DIŞ TİCARET

A protective tariff refers to decreasing the quantity of imports entering a country, thus shielding import-competing producers from foreign competition. A revenue tariff is imposed for the motive of generating tax revenues and may be placed on either exports or imports.  A specific tariff is a tariff rate charged as a fixed amount per quantity. Ad-valorem tariff is a tariff rate charged as a percentage of the price. The combination of both specific and ad-valorem tariff is called Compound tariff. It is frequently applied to manufactured goods embodying raw materials which are subject to tariffs.

The disadvantage of tariff is that it impedes with the concept of ‘free trade’ because it mainly focuses on the protection local industries. Free trade permits the market to set prices on the basis of supply, demand, productivity, and logistics, simply put, market determines the price. The remaining items are the advantages of a tariff.

The basic functions of tariffs are to serve as a source of revenue, shield domestic industries, and to remedy trade distortions (as a sanction).

GATT Article XXVIII specifies that once members desire to increase their bound rates or to withdraw tariff concessions, they must negotiate and reach agreements with the members with whom they had initially negotiated. In addition, they must enter into consultations with major supplying members that have a substantial interest in any change within the bound rate.

Despite significant benefits of tariff, a nation can experience losses from it. The net effect of the tariff on the importing nation as a whole can be determined by combining the effects of the tariff on consumers, producers, and the government. The first key step is to impose a social value judgement.

Specific Limitations on Trade is described by the measures like quotas, import licensing requirements, proportion restrictions of foreign to domestic goods, minimum import price limits, embargoes. Customs and Administrative Entry Procedures is described by the measures like Valuation systems, anti-dumping practices, tariff classifications, documentation requirements, fees.  Standards is described by the measures like Standard disparities, intergovernmental acceptances of testing methods and standards, packaging, labelling, and marking. Government Participation in Trade is described by the measures like Government procurement policies, export subsidies, countervailing duties, domestic assistance programs.  Charges on imports is described by the measures like Prior import deposit subsidies, administrative fees, special supplementary duties, import credit discrimination, variable levies, border taxes.

Embargoes are one of the strictest kinds of restriction among all non-tariff restrictions. In the embargo, trade is restricted in two ways: entry of products from a country and the sale of products to that country. The embargo may be implemented only for the trade of certain products, or for any trade relations with a country. This practice is sometimes preferred for non- economic reasons, in other words, political reasons.

One tool of foreign exchange restriction is foreign exchange control, which is used in quantity restrictions. It is intended to restrict foreign exchange transactions. Thus, the exchange can only be understood with the condition of being filled. Normally, governments instruct central banks about buying and selling of foreign exchange transactions.

Dumping is a sale of goods abroad at low a price, below their cost and price in the home market. Voluntary export restraint is a restriction set by a government on the volume of products that can be exported to other countries during a specified period of time. A domestic production subsidy is a payment made by a government to a particular industry based on the output or production. Export subsidies are also payments made by a government in order to inspire the export of specified goods. An international cartel is an arrangement to avoid some or all forms of competition, the parties to which are business enterprise domiciled under more than one government and trading across national frontiers.

Interlocking ownership, may take the form of reciprocal exchange of stock between large concerns, private stockholdings which establish a community of control among nominally independent enterprises, jointly owned subsidiaries, or the monopolization of an industry’s international trade by a combination of concerns governed by a single holding company. Ordinary restrictive agreement among businessmen, takes the forms from a simple contract to fix prices or allocate sales to an international trade association which maintains an incorporated joint sales agency for its members.

Protectionism simply denotes the defensive measures of a government in order to protect its local industries from overseas competition. From an economic point of view, it supports to decrease the level of imports. This protection interest of local industries comes from special-interest groups within different sectors of the economy who plead their case for protecting domestic capacity and production facilities. A significant number of people believe that calls for protectionism should be comprehended as a need for the country to make structural changes in its industrial base in order to increase its competitiveness in foreign markets
rather than having government intervention support for inefficient industries.

Advantages:
One of the advantages of tariff is revenue function, it provides revenue to government based on imported products.

A tariff can be levied to shield domestic companies. In fact, that is the most cited reason for levying a tariff.

A tariff surges the price of the imported products, sometimes uplifting its status to that of a luxury product.

By the same token, a tariff may be used to raise the price of an exported product.

Export tariffs can also be used to regulate the advancement of rival industries in
different countries.

Export tariffs may also be used to discourage the export of products that are deemed as critical assets.

Another benefit of tariff is that a government can also impose an export tariff to lessen the consumption of an extraordinary resource or good.

A tariff code is a product-specific code as documented in the Harmonized System (HS) maintained by the World Customs Organization (WCO). Tariff codes exist for nearly each and every product involved in international commerce. Required on official shipping files for tax assessment functions, a tariff code makes sure the uniformity of product category worldwide. A tariff code is a number assigned to every kind of product sold across the world. The Harmonized system features 21 sections and 97 chapters of product codes that must be utilized by WCO members to stay compliant with trade policies. Tariff codes are used for taxation, customs, and statistical purposes by using WCO member countries.

One of the important benefits of tariffs is that they act as the revenue of the government. The effects of a tariff on the well-being of consumers and producers do not exhaust its effects on the importing country. Imposing a tariff with an optimal basis on exporting countries brings revenue to the country’s government. In order to receive this revenue from the tariff, the government could follow various ways. This revenue can be utilized in different projects of a country. For instance, it could be used to pay for extra government spending on socially worthwhile projects, matched by an equal cut in some other tax, such as the income tax. Or it could just become extra income for greedy government officials.

Offer curves give the nation’s offer of quantity of exports and imports. In this respect, it demonstrates the nation’s supply (exports) and demand (imports) offers. Large country is a nation that can affect the global market by trade restrictions. In other words, large nation affects the world commodity prices. Small country is a nation that cannot affect the global market by trade restrictions. In other words, a small nation cannot affect the world commodity prices.

Groups of Non-Tariff Restrictions

Specific Limitations on Trade:

Quotas import licensing requirements, proportion restrictions of foreign to
domestic goods, minimum import price limits, embargoes.

Customs and Administrative Entry Procedures:
Valuation systems, anti-dumping practices, tariff classifications, documentation requirements, fees.

Standards:

Standard disparities, intergovernmental acceptances of testing methods
and standards, packaging, labeling, and marking.

Government Participation in Trade:
Government procurement policies, export subsidies, countervailing duties,
domestic assistance programs.

Charges on imports:

Prior import deposit subsidies, administrative fees, special supplementary
duties, import credit discrimination, variable levies, border taxes.

Others:

Voluntary export restraints, orderly marketing agreements

Foreign Exchange Restrictions
(1) Multiple Exchange Rate System: Nations implement various exchange rates in the flow of goods and services in the multiple exchange rate system. Thus, if nations want to prevent the import of a product, they apply the multi-exchange rate policy and achieve their objective with a high exchange rate. On the other hand, imports of products enhance the low exchange rate.
(2) Foreign Exchange Control: Another tool of foreign exchange restriction is foreign exchange control, which is used in quantity restrictions. It is intended to restrict foreign exchange transactions. Thus, the exchange can only be understood with the condition of being filled. Normally, governments instruct central banks about buying and selling of foreign exchange transactions.

Anti-Dumping Duty: Anti-dumping duty is a tariff imposed on imports manufactured in overseas countries and priced below the fair market value of similar goods in the domestic market. The government imposes anti-dumping duty on foreign imports when it believes that the goods are being dumped in the domestic market. Anti-dumping duty is imposed to protect local businesses and markets from unfair competition by foreign imports.

Export subsidies are also payments made by a government in order to inspire the export of specified goods. As with taxes, subsidies can also be imposed on the basis of specific or ad-valorem. Agricultural and dairy products are the most common product groups where export subsidies are implemented. It is important to know that the subsidy is applied to the exported part of goods, not to the whole of its local production. In this way, the manufacturers or producers will turn to foreign sales more than their domestic sales. The subsidies for this purpose are varied such as tax rebate, direct premium payment, cheap credit and cheap input to export-oriented industries. Export subsidies can be regarded as a form of dumping. Although export subsidies are not legal by international accord, many countries provide them in disguised and not so-disguised forms

Voluntary export restraint is a restriction set by a government on the volume of products that can be exported to other countries during a specified period of time. This barrier is one of the most important nontariff trade barriers among other nontariff restrictions. Sometimes, the word voluntary is considered in quotes because it is implemented upon the insistence of the importing nations. Typically, VERs arise when the import-competing industries seek protection from an augmentation of imports by particular exporting countries. Then, the exporter offers VERs in order to satisfy the importing country and to avoid the impact of possible trade restraints on part of the importer. Thus, VERs are seldom completely voluntary.