Quota in the United States

Quota Definition

A proportionate share of anything required to be paid, supplied, or furnished.

Quota in the International Business Landscape

Import quotas are quantity controls that regulate the amount (volume) of various commodities that can be imported into the United States during a specified period of time. Quotas are established by legislative enactments and Presidential proclamations/Executive Orders issued pursuant to specific legislation. Some quotas are provided for in the Harmonized Tariff Schedule of the United States.

Other definitions of Quota in the context of U.S. international business and public trade policy:

• A limit on the quantity of a product that may be imported by (or sold to) a country. Import quotas are enforced by the receiving nation, export quotas by the country of origin.
• Deposit paid by a member nation when joining the International Monetary Fund.
• Numerical limit on the quantity of a good that may be imported into a country.

Quota Enforcement and Administration

Import quotas control the amount or volume of various commodities that can be imported into the United States during a specified period of time. Quotas are established by legislation, Presidential Proclamations or Executive Orders. Quotas are announced in specific legislation or may be provided for in the Harmonized Tariff Schedule of the United States (HTSUS).

Goods Subject to Quota

Import quotas control the amount or volume of various commodities that can be imported into the United States during a specified period of time. Quotas are established by legislation and Presidential proclamations issued pursuant to specific legislation and provided for in the Harmonized Tariff Schedule of the United States (HTSUS).

There are three types of quotas: absolute, tariff-rate, and tariff preference level. Absolute quotas strictly limit the quantity of goods that may enter the commerce of the United States for a specific period. Currently, no goods are subject to absolute quota restrictions. Tariff Rate Quotas (TRQs) permit a specified quantity of imported merchandise to be entered at a reduced rate of duty during the quota period. Once the tariff-rate quota limit is reached, goods may still be entered but at a higher rate of duty. Many Free Trade Agreements (FTAs) and other special trade legislation establish Tariff Preference Levels (TPLs) that Customs and Border Protection (CBP) administers like tariff rate quotas.

Several key factors determine whether a shipment is subject to quota requirements or eligible for preference benefits:

• Harmonized Tariff Schedule of the United States classification (based on merchandise description)
• Textile category number, used to determine proper quantity in square meter equivalents (SMEs) to apply to a quantitative restraint
• Harmonized Tariff Schedule of the United States chapter notes and additional U.S. notes to HTS chapters
• Country of origin (where the goods were grown, produced, or manufactured)

Different Types of Import Quotas Administered by the U.S. Customs and Border Protection

There are primarily three types of import quotas administered by the U.S. Customs and Border Protection: absolute quotas, tariff-rate quotas (TRQs), and tariff preference levels (TPLs).

Absolute quotas permit a strictly limited quantity of specified merchandise to be entered or withdrawn from warehouse for consumption during specified periods. Once the quantity permitted under the quota is reached, no further entries or withdrawals for consumption of merchandise subject to that quota are permitted until the opening of the next quota period. If an absolute quota fills, the importer must warehouse, export, destroy, or abandon merchandise imported in excess of the restraint limit. Currently, no goods are subject to absolute quota restrictions.

Tariff-rate quotas permit a specified quantity of merchandise to be entered or withdrawn from warehouse for consumption at a reduced duty rate during a specific period. Quantities imported in excess of the quota can be entered in unlimited amounts during the quota period, but are subject to higher rates of duty.

Many free trade agreements and other special trade legislation establish Tariff Preference Levels for certain textile and apparel products. CBP administers these restraints like tariff-rate quotas because they are similar. Just as with a TRQ, quantities imported in excess of the TPL limit are permitted in unlimited quantities at a higher rate of duty – the rate specified in column one of the HTSUS. Additionally, merchandise in excess of the TPL limit or found not to be eligible for TPL benefits becomes subject to any duty or restrictions that may be in effect at the time for non-qualifying shipments.

Quotas to Import Goods

See the folowing entries in this legal Encyclopedia: Quota Administration and Commodities Subject to Import Quotas.

Electronic Certification System (eCERT)

The Electronic Certification System, or eCERT, is an electronic government-to-government system for transmitting a certificate, like an export license/certificate or a certificate of eligibility, used for importation into the U.S. for specific commodities as a requirement to qualify for in-quota or tariff preference rates of duty.

Commodity Status Reports and Tariff Preference Levels

They are current and year-end commodity status reports as well as current and historic tariff preference levels fill list. These listings are designed to allow you to track quota as it is in the process of filling as well as giving the date and time of quotas already filled.

Calendar year-end “snapshot” status reports are for imported merchandise subject to tariff rate quotas and tariff preference levels. Once the quota period for a commodity ends, information for the new period is captured when the report is run. Non-calendar year quota periods may already be in progress.

Earned Import Allowance Programs

CITA administers the Earned Import Allowance Programs to provide benefits to designated countries. Currently, programs have been established for the Dominican Republic (HTS 9822.06.05) and Haiti (HTS 9820.62.25). For each 2 (Dominican Republic) or 3 (Haiti) square meters of U.S. fabric that was made from U.S. yarn and used to produce apparel that is imported into the U.S., the country accumulates credit through a web-based license program.

These credits allow the country to use 1 square meter of foreign fabric to form apparel for which duty free benefits can be claimed upon importation into the U.S. For more information, see the Office of Textile and Apparel web site, in particular the program pages for the Dominican Republic and Haiti.

Concept of Quota in Foreign Trade

A definition of Quota in relation with foreign trade is provided here: Import quotas control the amount or volume of various commodities that can be imported into the United States during a specified period of time. Quotas are established by legislation, Presidential Proclamations or Executive Orders. Quotas are announced in specific legislation or may be provided for in the Harmonized Tariff Schedule of the United States. (Source: U.S. Customs and Border Protection)