Tariff rate quota
Also called: TRQ · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
A tariff rate quota (TRQ) is a two-tier tariff. Imports up to a set quantity pay a low in-quota duty. Imports above that quantity pay a high out-of-quota duty. TRQs came from the Uruguay Round's tariffication, which turned non-tariff barriers into tariffs. They allow some market access while still protecting domestic producers.
Example
India operates TRQs on items such as skimmed milk powder and maize. A fixed quantity comes in at a low duty. Anything beyond it pays a much higher duty, which protects Indian dairy and maize farmers.
Don't confuse with
- Import quota: this sets a hard limit, so no imports are allowed beyond it. Under a TRQ, imports above the limit can still come in, but they pay a higher tariff.
Related concepts
- Tariff
- Ad valorem tariff
- Specific tariff
- Compound tariff
- Mixed tariff
- Export duties
- Duty drawback
- Tariff escalation
- Tariff peak
- Effective rate of protection