Are you an EPFL student looking for a semester project?
Work with us on data science and visualisation projects, and deploy your project as an app on top of GraphSearch.
Concept
Tariff-rate quota
Summary
In economics, a tariff-rate quota (TRQ) (also called a tariff quota) is a two-tiered tariff system that combines import quotas and tariffs to regulate import products.
A TRQ allows a lower tariff rate on imports of a given product within a specified quantity and requires a higher tariff rate on imports exceeding that quantity. For example, a country might allow the importation of 5,000 tractors at a tariff rate of 10%. However, any tractor imported above this quantity would be subject to a tariff rate of 30%.
Unlike a simple quota system, a TRQ regime does not restrict the quantity of imported products. The “in-quota commitment” is complemented by an “out-of-quota commitment”. The out of quota commitment does not set any limit on the quantity or value of a imported product, but instead applies a different, normally higher, tariff rate to that product. Imports face this higher duty rate once the in-quota quantity or value has been reached, or if any requirement associated with the “in-quota commitment” is not fulfilled.
A TRQ is generally used to protect domestic production by restricting imports. Under that regime, the quota component combines with a specified tariff level to provide the desired level of protection. In many cases, imports above the threshold may face a prohibitive “out-of-quota” tariff rate.
The terms tariff quota and tariff-rate quota are used interchangeably in existing literature, but the former term is more legally accurate because it may include specific tariffs, and the latter term excludes them. Tariff quota is also the term officially used in Article XIII of the General Agreement on Tariffs and Trade (GATT).
Customs duties and other charges are explicitly excluded from the scope of quantitative restrictions within the meaning of Article XI of the GATT. Therefore, a TRQ is not a quantitative restriction since the regime subjects imports to varying duties rather than prohibits or restricts the quantity of imports.
There are several dispute settlement rulings regarding the legitimacy of TRQ under WTO law.
Official source
About this result
This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.