Why is import licensing used in international trade?

Import licensing is a regulatory measure used by governments to manage the entry of foreign goods into the domestic market. The primary purpose of import licenses is to control both the quantity and quality of goods that are imported. By requiring importers to obtain licenses, governments can enforce standards that ensure products meet health, safety, environmental, or other regulatory criteria. This process allows for oversight of what goods are allowed into the market, preventing substandard or harmful products from being sold to consumers.

Moreover, import licensing can be used to limit the volume of specific imports to protect domestic industries from excessive foreign competition. Such regulations help maintain a balance between allowing international trade and safeguarding local economic interests.

This option highlights the dual focus on quality and quantity control, which is central to the purpose of import licensing in international trade and crucial for ensuring compliance with national standards and regulations.