tariff notes - Tariff Policy Marissa Maricosa A. Paderon...

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1 Tariff Policy Marissa Maricosa A. Paderon Assistant Professor, Economics Dept. Ateneo de Manila University
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2 Common features of tariff policy Preferential duty – applied to an import good according to its geographical source; a country that is given preferential treatment pays a lower tariff. A preferential duty is geographically discriminatory in nature Most-favoured-nation (MFN) - non- discriminatory. Import tariff applies to all its trading partners.
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3 Common features of tariff policy Offshore assembly provisions (OAP) – tariff in practice is lower than that listed in tariff schedule. e.g. US imports cordless telephone set from Taiwan at $80/set, t=15%. Pay import tax of $12. Assume price to US consumer = $92; US components made by Taiwan = $52. Under the OAP, applied value of final product = ($80 - $52)= $28 x 15%= $4.20 import tax. For US consumer: $80 + $4.20= $84.20 which is 5.25% (4.20/80) instead of 15%
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4 Measurement of Tariff One issue concerns the height of a country’s average tariff (how much price interference exists in a country’s tariff schedule. 2 Measurements: Unweighted average tariff – average of nominal rates. e.g. 3 imported goods A,B,C with tariffs = 10%, 15%, 20%, respectively t UA = (10 + 15 +20)/3 = 15%
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5 Measurement of Tariff Note: unweighted average tariff does not take into account the relative importance of imports. For example, country A imports mostly good A, then t UA tend to overstate height of the country’s average tariff. Weighted
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This note was uploaded on 04/10/2011 for the course ECON 2001-1 taught by Professor Nickeyturner during the Spring '11 term at Walden University.

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tariff notes - Tariff Policy Marissa Maricosa A. Paderon...

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