Handbook on International Trade Policy
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Handbook on International Trade Policy

Edited by William A. Kerr and James D. Gaisford

The Handbook on International Trade Policy is an insightful and comprehensive reference tool focusing on trade policy issues in the era of globalization. Each specially commissioned chapter deals with important international trade issues, discusses the current literature on the subject, and explores major controversies. The Handbook also directs the interested reader to further sources of information.
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Chapter 19: Tariffication: Theoretical Justification and Problems of Implementation

Laura J. Loppacher and William A. Kerr


19 Tariffication: theoretical justification and problems of implementation Laura J. Loppacher and William A. Kerr Introduction Tariffication is the process whereby non-tariff barriers to trade imposed by countries are converted to tariffs which, at least in theory, provide an equivalent degree of protection to the non-tariff barrier that they replace. The principle of tariffication was enshrined in the 1947 General Agreement on Tariffs and Trade (GATT 1947) and remains a central premise of the World Trade Organization (WTO). Tariffs are pre-announced border taxes that remain in place until the country imposing them announces that they are to be altered. Their pre-announced nature provides a degree of predictability for exporters as they are able to discern if exports can be made profitably after paying the tariff. Tariffs are, hence, a subset of border taxes – other forms could be levied on a one time basis when shipments arrive at the importer’s customs warehouse (greatly increasing the risk for exporters) or could be adjusted to reflect changes in international market prices. These latter are known as variable import levies which can be increased as international prices fall and decreased as international prices rise. The effect is to provide a degree of domestic price stability. Other non-tariff barriers such as import quotas, import licenses, minimum import prices, non-tariff measures maintained by state trading enterprises and administrative impediments can all provide even less transparency for exporters than tariffs. Beyond the advantage of transparency,...

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