Tariff Rate Quota
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A Tariff Rate Quota is a two-tier trade instrument that is a quantity-based tariff system that can balance market access with domestic protection.
- AKA: TRQ, Tariff Quota, Two-Tier Tariff System, In-Quota/Out-of-Quota System.
- Context:
- It can typically permit Low-Duty Imports through in-quota volume.
- It can typically impose High-Duty Rates through out-of-quota tariff.
- It can typically protect Sensitive Sectors through import volume control.
- It can typically stabilize Domestic Prices through supply management.
- It can typically allocate Import Licenses through distribution mechanism.
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- It can often create Quota Rents through license value.
- It can often generate Administrative Challenges through allocation system.
- It can often encourage Rent-Seeking Behaviors through license competition.
- It can often distort Trade Patterns through timing manipulation.
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- It can range from being a Small Volume TRQ to being a Large Volume TRQ, depending on its quota size relative to consumption.
- It can range from being a Country-Specific TRQ to being a Global TRQ, depending on its allocation method.
- It can range from being a Transparent TRQ to being an Opaque TRQ, depending on its administration clarity.
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- It can interface with WTO Commitments for market access obligation.
- It can coordinate with Agricultural Policys for farm income support.
- It can influence Import Timings for seasonal adjustment.
- It can affect Market Competitions for import license holder.
- It can shape Price Formations for domestic market.
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- Example(s):
- Agricultural TRQs, such as:
- Dairy Product TRQ for milk and cheese import.
- Sugar TRQ for raw and refined sugar.
- Beef TRQ for meat import management.
- Industrial TRQs, such as:
- Country-Allocated TRQs, such as:
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- Agricultural TRQs, such as:
- Counter-Example(s):
- Simple Tariff, which lacks quantity differentiation.
- Absolute Quota, which prohibits over-quota imports entirely.
- Variable Levy, which adjusts rates based on price rather than quantity.
- See: Import Quota, Agricultural Trade Policy, Market Access, WTO Agriculture Agreement, License Allocation System, Trade Remedy, Price Stabilization, Quota Administration.