Absolute Quota – Definition

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Absolute Quota Definition

An absolute quota is the specific amount of imports or exports of commodities that is allowed in and out of a country at a particular period of time. This is the maximum inventory that is permissible into a nation at a specific time.

Absolute Quota limits the amount of imported goods or commodities that can be allowed into a country at a specific time. If imports of goods exceed the absolute quota, the excess amount will not be allowed into the country.

Global quotas and country quotas are the two categories of Absolute Quota.

A Little More on What is an Absolute Quota

Import quotas are strategies used by nations of the world to set a limit to the number of inventory or amount of imports that can be allowed into a country at a certain time. There are different management methods used by import quotas and the division of import quotas is based on the method used. Absolute quotas and tariff quotas are the two divisions of import quotas.

Absolute quotas can further be divided into global quotas and country quotas. Each of these divisions has unique management technique that it adopts.

Global Quota

Global quotas refer to the specific amount of goods or commodities than an importer can bring into a country at a certain time. It sets a limit on imported merchandise from all countries at a specific time. Appropriate authorities in any given state grants an importer right to move in an amount of goods at a certain time. Importers apply and compete for the quotas and it is within the jurisdiction of the competent authority to announce the expected quota that can be imported at a specific time. However, global quota is not restricted to any country or region, once the quota is announced, importers from any region can compete for quotas and once the limit is reached, no imports will be allowed.

In a beverage sense, quota refers to the allocation of number of apportionment of goods that can be produced, imported or exported at a given period. Oftentimes, countries, industries and companies set quotas for the purpose of creating balance between supply and demand at a given time.

Quotas also help to adjust the balance of payments and relieve an economy from excessive supplies. Internationally, countries announce the expected quotas for imports and exports required at a specific time. This is basically to avoid excessive imports and exports of goods that can damage a country. Both import and export quotas stipulates the limited quantity of a particular product which can be produced, exported, or imported.

Country Quota

Country quotas refer to import management technique that allocates fixed quotas (within the total quota) to countries and regions. Countries quotas are otherwise called region quotas, they set a limit to the amount of goods that a country is allowed to import with the total quota.

Country quotas is a device employed in an international trade arrangement, it regulates the limited amount of goods that can be imported by other countries. Country quotas are in two categories, the independent quotas otherwise called autonomous quotas and the agreement quotas.

Agreement quota

Under agreement quota arrangement, two parties consent to the quota of importing and exporting goods between the countries. Agreement quotas are also called bilateral quotas, these quotas can either be reached by government of the countries involved or by civil societies.

If two governments signed the agreement quota, this agreed quota will be announced to exporters and importers in the countries. However, if the agreement quota is signed by a bilateral civil society or two parties, the government must approve of the agreement.

Autonomous quota

Autonomous Quotas are independent quotas, they are often unilateral quotas. These types of quotas often occur in independent preferential trade arrangement between countries. In this situation, an importing country imposes these quotas which stipulates that it can import specific goods from a country at a particular time.

The exporting country has no say or consent in autonomous quotas and this easily leads to resentments or retaliation from the exporter. In order to avoid resentments and revenge, many countries use the agreement quotas.

Reference for Absolute Quota

Academic Research on Absolute Quota

How free trade can save the Everglades, Schwabach, A. (2001). Geo. Int’l Envtl. L. Rev., 14, 301.

International price discrimination in the European car market, Verboven, F. (1996). The RAND Journal of Economics, 240-268.

Assessing the effects of the WTO agreement on rice markets: What can we learn from the first five years?, Sumner, D. A., & Lee, H. (2000). American Journal of Agricultural Economics, 82(3), 709-717.

Economic issues in tariffication: an overview, Moschini, G. (1991). Agricultural Economics, 5(2), 101-120.

Import quotas in the United States, Whittlesey, C. R. (1937). The Quarterly Journal of Economics, 52(1), 37-65.

Dairy demand, supply and policy in Korea: Potential for international trade, Song, J., & Sumner, D. A. (1999). Canadian Journal of Agricultural Economics/Revue canadienne d’agroeconomie, 47(5), 133-142.

US sugar policy and the Caribbean Basin Economic Recovery Act: Conflicts between domestic and foreign policy objectives, Messina Jr, W. A., & Seale Jr, J. L. (1993). Review of agricultural economics, 15(1), 167-180.

Does uncertainty justify intensity emission caps?, Quirion, P. (2005). Resource and Energy Economics, 27(4), 343-353.

Delegating Privileges over Finite Resources: A Quota Based Delegation Approach, Agudo, I., Fernandez-Gago, C., & Lopez, J. (2008, October). In International Workshop on Formal Aspects in Security and Trust (pp. 302-315). Springer, Berlin, Heidelberg.

 

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