TRQs

A tariff-rate quota, or TRQ, is a trade instrument that combines a quantity-based import limit with a tiered tariff structure. It allows a specified amount of a good to be imported at a relatively low tariff, while imports above that quantity are charged at a higher tariff.

Typically, the quota applies to a specific tariff line and is defined for a set period, such as a calendar year. Quotas may be allocated through licenses or licenses granted to particular suppliers, or they may operate on a first-come, first-served basis. The lower tariff applies to shipments that enter within the quota volume; shipments outside the quota are subject to the higher over-quota rate. TRQs are common in international trade agreements and are often bound in agreements under the World Trade Organization or in regional trade agreements.

Purpose and effects: TRQs are used to open markets gradually for sensitive products while protecting domestic producers. They provide predictable access for importers and can influence domestic prices and supply patterns. The exact quota volumes and tariff rates are typically defined in law or negotiated agreements and can be adjusted over time.

Administration and considerations: Governments administer TRQs by setting annual quotas, processing licenses, and enforcing import entries. They can be controversial due to complexity, allocation disputes, and perceived inequities among producers and importers. Critics argue that administrative rules can obscure market access or distort competition, while proponents view TRQs as a practical compromise between protection and liberalization.

See also: Tariff-rate quota, import quota, World Trade Organization.