special duties 2

8/10/2019 Special Duties 2

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As markets have become more open, goods from differentcountries varied and free trade advocates are almost everywhere in the regions to advance the cause of liberalizingthe flow of goods in the markets. But no matter how strongand compelling its benefits and logic, barriers to trade

exist. Under the principle of protectionism, thegovernment uses many methods to restrict internationaltrade. As long as the power to regulate trade belongs to thelegislature, where politics are more dominant and lies morethan economics, protectionist policy remains in the halls of

Congress and liberalist policy to freer trade remains in thefour walls of a classroom, government intervention restircstrade.


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1. Tariffs talking the side of history, tariff is the oldestmethod of governments attempt to control trade. Tariff is aform of tax levied on goods imported into the country. Theeconomic is that, by levying a higher tariff in a particular

class of goods, the more trade is restricted has the effect ofkeeping out these goods in a domestic market of a country.

2. Non-Tariff Barriers This includes any form ofgovernment action that hampers or reduces the entrance ofimported commodities in a country.

A. Quotas another hindrance for freer internationaltrade. A Quota limitation on the amount or quantity ofcommodity or commodities that may be imported in anygiven period. Authorities believe that quotas on importsare more effective barrier and may retard international

trade than the imposition of tariffs.Example : 1. Garments & Textiles Export Board (GTEB),imposes quota for the import or export of garments andtextiles in and out of the Philippines.


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B. Products Standards These are government regulations to check thecorrect or proper standard of the goods imported as to its quality and safety.These standards are more present in home use commodities like LPG, bulbsand other electrical and home appliances.

Example: The Bureau of Product Standard (BPS), requires importers to have

certain imported articles covered by mandatory standards undergo productverification and testing in the BPS before it will be finally released from theBureau of Customs.

C. Licensing Requirements These are regulatory permits that importersand/or distributors need to obtain before they can be allowed to engage in the

importation and/or distribution of these imported products.Example: Bureau of Foods and Drugs Administration (BFAD), subjects importersto prior registration requirement of their company and the products they areimporting.

Bureaucratic Customs Process Customs administration of a country mayapply or burdensome customs process that a certain imported products maypass through before its final clearance from customs.

Example: Policy or requirement issued by the Bureau of Customs prior to therelease of certain commodity. Electronic articles/commodity required to passthrough the office of the collector of customs for verification and check of theclearance or requirement.


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Voluntary Restraints - Voluntary export restrictionsentered into the government or private export firms tolimit international trade for certain products in a

particular period. Its purpose is to prevent or avoidfurther trade restrictions (maybe in a form of highertariff, documentations or permits or additionalcustoms process.) from the government itself due tothe influx (over supply) of the goods entering the

country. It may also be entered to control the oversupply of goods available in a certain market. This kindof trade barrier is like a quota, but the former differ inthe sense that it is negotiated or entered into

voluntarily by governments or export firms, unlikewhich must be passed or sanctioned by the Congressof a country imposing quotas.


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3.1 Voluntary Government Restraint Agreements

- Entered into by one government to another

government of a country to limit or restrict the exportof a certain goods from each other.

- 3.2 Voluntary Export Restraint Agreement

- - Entered into by the exporters themselves fromcountry to country to limit or restrict the export oftheir products either one way or from each other in a

particular usually in a particular period.


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Schedule of rates ofimport or esportduties.

Lists of taxes requiredto pay upon variousclasses of goods.

Customary tolls ordues paid by

merchants uponcommodities

A table or catalog

containing names of

several kinds ofmerchandise.

Lists or schedule of

commodities .

TARIFF

Customs

Tariff

is a tax levied oncommodity when

it crosses theboundary of acustoms area


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PURPOSE OF TARIFF

REVENUE TARIFF- A tariff imposed chiefly to generatepublic revenue.

-a tariff for the purpose of producing public revenue

PROTECTIVE TARIFF - a tariff levied on imports to protectthe domestic economy rather than to raise revenue.

-a tariff imposed to protect domestic firms from importcompetition.

BARGAINING TARIFF-reciprocal trade agreements betweenthe member countries.

-favor of reducing the tariffby negotiating with foreign

countries.


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As to Form :1. Specific Duty levied on imports that is proportional to the

number of items or units imported. (i.e., based on the weight,volume, gauge or other measure of quantity or based upon orregulated by value.) without regard to its value.

Example: Php 2.00 per linear meter of cinematographic filmImported.

2. Ad Valorem Duty is derived from the latin word, literallymeans according to Value. A tax levied which is equal to acertain percentage of the value of the imported articles.

Example: 7% the declared transaction value of cinematographicfilm imported.

3. Mixed or compound Duty A tax which comprises bothspecific and an ad valorem rates.

Example: Php 1.00 per linear meter and 3% ad valorem oncinematographic film imported.


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As to Economic Purpose :

REVENUE DUTY is designed primarily to obtain orraise revenue for the government rather than torestricts imports. The tariff is usually minimal ormodest and usually levied on products not producedlocally.

PROTECTIVE DUTY intended to protect or shielddomestic products from foreign competition by

imposing a higher duties on imported commodities,thus restricting its entrance in the domestic marketsgiving domestic goods on a competitive edge.


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AS TO SPECIAL PURPOSE

What is dumping?Dumping is, in general, a situation of international

price discrimination, where the price of a product when soldin the importing country is less than the price of that productin the market of the exporting country. Thus, in the simplestof cases, one identifies dumping simply by comparing pricesin two markets. However, the situation is rarely, if ever, thatsimple, and in most cases it is necessary to undertake a seriesof complex analytical steps in order to determine theappropriate price in the market of the exporting country

(known as the normalvalue) and the appropriate price inthe market of the importing country (known as the exportprice) so as to be able to undertake an appropriatecomparison.


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Special duty which is equal to the difference

between the lower price of the dumped importedarticles and the higher price of a like domesticproduct. It is being imposed in addition to theregular duty, to prevent the continuous dumping

of imported articles into the local market of acountry at a price less than those prevailing in itsdomestic markets, which has the effect causingmaterial injury or threatening to retard the

establishment of a domestic industry producingthe same products.


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The GATT 1994 sets forth a number of basic principles applicable in tradebetween Members of the WTO, including the most favoured nation

principle. It also requires that imported products not be subject to internaltaxes or other changes in excess of those imposed on domestic goods, andthat imported goods in other respects be accorded treatment no lessfavourable than domestic goods under domestic laws and regulations, andestablishes rules regarding quantitative restrictions, fees and formalitiesrelated to importation, and customs valuation. Members of the WTO alsoagreed to the establishment of schedules of bound tariff rates. Article VI ofGATT 1994, on the other hand, explicitly authorizes the imposition of aspecific anti-dumping duty on imports from a particular source, in excess ofbound rates, in cases where dumping causes or threatens injury to adomestic industry, or materially retards the establishment of a domestic

industry.

The Agreement on Implementation of Article VI of GATT 1994, commonlyknown as the Anti-Dumping Agreement, provides further elaboration onthe basic principles set forth in Article VI itself, to govern the investigation,determination, and application, of anti-dumping duties.


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As tariff rates were lowered over time following the original GATT agreement, anti-dumping duties were increasingly imposed, and the inadequacy of Article VI togovern their imposition became ever more apparent. For instance, Article VI

requires a determination of material injury, but does not contain any guidance as tocriteria for determining whether such injury exists, and addresses the methodologyfor establishing the existence of dumping in only the most general fashion.Consequently, contracting parties to GATT negotiated more detailed Codes relatingto anti-dumping. The first such Code, the Agreement on Anti-Dumping Practices,entered into force in 1967 as a result of the Kennedy Round. However, the UnitedStates never signed the Kennedy Round Code, and as a result the Code had little

practical significance.

The Tokyo Round Code, which entered into force in 1980, represented a quantumleap forward. Substantively, it provided enormously more guidance about thedetermination of dumping and of injury than did Article VI. Equally important, it setout in substantial detail certain procedural and due process requirements that mustbe fulfilled in the conduct of investigations. Nevertheless, the Code stillrepresented no more than a general framework for countries to follow inconducting investigations and imposing duties. It was also marked by ambiguitieson numerous controversial points, and was limited by the fact that only the27 Parties to the Code were bound by its requirements.


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The Committee, which meets at least twice a year, providesMembers of the WTO the opportunity to discuss any mattersrelating to the Anti-Dumping Agreement (Article 16). TheCommittee has undertaken the review of national legislationsnotified to the WTO. This offers the opportunity to raisequestions concerning the operation of national anti-dumpinglaws and regulations, and also questions concerning theconsistency of national practice with the Anti-Dumping

Agreement. The Committee also reviews notifications of anti-dumping actions taken by Members, providing the opportunityto discuss issues raised regarding particular cases.

The Committee has created a separate body, the Ad HocGroup on Implementation, which is open to all Members ofthe WTO, and which is expected to focus on technical issues ofimplementation: that is, the how to questions thatfrequently arise in the administration of anti-dumping laws.


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Determination of normal value

General rule

The normal value is generally the price of the product

at issue, in the ordinary course of trade, when destinedfor consumption in the exporting country market. Incertain circumstances, for example when there are nosales in the domestic market, it may not be possible to

determine normal value on this basis. The Agreementprovides alternative methods for the determination ofnormal value in such cases.


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One of the most complicated questions in anti-dumping investigations is the

determination whether sales in the exporting country market are made in the

ordinary course of trade or not. One of the bases on which countries may

determine that sales are not made in the ordinary course of trade is if sales in the

domestic market of the exporter are made below cost. The Agreement defines the

specific circumstances in which home market sales at prices below the cost of

production may be considered as not made in the ordinary course of trade", and

thus may be disregarded in the determination of normal value (Article 2). Those

sales must be made at prices that are below per unit fixed and variable costs plus

administrative, selling and general costs, they must be made within an extended

period of time (normally one year, but in no case less than six months), and they

must be made in substantial quantities. Sales are made in substantial quantities

when (a) the weighted average selling price is below the weighted average cost; of

(b) 20% of the sales by volume were below cost. Finally, sales made below costsmay only be disregarded in the determination of normal value where they do not

allow for recovery of costs within a reasonable period of time. If sales are below

cost when made but are above the weighted average cost over the period of the

investigation, the Agreement provides that they allow for recovery of costs within a

reasonable period of time.


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If there are sales below cost that meet the criteria set out in the Agreement,they can simply be ignored in the calculation of normal value, and normal

value will be determined based on the remaining sales. However, exclusion ofthese below-cost sales may result in a level of sales insufficient to determinenormal value based on home market prices. It is obvious that, in the case wherethere are no sales in the exporting country of the product under investigation,it is not possible to base normal value on such sales, and the Agreementrecognizes this. However, it is also possible that, while there are some sales inthe exporting country's market, the level of such sales is so low that its

significance is questionable. Thus, the Agreement recognizes that in somecases sales in the home market may be so low in volume that they do notpermit a proper comparison of home market and export prices. It provides thatthe level of home market sales is sufficient if home market sales constitute 5per cent or more of the export sales in the country conducting theinvestigation, provided that a lower ratio shouldbe accepted if the volume ofdomestic sales nevertheless is of sufficient magnitude to provide for a faircomparison.

http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm - for additionalreference and understanding.
http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htmhttp://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm


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Special duty which is equal to the ascertained amount

of subsidy granted, intended to offset or forestall thesubsidy or bounty directly granted by the governmentof the exporting country or by a cartel upon themanufacture, production or exportation of a product

imported in a country which has caused or threatensto cause material injury to a domestic industry orretard the establishment of a domestic industryproducing identical or like articles.

http://www.wto.org/english/tratop_e/scm_e/scm_e.htm- additional reference
http://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htmhttp://www.wto.org/english/tratop_e/scm_e/scm_e.htm


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