Tariff-rate quota

Unlike a simple quota system, a TRQ regime does not restrict the quantity of imported products.

[5] Customs duties and other charges are explicitly excluded from the scope of quantitative restrictions within the meaning of Article XI of the GATT.

For instance, the Panel in US - Pipeline stated that a tariff quota involves the “application of a higher tariff rate to imported goods after a specific quantity of the item has entered the country at a lower prevailing rate,” while any quantity above the quota is subject to a higher duty.

[9] In some cases, the calculated equivalent tariffs would be too high to allow for any real opportunity for imports to enter the market.

If the difference between domestic and international prices exceeds T, importers still make profit despite paying high out-of-quota tariff.

Supposing that a TRQ does not exist and merely a tariff at the in-quota rate (t) applies, then an import volume of Q3 will be generated.

[12] TRQ administration essentially concerns the distribution of the rights to import at the in-quota tariff rate.

Although licensing methods may result in too-small consignments, which are not economically viable, that problem is often remedied at the time it emerges.

[18] In general, administration methods that are able to separate the distribution of rents from that of trade may mitigate the distorting effect posed by the former.

In contrast, methods that grant quota rents to in-quota imports are blamed for encouraging a biased distribution of trade.

When practicable, it also provides information at the HS sub-heading level on non-MFN tariff regimes a member applies towards its export partners.

The European Union also develops a portal for Tariff Quota Consultation, where users can have full access to its TRQ publication.