If it is allocated, the permitted volume of imports is allocated among countries of origin and private traders in accordance with some previous pattern.

2. Negotiated Quotas
In this case, the importing country, after negotiations with the government of each exporting country, or with groups of its exporters, allots shares of the quota to each country.

Often, with a bilateral negotiated quota, the exporting country is given the responsibility for issuing licenses to its exporter.

Sometimes a negotiated bilateral quota goes under the guise of a voluntary export quota - for example, the "voluntary" quotas that Japan places on its exports of man-made textiles to the United States.

With a multilateral quota, the restriction is placed on the total amount of imports only, with no restriction as to source.

3. Tariff Quotas
With this type of quota, a country allows a certain amount of a product to enter at a given rate of import duty or even duty free. Any excess amount is subjected to a much higher rate of duty.

Exchange Controls

Some countries restrict imports by limiting the amount of "exchange", or foreign currency, available to pay for them. Often, imports are classified into essential and non-essential or luxury goods.

Foreign currency is made available at one rate of exchange for essential imports while a more limited amount of foreign currency is made available at a much higher rate of exchange for the luxury items such as foreign cars.

This restrict the imports of luxury goods and are taxed more heavily than essential goods through the sale of foreign currency at a "free market" rate of exchange rather than at the official one.

Other countries achieve the same effect by levying exchange taxes at various rates according to the priority attached to the product to be imported.

With exchange control, anyone wishing to obtain foreign exchange must secure permission from the government. Such a system permits the government to restrict the demand for scare foreign exchange and to ration it out among different needs.

This rationing of foreign exchange also applies to importers: they must obtain a foreign exchange permit before they can import any goods and must pay a higher rate of exchange for imports of "luxury" or "non-essential" goods.

Exchange control, like import quotas, is therefore another very effective way of restricting imports as well as other types of foreign exchange spending.

Together with tariffs and import quotas, it forms the main form of protectionism.

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