Receiving an import license or even an exchange permit however, is not a guarantee that a seller can exchange local currency for the currency of he seller. If local currency is in short supply – a chronic problem in some countries – other means of acquiring home country are necessary. For example, in a transaction between the government of Colombia and a US truck manufacturer there was a scarcity of US currency to exchange for the 1,000 vehicles Colombia wanted to purchase. The problem was solved through a series of exchanges Colombia has surplus of coffee that the truck manufacturer accepted and traded in Europe for sugar, the sugar was traded for pig iron, and finally the pig was traded for US dollars.
This somewhat complicated but effective counter trade transaction is not uncommon. Counter trade deals are often if the inability to convert local currency into home country currency or of the refusal of a government to issue foreign exchange.
Countries may also impose limitations on the quality of certain goods imported during a specific period. These quotas may be applied to imports from specific countries or form all foreign sources in general. The United States for example has specific quotas for importing sugar, wheat, cotton, tobacco textiles and peanuts. In the case of some of these items the amount imported from specific countries is also limited. The most important reasons to set quotas are to protect domestic industry and to conserve foreign exchange. Some importing countries also set quotas to ensure an equitable distribution of a major among friendly countries.
As a means of regulating the flow of exchange and the quantity of a particular imported commodity, countries often require import licenses. The fundamental difference between quotas and import licenses as a means of controlling imports is the greater flexibility of import licenses over quotas. Quotas permit importing until the quota is filled; licensing limits quantities on a case by case basis.
Like many non tariff barriers, standard have legitimacy. Health standards, safety standards and product quality standards are necessary to protect the consuming public, and imported goods are required to comply with local laws. Unfortunately standards can also be used to slow down or restrict the procedures for importing to the point that the additional time and cost required to comply become in effect trade restrictions.
Safety standards are a good example. Most countries have safety standards for electrical appliances and require that imported electrical products meet local standards. However, safety standards can be escalated to the level of an absolute trade barrier by manipulating the procedures used to determine of products meet the standards. The simplest process is for the importing to accept the safety standard verification used by the exporting country, such as Underwriters Laboratories (UL) in the United States. If the product is certified for sale in the United States and if US standards are the same as the importing country’s then US standards and certification are accepted and no further testing s necessary. Most countries not interested in using standards as a trade barrier follow such a practice.
The extreme situation occurs when the importing nation does not accept the same certification procedure required by the exporting nation and demands all testing be done in the importing country. Even more restrictive is the requirement that each item be tested instead of accepting batch testing. In this case the effect is the same as a boycott. Until recently, Japan required all electrical consumer products to be tested in Japan or tested in the United States by Japanese officials Japan now accepts the UL’s safety tests except for medical supplies and agricultural products, which must be tested in Japan.