The Tariff Rate Quota (TRQ) scheme for imports is a trade policy mechanism utilized by governments to manage the importation of certain goods by imposing a combination of quota restrictions and preferential tariff rates. Under the TRQ scheme, a specified quantity of a particular product is allowed to be imported at a lower or zero tariff rate, known as the “in-quota” tariff, while imports beyond the quota limit are subject to higher, “out-of-quota” tariff rates. This approach aims to balance the objectives of facilitating trade while protecting domestic industries from excessive foreign competition and ensuring food security and stability in sensitive sectors.

The TRQ scheme is commonly applied to agricultural products, textiles, and other sensitive goods where governments seek to strike a balance between meeting domestic demand and supporting local producers. By setting TRQs, governments can regulate the volume of imports while providing importers with certainty regarding tariff rates and market access within the quota limits. This mechanism also encourages efficient allocation of quota allocations through competitive bidding or other allocation methods, fostering transparency and fairness in importation processes.

However, the TRQ scheme can pose challenges for importers and exporters alike, including administrative complexities, uncertainty surrounding quota allocations, and potential market distortions. Importers must navigate the intricate procedures for obtaining quota allocations, while exporters may face restrictions on accessing foreign markets due to TRQs imposed by importing countries. Nevertheless, the TRQ scheme remains a valuable tool for governments to balance competing interests in trade policy, promote domestic industry development, and ensure a stable and predictable trading environment.