Trade glossary · mechanics

Quota

A quantity limit on how much of a particular good can be imported or exported in a given period. Often combined with tariffs (tariff-rate quotas).

Quotas restrict supply directly rather than via price. They're less common than tariffs in the WTO era because GATT Article XI prohibits quantitative restrictions, but they're still used in agriculture, textiles (until 2005), and as emergency measures. A tariff-rate quota allows a fixed quantity at a low tariff and applies a higher tariff above the threshold.

Examples

  • EU sugar tariff-rate quota: low tariff on the first ~1.4M tonnes/year, much higher above.
  • US dairy quotas under the WTO agreement on agriculture.

Related terms

Tariff
A tax on imported goods, usually expressed as a percentage of value (ad valorem) or a fixed amount per unit. Used to protect domestic producers or raise revenue.
Rules of origin
Criteria determining the country of origin of a product, used to apply tariffs, FTAs, and trade remedies. A car assembled in Mexico from US-made parts may be classified differently depending on origin rules.