ad- valorem on the import of ware potato. (2009)
  • 22. • 3. Compound duty: A tax placed on imported items, the amount of which is based upon two types of duties: a percentage of the value of the goods (called an ad valorem duty ) and a specific tax per unit (called a specific duty) of the goods (weight, numbers). • The sum of these customs taxes is referred to as a compound duty. • An example will assist in understanding: Country A assesses a compound duty on imports of car batteries. The duty consists of 10 percent of the value plus $1.00 per battery.
  • 23. • 1.Revenue tariff: tariff imposed principally to raise government revenue rather than to protect domestic industries. • It aims at collecting substantial revenue for the government, but does not really obstruct the flow of imported goods. Here, the duty is imposed on items of mass consumption, but the rate of duty is low. • An example*4 of a revenue tariff in a business is the tax applied to all imported oil in the United States.
  • 24. • 2. Protective tariff: taxes, duties or other road blocks (generally monetary fees) placed on foreign goods by a national or state government in order to protect domestic products and markets. • This system is design to encourage consumers to purchase more domestic products. • This protective tariff is economical unethical in the eyes of capitalist or free market forces. • Protective tariff tries to ban imports to stop them competing with local products
  • 25. • 3. Anti-dumping duty: is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. • Example: *5 In June 2015, American steel companies US Steel Corp., Nucor Corp., Steel Dynamics Inc., ArcelorMittal USA, AK Steel Corp. and California Steel Industries filed a complaint with the Department of Commerce and the ITC alleging that China (and other countries) were dumping steel on the U.S. market and keeping prices unfairly low. A year later, the United States, after a review and much public debate, announced that it would be imposing a 500% import duty on certain steel imported from China.
  • 26. • 4. Countervailing duty: Such duties are similar to anti- dumping duties but are not so severe. Countervailing duties are imposed to nullify the benefits offered, through cash assistance or subsidies, by the foreign country to its manufacturers. The rate of such duty will be proportional to the extent of cash assistance or subsidy granted. • Duties that are imposed in order to counter the negative impact of import subsidies to protect domestic producers are called countervailing duties.
  • 27. Trade Barriers Tariff Barriers Non-Tariff Barriers 1. Quota 2. Licensing 3. Consular formalities 4. Trade blocs 5. Customs Regulations 6. State Trading 7. Forex Regulations 8. Health & Safety
  • 28. • A non-tariff barrier is any barrier other than a tariff that rises and obstacle to free flow of goods in overseas markets • Non-tariff barriers, do not affect the price of imported goods but only the quantity (supply) of imports • However, the net effects of tariffs and non-tariff barriers are more or less the same. The impact of non-tariff barriers is more direct and faster.
  • 29. • 1. Quota: limits quantity of imported goods. For sake to protect native industry. • WTO prohibits. • The quantity allowed to be imported or quota fixed normally depends upon the relations of the two countries and the need of the importing country. • A permit has to be obtained from the Government to import the goods mentioning the quantity and the country from which to import.
  • 30. • 2. Import Licensing: Import licensing is an alternative to the quota system. In this system, imports are allowed under license. Importers have to approach the licensing authorities for permission to import certain commodities. Import licensing may be used separately or along with the quota system.
  • 32. • 3. Consular formalities: Large number of countries demands that shipping documents must accompany the consular documents such as: (a) Certificate of origin, (b)Certified invoices, (c) Import certificates etc.
  • 33. • 4. Preferential treatment through trading blocs: countries form regional groups and offer special concessions and preference to member countries. As a result, trade is developed among the member countries, as a trading bloc acts as a trade barrier. • Example: NAFTA, SAFTA, SAARAC etc.
  • 34. • 5. Customs regulations: Customs regulations and administrative regulations are very complicated in many countries. There are a number of ‘Commodities Act,’ pertaining to the movement of drugs, medicines, minerals, bullion etc. Restrictions under such acts are useful to curtail imports. Tax administration also acts as barrier to free marketing amongst countries.
  • 35. • 6. State trading: State trading refers to import-export activities conducted by the government or a government agency. Stat trading is useful to restrict imports, as the final decision is taken by the government. Such state trading acts as a barrier, restricting the freedom of private parties. • Example: In India some articles decided by the government is imported only through the State Trading Corporation (STC). Export of raw materials such as iron ore, mica are handled by MMTC (Minerals and Metals Trading Corporation).
  • 36. • 7. Foreign exchange regulations: • Under this system the importer must be sure that adequate foreign exchange would be made available for the imports of goods by obtaining a clearance from the exchange control authorities of the country before concluding the contract with the supplier. • Such restrictions have the following objectives. • To restrict the demand for foreign exchange and to use the foreign exchange reserves in the best possible manner. • The government provides foreign exchange to the businessmen as per priorities that are fixed periodically.
  • 37. • 8.Health and safety measures: Many countries have specific rules regarding health and safety regulations, which are mainly applicable to raw materials and food items. Imports are not allowed if the regulations are not followed properly. • Example: Article 20 of the General Agreement on Tariffs and Trade (GATT) allows governments to act on trade in order to protect human, animal or plant life or health, provided they do not discriminate or use this as disguised protectionism.
  • 38. • 9. Miscellaneous non-tariff barriers: Such barriers include; • Prior import deposits, • embargoes and • All such measures act as non-tariff barriers as they restrict the free flow of goods and services between countries.
  • 40. • *1, https://timesofislamabad.com/budget-2017-18-new- taxes-worth-rs-120-billion-imposed-by- government/2017/05/27/ • *2https://en.wikipedia.org/wiki/List_of_tariffs_in_Pakistan#Exp ort_duty • *3 https://www.dawn.com/news/1364509 • *4 http://www.businessdictionary.com/definition/revenue- tariff.html • *5 https://www.investopedia.com/terms/a/anti-dumping- duty.asp

Editor's Notes

  1. Trade Barrier is hurdle in flow of trade, they arise from the rules, regulations which governs trade from home country of host country or intermediary country. Trade barriers are man-made obstacles to the free movement of goods between different countries, and impose artificial restrictions on trading activities between countries.
  2. Mutual understanding of products and tariffs is concluded through a cartel. It is also called preferential tariff.
  3. Ware Potatoes is a term mostly used within the potato industry.
  4. tariff for the purpose of producing public revenue
  5. Dumping, in reference to international trade, is the export by a country or company of a product at a price that is lower in the foreign market than the price charged in the domestic market. ITC- International Trade Centre
  6. Import subsidies consist of subsidies on goods and services that become payable to resident producers when the goods cross the frontier of the economic territory or when the services are delivered to resident institutional units.  Anti-dumping duties are for combating “dumping” Countervailing duties seek to counteract artificially low prices that are a result of subsidies.
  7. Tariffs restrict imports indirectly while quotas restrict imports directly. Developing countries may use quotas in place of tariffs. . Tariff quota: A tariff quota combines the features of the tariff as well as the quantity. Here, the imports of a commodity up to a specified volume are allowed duty free or at a special low rate of duty. Imports in excess of this limit are subject to a higher rate of duty. Example of Quota Germany has imported 2 million tons of steel from France every year for the past decade. Germany then started an import quota on steel. Germany now only imports around 1 million tons of steel from France, but the country of Germany still uses around 3 tons of steel a year. Unilateral quota: In a unilateral quota system, a country fixes its own ceiling on the import of a particular item. Bilateral quota: In a bilateral quota, the quantity to be imported is decided in advance, but it is the result of negotiations between the country importing the goods and the country exporting them.   Mixing quota: Under a mixing quota, the producers are obliged to utilize a certain percentage of domestic raw material in manufacturing the finished products.
  8. An import license is a document issued by a national government authorizing the importation of certain goods into its territory.
  9.  Import Procedures Notes forums, part of the Resolve Your Query - Get Help and discuss Projects category; CONSULAR FORMALITIES Consular formalities are one type of non tariff barrier on trade, particularly imports. Some importing country imports strict ... Sometimes, it is also insisted that such documents should be drawn in the language of importing countries. In case the documentation is faculty and is not drawn in the language of the importing country heavy penalties are imposed. Fees charged for such documentation are quite heavy. Consular سفارتی having to do with a consul or his office or duties , or ambassador who representative of his country in another country
  10. Some countries form regional groups and offer special concessions and preference to member countries. As a result, trade is developed among the member countries and allows advantages to all member countries. On the other hand, it can cause a considerable loss to non-member countries, as a trading bloc acts as a trade barrier. Even trade agreements and joint commissions are used as trade barriers as they restrict free movement of goods at the international level.
  11. In socialistic countries import and export transactions are handled by certain State Agencies. These agencies carry international trade strictly according to Government Policies. In India some articles decided by the government is imported only through the State Trading Corporation (STC). Export of raw materials such as iron ore, mica are handled by MMTC (Minerals and Metals Trading Corporation).
  12. Under this system the importer must be sure that adequate foreign exchange would be made available for the imports of goods by obtaining a clearance from the exchange control authorities of the country before concluding the contract with the supplier. Foreign exchange regulations: Countries impose various restrictions on the use of the foreign exchange earned through exports. Such restrictions have the following objectives.  To restrict the demand for foreign exchange and to use the foreign exchange reserves in the best possible manner. To check the flow of capital. To maintain the value of exchange rates. Under such regulations the foreign exchange earned should be surrendered to the government. The government provides foreign exchange to the businessmen as per priorities that are fixed periodically.
  13. To protect the health and safety of people, animals, and plants; to protect or improve the environment Licensing, packaging, and labeling requirements; sanitary (hygienic) and phytosanitary (Phytosanitary certification is used to attest that consignments meet phytosanitary(regarding plants) import requirements and is undertaken by an NPPO (National Plant Protection Organization). (SPS) rules; food, plant and animal inspections; import bans based on objectionable fishing or harvesting methods
  14. Definition: A trade embargo is a governmental order to restrict trade of certain goods or all goods entirely with a foreign country. This typically stems from political differences between the two nations or economic circumstances that make commercial trade undesirable. Since Japan wants to support its domestic production of food, it decides to charge tariffs on the US imports to level the playing field for domestic agriculture. The US considers the tariffs and finds the rate increase unjustified. Even after rounds of discussions, the two countries are not able to reach a trade agreement. This situation may result in a full embargo where the US stops exporting food to Japan in hopes that Japan will reconsider its tariff rate.