Non-tariff barriers of this category include standards to protect health, safety, and product quality. The standards are sometimes used in an unduly stringent or discriminating way to restrict trade, but the sheer volume of regulations in this category is a problem in itself. A fruit content regulation for jam varies so much from country to country that one agricultural specialist says, a jam exporter needs a computer to avoid one or another country’s regulations. Different standards are one of the major disagreements between the United States and Japan. The size of Knotholes in plywood shipped to Japan can determine whether or not the shipment is accepted; if a knothole is too large, the shipment is rejected because quality standards are not met.
The United States and other countries require some products (automobiles in particular) to contain a percentage of local content to gain admission to their markets. The North American Free Trade Agreement (NAFTA) stipulates that all automobiles coming from member countries must have at least 62.5 percent North American content to deter foreign car makers for using one member nation as the back door to another.
Trade restrictions abound, and the United States is among the governments applying them. According to one source approximately 45 percent of US manufactured imports are subjects to some form of non-tariff barrier. For more than a decade, US government officials have arranged voluntary agreements with the Japanese steel and automobile industries to limit sales to the United States. Similar negotiations with the governments off major textile producers have limited textile imports into the United States. While countries create barriers to trade, they appreciate the growing interdependence of the world’s economies and thus strive to lower barriers in a controlled and equitable manner. The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) have their goals as the elimination of trade barriers.
Historically tariffs and non-tariffs trade barriers have impeded free trade, but over the years they have been eliminated or lowered through the efforts of GATT and WTO. Now there is a new non-tariff barrier; antidumping laws that have emerged as a way of keeping foreign goods out of a market. Anti dumping laws were designed to prevent foreign producers from predatory pricing a practice where by a foreign producer would intentionally sell its products in the United States for less than the cost of production in order to undermine the competition and take control of the market. This was intended as a kind of antitrust law for international trade. Violators are assessed “antidumping” duties for selling below cost and / or imposed countervailing duties or loading to prevent the use of foreign government subsidies to undermine American industry. Many countries have similar laws, and they are allowed under WTO rules.
Recent years have seen a staggering increase in antidumping cases in the United States. In one year, 12 US steel manufacturers launched anti dumping cases against 82 foreign steel makers in 30 countries. Many economists felt that these antidumping charges were unnecessary because of the number of companies and countries involved; supply and demand could have been left to sort out the best producers and prices. And, of course, targeted countries have complained as well. Nevertheless, antidumping cases are becoming de facto trade barriers. The investigations are very costly, they take a long time to resolve, and until they are resolved they effectively limit trade. Further the threat of being hit by an antidumping charges is enough to keep some companies out of the market.