Nontariff Barrier

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Definition of 'Nontariff Barrier'

A nontariff barrier (NTB) is a government regulation or policy that restricts international trade, but does not involve a tariff. NTBs can take many forms, such as quotas, import licenses, and technical standards.

Nontariff barriers are often used to protect domestic industries from foreign competition. For example, a country might impose a quota on the number of imported cars, or require that imported cars meet certain safety standards that are more stringent than those in the exporting country.

Nontariff barriers can have a significant impact on international trade. They can raise the cost of imported goods, making them less competitive with domestic goods. They can also make it more difficult for foreign companies to enter the domestic market.

Nontariff barriers are often criticized for being protectionist. They can prevent consumers from getting the best possible prices for goods and services, and they can stifle innovation. However, NTBs can also be used to protect legitimate public interests, such as public health and safety.

The World Trade Organization (WTO) prohibits NTBs that are discriminatory or that are designed to protect domestic industries. However, the WTO does allow NTBs that are necessary to protect public health or safety.

Nontariff barriers can be difficult to negotiate. They are often complex and technical, and they can have a significant impact on the economy. As a result, NTBs are often a source of tension between trading partners.

Despite the challenges, NTBs can be reduced through trade negotiations. The WTO has been successful in reducing NTBs in some sectors, such as agriculture and textiles. However, there is still much work to be done.

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