The import quota, as well as the export one, refers to one of the non-tariff methods of restricting imports and is widely used in economic practice. This indicator also characterizes the degree of importance of import of products both for the entire national economy of the country and for any particular industry. At its core, an import quota is the maximum volume or value of a product that is allowed to be imported into a country over a specific period of time.
When calculating the size of this restrictive measure, certain rules are observed. So, the annual value of the import quota should not be less than the average annual value of the volume of goods imported into the country during the previous period. Restrictions on imports in a smaller amount can be established only when exactly such a volume is needed in order to prevent or eliminate the damage caused to the national economy by too many imported goods.
An import quota may also be established for a particular state. However, the sum of all such protective measures shall not exceed the limit value of the annual volume of this protective measure.
Quotations are mainly carried out through the issuance of licenses. Those firms that have received licenses to import a particular type of product for a certain period are free to import. For the rest of the enterprises, unlicensed trade is prohibited.
The mechanism for distributing licenses can be of three types:
- Clear preference. In this case, licenses are granted to the most authoritative enterprises from the point of view of the government.
- Open competition. With this distribution, the state receives income from their sale.
- Costly method. Licenses are issued to those companies that have better production facilities, more qualified personnel and other resources.
The import quota acts like a customs tariff. The difference is that the latter brings additional funds to the state, and the quota partially or fully directs additional income into the pockets of importers. Why then does the state use import quotas? The fact is that this is a more flexible and operational policy tool, since tariffs are regulated by various national laws, as well as international agreements. In addition, the import quota provides a guarantee, since import suppliers can circumvent duties through lower prices for goods. Another plus of it is that it is selective, that is, it allows you to support individual specific enterprises.
Since the import quota limits the supply of goods, the adoption of such a measure leads to an increase in prices for products of domestic producers. This, in turn, will stimulate local entrepreneurs to develop their business and increase the competitiveness of goods produced. In the short term, residents suffer damage when the government decides to introduce any import quotas. After all, they now have to buy more expensive and often less quality domestic goods. But in the medium and long term they will benefit, since the protection of national producers will favorably affect the balance of payments, which means that it will allow the government to make social payments and make necessary expenses, not to mention the fact that improving the competitiveness of goods and protectionism policy is considered one of the most effective means of stimulating the economy to growth.
At the same time, we note that the import quota can lead to such negative consequences as the monopolization of the economy and increased corruption in government, since the issuance of licenses and the criteria by which they are issued are not always clear and clear.