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An import quota is a limit on the quantity of a good that can be produced abroad and sold domestically. [ 1 ] It is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time. If a quota is put on a good, less of it is imported. [ 2 ] Quotas, like other trade restrictions, are used to benefit the producers of a good in a domestic economy at the expense of all consumers of the good in that economy. [ edit ] Goals The primary goal of import quotas is to reduce imports and increase domestic production of a good, service, or activity, thus "protect" domestic production by restricting foreign competition.
Trade in agricultural products accounts for less than ten percent of world merchandise exports but is perhaps the most volatile of trade issues. 2 A former U.S. Secretary of Agriculture characterized agricultural trade as “enigmatic, often inexplicable, always exasperating” and the most distorted segment of the global economy. 3 Disagreements over trade in agriculture have been blamed in part for the recent breakdown of the World Trade Organization’s negotiations in Cancún, Mexico and the less than ideal agreement produced during the Free Trade Area of the Americas negotiations in Miami Florida. 4 Conducting legal research into international agricultural trade may appear as daunting as the subject itself. The topic involves aspects of international and domestic law including: intergovernmental and nongovernmental organizations; treaties and agreements; dispute resolution; customs; tariffs; domestic trade law and policy; and, statistics.
The classical theory of comparative advantage has driven US trade policy for the past fifty years. That policy, in combination with technical innovations that have lowered costs of transportation and communication, has opened the global economy. Yet paradoxically, this opening has rendered classical trade theory obsolete. That in turn has left the US economically vulnerable because its trade policy remains stuck in the past and based on ideas that no longer hold.
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The original HO Theorem, however, was expressed in terms of relative abundance. An economy's offer curve depends on both production and consumption conditions in that country. In the Ricardian trade model, it is easy to derive offer curves because each country specializes in the production of one commodity. This means that as the price of good changes production remains unchanged.
The Heckscher–Ohlin model ( H–O model ) is a general equilibrium mathematical model of international trade , developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics . It builds on David Ricardo's theory of comparative advantage by predicting patterns of commerce and production based on the factor endowments of a trading region. The model essentially says that countries will export products that use their abundant and cheap factor(s) of production and import products that use the countries' scarce factor(s). [ 1 ]