Theoretical aspects of the analysis of application of tariffs quotas and their impact on trade

The main objective of this paper is to present the theoretical aspects of the implementation of tariff rate quotas in the trade. Tariff rate quota is considered to be a very important instrument, which is used since the Uruguay Round Agreement on Agriculture, which allows minimum market access and enables conversion of a wide scope of agricultural non-tariff barriers into tariffs (called tariffication). The reasons why tariff rate quotas are being used by most countries are predictable and transparent customs to exporters, which does not lead to discrimination among suppliers or exclude imports of products at lower costs. Tariff rate quotas also provide the ability to import over tariff rate quotas, which was not possible with the classical or absolute quota. On the other hand, very high tariff rates above quotas make import too expensive and generated income is equal to the level of import from traditional quotas. In addition, the paper clearly presents a model of customs quotas on which basis is explained the functioning of tariff rate quotas within certain scenarios.