What Are Import Quotas?

When companies try to import certain commodities, the domestic governments will sometimes impose import quotas. These are established amounts of a specific commodity that a country is willing to allow in from another country. They may either put a limit under a certain duty rate, or they may limit the product all together depending on which governments and products are involved. The reasons they do this are to supplement the already established domestic production of the specific item. If you are an importer, you will need to find out if your products fall under a specific quota category. This is an issue that can be handled through your freight forwarder. If they are experienced in working with importers from your industry they may already know all of the facts and can assist you in requesting to become part of the quota. Once you apply, you can be accepted completely, partially or not at all. This is especially difficult for new importers since many times you will not find out if your application was denied until after you have set up your production abroad. One of the most criticized points about having quotas is that they can be susceptible to bribes and corruption abroad. This is no surprise considering all of the effort both companies put in, not to mention costs. Fortunately quotas are usually set up for a year at a time so if you miss the quota, you may be able to ship early in the next year. In general, if you are planning to import a commodity that has quotas, you should try to ship close as possible to the beginning of the year. This will ensure that get your product in before the quota closes.