What Is a Free Trade Agreement Quizlet

Quotas, like other trade restrictions, are generally used for the benefit of the producer of a good in this economy. An import quota is a type of trade restriction that sets a physical limit on the quantity of a product that can be imported into a country during a given period. [1] For example, the United States imposes an import quota on cars from Japan. The Japanese government may find it appropriate to introduce a quota-sharing program to determine the number of cars that each Japanese automaker is allowed to export to the United States. Any additional number that a manufacturer wishes to export must be negotiated with another manufacturer who could not or cannot maximize his share of the quota. In addition, there are co-payment insurance programs in which liability and premiums are distributed proportionally among insurers. For example, three companies purchase a $1,000,000 fire insurance policy on a co-share basis, with Company A accepting 50% ($500,000), Company B 30% ($300,000) and Company C 20% ($200,000). If the annual premium were $5,000, Company A would receive a premium of $2,500, a premium of $1,500 B and a premium of $1,000 C. Company A would pay 50% of a claim, Company B would pay 30% of a claim, and Company C would pay 20% of a claim.

The quota share is a certain number or percentage of the allocation as the total quota prescribed to each unit. .