Trq Trade Agreement

The aim of the World Trade Organization (WTO) is to create a level playing field for trade through “pricing.” Each country is free to dictate its import duty for the goods they import, but it must apply it on a lump sum, without it being preferable to a country. Over the past three years, following successful negotiations on new trade agreements, Canada has introduced several new tariff quotas (TRQs) for supply-managed products. However, a QRR is more vulnerable to discrimination, which has been addressed in a number of WTO disputes. [16] A TRQ may be discriminated against if imports are equal to or greater than the quota volume, which means that the price of imports into the import country is higher than that of world traffic plus import duty. Such a price difference is called “quota rental” and the distribution of import duties in the quota can determine not only the volume and distribution of trade, but also the distribution of quota rents. [17] Although GATT regulates only how quota management affects the volume and distribution of trade, the distribution of rents is important, given their influence on trade distribution. [18] In general, management methods that can separate the distribution of rents from that of trade can mitigate the distorting effect of trade. On the other hand, methods that grant quota rents to quota imports are responsible for promoting a unilateral distribution of trade. [19] Such distortion is a consequence of the fact that quota rentals attract suppliers who are otherwise not competitive enough to enter the market. The commercial share is no longer determined by the relative effectiveness of suppliers, but by their access to quota rentals.

[20] A TRQ can influence the import incentive. The effective supply curve of exports to the import market consists of two horizontal lines. The first line represents imports in quotas that range from 0 to Q at a price of 1 t. The other line represents the actual supply of aerthetat imports, which ranges from Q to the infinitely priced 1-T. The impact of a QRR on trade depends on domestic demand for imports. The graph shows four possible demand conditions corresponding to the 1 to 4 demand curves, reflecting the increase in import demand.