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Read about a quota on New Zealand beef in Europe today, will definitely affect the New Zealand economy, probably for the better; although, New Zealanders in the short run could possibly be detrimentally affected from this change. In June of 2011, The European Union has allowed the import of New Zealand grain-fed beef into Europe in the form of a quota, as this type of beef wasn't allowed to be imported into Europe before. This quota is for a product that is produced in small, expensive amounts, and the quota is tariff free, not having the 20% tariff that is applied to other European nation's beef quotas. A common method to protect the domestic market is by setting a quota on international imports. A quota is quantitative limit on the imports set by the importing country. The effect of a quota is that domestic suppliers will replace some of the imports at a higher than world market price, which is non-existent in our case because there was no original world/New Zealand supply into Europe. When foreign (New Zealand) producers are confronted with a quota which limits the quantity they are allowed to sell to a country (in this case the European Union), simple supply and demand analysis suggests that the highest possible price will be charged, because there would be a decrease in supply, and the cost of production would also be more expensive. This is because foreign countries have more efficient technology and/or a cheaper labour force. However, in the case of the newspaper article, because New Zealand wasn't allowed to import grain-fed beef into Europe before the quota, this means that there wasn't a world supply or world price, meaning that after the quota is put into place, there is an increase in supply of beef imported from New Zealand.
