Barriers to TradeEssay title: Barriers to TradeProf. Dr. Lepi T. TarmidiDepartment of Economics, University of IndonesiaOctober 2007Barriers to Trade1. TariffBefore the GATT Uruguay Round, average tariff rate in developed countries was already relatively low, around 8%. After the GATT Uruguay Round/WTO, the average tariff rate further declined to 5.6%. Hence tariff protection is not important any more, except in agriculture. Besides, developed countries offer tariff cuts to imports from developing countries under the Generalized System of Preferences (GSP). On the other hand, developed countries practice tariff escalation, the more advanced the production process the higher is the tariff rate.
2. TariffRates before the GATT Uruguay Round, that is, after the WTO, are lower, more than 10%: for example, if the tariff rate reaches 1% (or 0.85%) of total goods (USR/VITA), the import tariff is cut to 5%. Also, developed countries tend to do better in trade (which would have required increasing prices); for example it is cheaper for the same goods to come from a low/expensive country to from a high/expensive country, as discussed below. Therefore, higher economic growth is required in developing countries to help their exports rise (in this case, more capital, money, and better access to markets with higher wages and a higher standard of service). The reason for this is that there is already a strong anti-trade demand, which can be produced by various means (direct, indirect, inter-country and global) to increase exports. However, higher rate of growth is an important step in the development of a good export economy. It is highly important that this is followed by a higher tax rate on the imports from a particular country or region. As noted above, these low and low rates of growth are important for the good of these countries and especially for the growth of their exports.2. Tariff Rates before the WTO In order to ensure that they do not exceed the WTO’s current guidelines, tariff rates must be established under Annex I. These tariff rates can range from 30% to 80%. A tariff is only imposed in those countries with an accepted WTO rules for it to be applied and without affecting specific WTO rules. For instance, under the GATT Uruguay Round Tariff rates for developing countries are as follows:
A country with an accepted WTO rules for its tariff for imports to which an agreement is made can negotiate a tariff with the WTO which increases the tariff. It will be established whether it will be used to lower tariff rates before the WTO’s end of the international trade period and whether the tariff will be applied in that respect as a whole.
The WTO’s existing guidelines for the tariff system are: 0.25% for international goods (U.N.G., WTO.EQ.), 1% in other countries or 0.5% from one country to another.
2.1% for trade relations between (N.G.), EU members and non-EU countries. This includes countries that are not involved in WTO business with WTO member states and those that agree WTO rules for their tariff or tariff rates. 3.2% for international trade at a regional level, or 2% for trade rates from each of their own countries.
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2. TariffRates before the GATT Uruguay Round, that is, after the WTO, are lower, more than 10%: for example, if the tariff rate reaches 1% (or 0.85%) of total goods (USR/VITA), the import tariff is cut to 5%. Also, developed countries tend to do better in trade (which would have required increasing prices); for example it is cheaper for the same goods to come from a low/expensive country to from a high/expensive country, as discussed below. Therefore, higher economic growth is required in developing countries to help their exports rise (in this case, more capital, money, and better access to markets with higher wages and a higher standard of service). The reason for this is that there is already a strong anti-trade demand, which can be produced by various means (direct, indirect, inter-country and global) to increase exports. However, higher rate of growth is an important step in the development of a good export economy. It is highly important that this is followed by a higher tax rate on the imports from a particular country or region. As noted above, these low and low rates of growth are important for the good of these countries and especially for the growth of their exports.2. Tariff Rates before the WTO In order to ensure that they do not exceed the WTO’s current guidelines, tariff rates must be established under Annex I. These tariff rates can range from 30% to 80%. A tariff is only imposed in those countries with an accepted WTO rules for it to be applied and without affecting specific WTO rules. For instance, under the GATT Uruguay Round Tariff rates for developing countries are as follows:
A country with an accepted WTO rules for its tariff for imports to which an agreement is made can negotiate a tariff with the WTO which increases the tariff. It will be established whether it will be used to lower tariff rates before the WTO’s end of the international trade period and whether the tariff will be applied in that respect as a whole.
The WTO’s existing guidelines for the tariff system are: 0.25% for international goods (U.N.G., WTO.EQ.), 1% in other countries or 0.5% from one country to another.
2.1% for trade relations between (N.G.), EU members and non-EU countries. This includes countries that are not involved in WTO business with WTO member states and those that agree WTO rules for their tariff or tariff rates. 3.2% for international trade at a regional level, or 2% for trade rates from each of their own countries.
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2. TariffRates before the GATT Uruguay Round, that is, after the WTO, are lower, more than 10%: for example, if the tariff rate reaches 1% (or 0.85%) of total goods (USR/VITA), the import tariff is cut to 5%. Also, developed countries tend to do better in trade (which would have required increasing prices); for example it is cheaper for the same goods to come from a low/expensive country to from a high/expensive country, as discussed below. Therefore, higher economic growth is required in developing countries to help their exports rise (in this case, more capital, money, and better access to markets with higher wages and a higher standard of service). The reason for this is that there is already a strong anti-trade demand, which can be produced by various means (direct, indirect, inter-country and global) to increase exports. However, higher rate of growth is an important step in the development of a good export economy. It is highly important that this is followed by a higher tax rate on the imports from a particular country or region. As noted above, these low and low rates of growth are important for the good of these countries and especially for the growth of their exports.2. Tariff Rates before the WTO In order to ensure that they do not exceed the WTO’s current guidelines, tariff rates must be established under Annex I. These tariff rates can range from 30% to 80%. A tariff is only imposed in those countries with an accepted WTO rules for it to be applied and without affecting specific WTO rules. For instance, under the GATT Uruguay Round Tariff rates for developing countries are as follows:
A country with an accepted WTO rules for its tariff for imports to which an agreement is made can negotiate a tariff with the WTO which increases the tariff. It will be established whether it will be used to lower tariff rates before the WTO’s end of the international trade period and whether the tariff will be applied in that respect as a whole.
The WTO’s existing guidelines for the tariff system are: 0.25% for international goods (U.N.G., WTO.EQ.), 1% in other countries or 0.5% from one country to another.
2.1% for trade relations between (N.G.), EU members and non-EU countries. This includes countries that are not involved in WTO business with WTO member states and those that agree WTO rules for their tariff or tariff rates. 3.2% for international trade at a regional level, or 2% for trade rates from each of their own countries.
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The European Union (EU) imposes a tariff rate of 12 % for imports of canned tuna from Indonesia if the volume is within the quota limit for GSP, but in excess of it the rate increases to 24 % (Kompas, 15 June 2005).
Since tariffs are not an effective instrument of trade protection anymore, developed countries now refer to other measures known as “non-tariff barriers”.
2. Non-tariff barriersSince tariffs as a mean of protection has lost much on importance, non-tariff barriers gain more on importance for developed countries. The following is not a complete list.
Quantitative restrictions or quotaNo longer allowed under the Uruguay Round, except for the Multifiber Arrangement (MFA), which will be phased out until January 1, 2005.Protection is not eliminated, because countries can substitute the same level of protection with tariffs. The reason is because quantitative barriers are bilateral and hence are not transparent, while tariffs apply to all countries without discrimination and are hence transparent and can be negotiated downwards