What Does Quota Mean the international trade?

What’s Quota in the international trade?

Quota is one of the non-tariff barrier measures, which means that a government controls the import or export of some sensitive commodities in quantity or amount in a certain period of time. It aims to adjust international balance of payments and protect domestic industrial and agricultural production.  

What’s the import quotas and export quotas?

Quotas can be divided into import quotas and export quotas.  

An absolute quota is a maximum amount or amount of goods to be imported for a specified period of time.  Once this maximum amount is reached, no imports are allowed.

Absolute quotas come in two forms.

       One is to adopt "global quotas", which apply to goods from any country or region. The competent authority shall grant a certain amount of quota to the importer in accordance with the sequence of application or the actual import performance of a certain period in the past until the total quota is issued.  

      Second, adopt "country quotas", which are allocated by country and region within the total quota.  Different countries and regions are not allowed to import if they exceed their quotas.

Tariff quota does not absolutely limit the import quantity of goods. Sometioms, the low tax, tax reduction or exemption treatment will be allowed in a certain period of time for a certain number of imported goods. Otherwise, the imported goods will be levied higher tariffs or additional taxes and fines.  

Export quotas can be divided into "automatic" export quotas (passive quotas) and active quotas.  

      "automatic" export quota: under the requirements and pressure from the import country or region, the export countries or regions will "automatically" regulate or its export quota on the amount of certain commodities for a certain period (generally for 3 years) .  Export shall be controlled by oneself within the restricted quota and shall be forbidden to export in excess of the limit.  This is essentially a passive quota that has to be imposed, so the word "automatic" is put in quotation marks.  

      Active quota: the export countries will set the quota on certain commodities for a period of time in accordance with the change of the internal and external market and other factors .

At present, a considerable part of the commodities under active quota management in China are export commodities or monopoly commodities with advantages in the international market, which have a huge profit space, and most of them have something to do with export leading industries.  The main commodities subject to passive quota management are textiles.  At present, China implements quota export license administration for 54 categories, 68 kinds and 343 commodity codes.  

For the restricted goods, regardless of the way of import, the customs shall release them with import license.