Tariff Rate Quota

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.
  • ...
  • 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.
  • ...
  • 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.
  • ...
  • 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.
  • ...
• 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:
    • Steel Product TRQ for market stabilization.
    • Textile TRQ for apparel import control.
    • Chemical TRQ for specialty product.
  • Country-Allocated TRQs, such as:
    • EU Agricultural TRQ with country-specific shares.
    • U.S. Sugar TRQ with historical allocation.
    • Japan Rice TRQ for minimum access.
  • ...
• 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.

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