a tariff may be either tax on imports or exports

8/3/2019 A Tariff May Be Either Tax on Imports or Exports

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A tariffmay be either tax onimportsorexports(trade tariff), or a list or schedule of prices for

such things asrailservice,bus routes, andelectricalusage (electrical tariff, etc.).[1]

The word comes from the Italian word tariffa "list of prices, book of rates," which is derived

from the Arabic ta'rif"to notify or announce."[2]

NON-TARIFFBARRIERS

Any measure other than high import duties (tariffs) employed to restrict imports.

Two such measures are (1) direct price influencers, such as export subsidies or

drawbacks, exchange rate manipulations, methods of imports valuation, customs

surcharges, lengthy customs procedures, establishment ofminimum import prices,

unreasonable standards and inspection procedures, and (2) indirect price influencers,

such as import licensing and import. Non tariff barriers, with certain exceptions, are

breach ofWTO rules but, nevertheless, their overall use has been on the increase since

the Tokyo round ofmultilateral trade negotiations (September 1973 to April 1979)

where they were first discussed.

There are several different variants of division of non-tariff barriers. Some scholars divide

between internal taxes, administrative barriers, health and sanitary regulations and government

procurement policies. Others divide non-tariff barriers into more categories such as specificlimitations on trade, customs and administrative entry procedures, standards, government

participation in trade, charges on import, and other categories. We choose traditional

classification of non-tariff barriers, according to which they are divided into 3 principal

categories.

The first category includes methods to directly import restrictions for protection of certainsectors of national industries: licensing and allocation of import quotas, antidumping and

countervailing duties, import deposits, so-called voluntary export restraints, countervailing

duties, the system of minimum import prices, etc. Under second category follow methods thatare not directly aimed at restricting foreign trade and more related to the administrativebureaucracy, whose actions, however, restrict trade, for example: customs procedures, technical

standards and norms, sanitary and veterinary standards, requirements for labeling and packaging,

bottling, etc. The third category consists of methods that are not directly aimed at restricting theimport or promoting the export, but the effects of which often lead to this result.

The non-tariff barriers can include wide variety of restrictions to trade. Here are some example

of the popular NTBs.

[edit] Licenses
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The most common instruments of direct regulation of imports (and sometimes export) are

licenses and quotas. Almost all industrialized countries apply these non-tariff methods. Thelicense system requires that a state (through specially authorized office) issues permits for

foreign trade transactions of import and export commodities included in the lists of licensed

merchandises. Product licensing can take many forms and procedures. The main types of

licenses are general license that permits unrestricted importation or exportation of goodsincluded in the lists for a certain period of time; and one-time license for a certain product

importer (exporter) to import (or export). One-time license indicates a quantity of goods, its cost,

its country of origin (or destination), and in some cases also customs point through which import(or export) of goods should be carried out. The use of licensing systems as an instrument for

foreign trade regulation is based on a number of international level standards agreements. In

particular, these agreements include some provisions of the General Agreement on Tariffs andTrade and the Agreement on Import Licensing Procedures, concluded under the GATT (GATT).

[edit] Quotas

Licensing of foreign trade is closely related to quantitative restrictions quotas - on imports andexports of certain goods. A quota is a limitation in value or in physical terms, imposed on import

and export of certain goods for a certain period of time. This category includes global quotas inrespect to specific countries, seasonal quotas, and so-called "voluntary" export restraints.

Quantitative controls on foreign trade transactions carried out through one-time license.

Quantitative restriction on imports and exports is a direct administrative form of government

regulation of foreign trade. Licenses and quotas limit the independence of enterprises with a

regard to entering foreign markets, narrowing the range of countries, which may be entered into

transaction for certain commodities, regulate the number and range of goods permitted for importand export. However, the system of licensing and quota imports and exports, establishing firm

control over foreign trade in certain goods, in many cases turns out to be more flexible andeffective than economic instruments of foreign trade regulation. This can be explained by thefact, that licensing and quota systems are an important instrument of trade regulation of the vast

majority of the world.

[edit] Agreement on a "voluntary" export restraint

In the past decade, a widespread practice of concluding agreements on the "voluntary" export

restrictions and the establishment of import minimum prices imposed by leading Western nations

upon weaker in economical or political sense exporters. The specifics of these types of

restrictions is the establishment of unconventional techniques when the trade barriers of

importing country, are introduced at the border of the exporting and not importing country. Thus,the agreement on "voluntary" export restraints is imposed on the exporter under the threat of

sanctions to limit the export of certain goods in the importing country. Similarly, the

establishment of minimum import prices should be strictly observed by the exporting firms incontracts with the importers of the country that has set such prices. In the case of reduction of

export prices below the minimum level, the importing country imposes anti-dumping duty which

could lead to withdrawal from the market. Voluntary" export agreements affect trade in textiles,footwear, dairy products, consumer electronics, cars, machine tools, etc.
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Problems arise when the quotas are distributed between countries, because it is necessary to

ensure that products from one country are not diverted in violation of quotas set out in secondcountry. Import quotas are not necessarily designed to protect domestic producers. For example,

Japan, maintains quotas on many agricultural products it does not produce. Quotas on imports is

a leverage when negotiating the sales of Japanese exports, as well as avoiding excessive

dependence on any other country in respect of necessary food, supplies of which may decrease incase of bad weather or political conditions.

Export quotas can be set in order to provide domestic consumers with sufficient stocks of goods

at low prices, to prevent the depletion of natural resources, as well as to increase export prices by

restricting supply to foreign markets. Such restrictions (through agreements on various types ofgoods) allow producing countries to use quotas for such commodities as coffee and oil; as the

result, prices for these products increased in importing countries.

[edit] Embargo

Embargo is a specific type of quotas prohibiting the trade. As well as quotas, embargoes may beimposed on imports or exports of particular goods, regardless of destination, in respect of certain

goods supplied to specific countries, or in respect of all goods shipped to certain countries.Although the embargo is usually introduced for political purposes, the consequences, in essence,

could be economic.

[edit] Standards

Standards take a special place among non-tariff barriers. Countries usually impose standards onclassification, labeling and testing of products in order to be able to sell domestic products, but

also to block sales of products of foreign manufacture. These standards are sometimes entered

under the pretext of protecting the safety and health of local populations.

[edit] Administrative and bureaucratic delays at the entrance

Among the methods of non-tariff regulation should be mentioned administrative andbureaucratic delays at the entrance which increase uncertainty and the cost of maintaining

inventory.

[edit] Import deposits

Another example of foreign trade regulations is import deposits. Import deposits is a form of

deposit, which the importer must pay the bank for a definite period of time (non-interest bearingdeposit) in an amount equal to all or part of the cost of imported goods.

At the national level, administrative regulation of capital movements is carried out mainly withina framework of bilateral agreements, which include a clear definition of the legal regime, the

procedure for the admission of investments and investors. It is determined by mode (fair and

equitable, national, most-favored-nation), order of nationalization and compensation, transferprofits and capital repatriation and dispute resolution.
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[edit] Foreign exchange restrictions and foreign exchange controls

Foreign exchange restrictions and foreign exchange controls occupy a special place among the

non-tariff regulatory instruments of foreign economic activity. Foreign exchange restrictions

constitute the regulation of transactions of residents and nonresidents with currency and other

currency values. Also an important part of the mechanism of control of foreign economic activityis the establishment of the national currency against foreign currencies.

Types of TariffsA tariff may be one of the following four kinds:

(1) Ad valorem (2) Specific (3) Alternative

(4) Compound

1. Ad Valorem dutyThe kind most commonly used, is one that is calculated as a percentage of the value of the imported goods - for

example, 10, 25 or 35 per cent.

This may be based, depending on the country, either on destination (c.i.f.), or on the value of the goods at the port

in the country of origin (f.o.b.).

2. A Specific dutyIs a tax of so much local currency per unit of the goods imported (based on weight, number, length, volume or other

unit of measurement. Specific duties are often levied on foodstuffs and raw materials.

3. An Alternative dutyIs where both an Ad valorem duty and A Specific duty are prescribed for a product, with the requirement that the

more onerous one shall be Ad valorem duty value plus 10 cents per kilo.

4. Compound dutiesAre imposed on manufactured goods that contain raw materials that are themselves subject to import duty. The

"specific" part of the compound duty (called compensatory duty) is levied as protection for the local raw material

industry.

Dutiable Weights

Depending on the country, the Dutiable weights used to calculate specific import duties may be the gross weight,

the legal weight, or the net weight.

The dutiable weight is the actual weight upon which duty must be paid.

The gross weight is the weight of the goods and all interior, exterior containers and packing material.

The legal weight (used mainly by Latin American countries) is the weight of the goods and of the immediate

interior containers.
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The net weight is the weight of the goods without the packing materials.

However, in a few countries, it is defined as including the weight of the immediate container.

Very often, there is a fixed percentage allowance (called the tare) used by the customs authorities for determining

gross weight from net weight, and vice-versa. Most countries using specific duties employ different types of dutiableweights for difference commodities.

It is essential for an exporter to know what dutiable weight is being used for its product as it may be able to vary its

packing accordingly

Countervailing Duty

Countervailing duty is a duty imposed in addition to the regular (general) import duty,

in order to counteract or offset the subsidy and bounty paid to foreign export-

manufacturers by their government as an incentive to export, that would reduce the cost

of goods. Imposing a countervailing duty is the answer to unfair competition fromsubsidized foreign goods.

Anti-dumping Duty

Anti-dumping duty is a duty imposed to offset the advantage gained by the foreignexporters when they sell their goods to an importing country at a price far lower than

their domestic selling price or below cost. Dumping usually occurs from the oversupply

of goods, which is often a result of overproduction, and from disposing of obsolete goods

to other markets.

a tariff may be either tax on imports or exports

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