According to Hill, there are several main instruments of trade policy like tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative polices and antidumping policies.
We will begin with tariffs. They are taxes levied on imports that effectively raise the cost of imported products relative to domestic products. They provide protection to domestic producers, force consumers to pay more for certain imports, reduce the efficiency of the world economy and the most important one increase government revenues.
Secondly subsidies, they are government payments to domestic producers to help them in two ways. First one is to compete against low-cost foreign imports and second one to gain export markets, but they protect inefficient and excess production.
Thirdly import quotas, they directly restrict the quantity of some good that may be imported into a country. And …show more content…
For example tariff on sugar. South Africa is a low-cost sugar producer and ranked in the top 10 of producing countries around the world. It is also a highly protected market. According to article from Business Day newspaper website, which is daily paper in South Africa sugar tariff is imminent.
There was a lot of complains from local sugar producers that the industry is at risk from other countries like Guatemala, India, Brazil and others, as result of overproduction and subsidies the world price of sugar issignificantly below production cost. In year 2013South African Sugar Association applied to International Trade Administration Commission of South Africa to get higher reference price on imports. That’s why import tariff was put in place.
On 4 April 2014, South Africa increased the dollar-based reference price of beet and cane sugar by 58%, from $358 to $566 per metric ton, based on a recommendation of the country’s International Trade Administration