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Tariff Barriers.ppt

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Tariff Barriers.ppt

  1. 1. What is TRADE?  The voluntary exchange of goods and services among people and countries.  Trade and voluntary exchange occur when buyers & sellers freely and willingly engage in market transactions.  When trade is voluntary and non-fraudulent, both parties benefit and are better off after the trade than they were before the trade.
  2. 2. INTRODUCTION  All nations impose some restrictions in the form of tariff (i.e., import tariff and export tariff) and non-tariff barriers (i.e., import quota, dumping, international cartels and export subsidies) on the free flow of international trade.
  3. 3. Free Trade VS. Trade Barriers  Nations can trade freely with each other or there are trade barriers.  Free Trade: Nothing hinders or gets in the way from two nations trading with each other.  Sometimes countries complain about trade. They say that too much trade cause workers to lose jobs. Therefore, countries sometimes try to restrict trade by creating trade barriers.
  4. 4. Objectives of Trade Barriers  Tariffs may be levied either to raise revenue or to protect domestic industries, but a tariff designed primarily to raise revenue also may exercise a strong protective influence, while a tariff levied primarily for protection may yield revenue.
  5. 5. Transit Duties  This type of duty is levied on commodities that originate in one country, cross another, and are consigned to a third.  As the name implies, transit duties are levied by the country through which the goods pass.  Such duties are no longer important instruments of commercial policy, but, during the mercantilist period (16th–18th century) and even up to the middle of the 19th century in some countries, they played a role in directing trade and controlling certain of its routes.
  6. 6. Export Duties  Export duties are no longer used to a great extent, except to tax certain mineral, petroleum, and agricultural products. Several resource-rich countries depend upon export duties for much of their revenue.
  7. 7. TYPES OF TRADE BARRIERS  SPECIFIC TARIFF BARRIERS  AD VALOREM TARIFF
  8. 8. SPECIFIC TARIFF  A fixed fee levied on one unit of an imported good is referred to as a specific tariff. This tariff can vary according to the type of goods imported.  For example, a country could levy a $15 tariff on each pair of shoes imported, but levy a $300 tariff on each computer imported.
  9. 9. Ad Valorem Tariffs The phrase "ad valorem" is Latin for "according to value," and this type of tariff is levied on a good based on a percentage of that good's value. An example of an ad valorem tariff would be a 15% tariff levied by India on China Electronic Goods. The 15% is a price increase on the value of the good, so a Rs.10,000 mobile now costs Rs.11,500 to Indian consumers.

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