Final answer:
Nontariff barriers are methods countries use to control imports without tariffs, including regulations, inspections, and paperwork. Rules-of-origin are a type of nontariff barrier that require a product's last substantial transformation to be in the exporting country. The WTO works to reduce these barriers and protect global trade standards.
Step-by-step explanation:
Nontariff barriers encompass various methods that nations utilize to control imports aside from tariffs. These barriers can include extensive rules, regulations, inspections, and lengthy paperwork. By imposing such standards, a country can make it significantly more challenging and expensive for foreign goods to enter the domestic market. For instance, safety requirements can function as a powerful limitation on imports, similar to how high tariffs and stringent import quotas would.
In addition to these barriers, rules-of-origin regulations are particularly notable. They stipulate that a product must undergo its last significant transformation in the exporting country to receive a certain 'Made in' label. Manufacturers may alter their production processes to align with these rules and bypass tariffs or to attain a desirable label. A practical example involves American textiles shipped overseas for partial production and then returned to the U.S. for final assembly - a strategy to avoid tariffs and advertise a 'Made in the USA' label.
The World Trade Organization (WTO), as the successor to the General Agreement on Tariffs and Trade (GATT), plays a pivotal role in facilitating global trade. It aims to negotiate down barriers and resolve complaints regarding violations of international trade policies, standing in opposition to protectionist measures and the 'race to the bottom,' where countries compete in lowering standards, such as environmental regulations, to attract production.