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Edited by William A. Kerr and James D. Gaisford
Chapter 19: Tariffication: Theoretical Justification and Problems of Implementation
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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