Q&A

What are the 7 instruments of trade policy?

What are the 7 instruments of trade policy?

Trade policy uses seven main instruments: tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative policies and antidumping duties.

What are some examples of tariffs?

A “unit” or specific tariff is a tax levied as a fixed charge for each unit of a good that is imported – for instance $300 per ton of imported steel. An “ad valorem” tariff is levied as a proportion of the value of imported goods. An example is a 20 percent tariff on imported automobiles.

What are the trade policy instruments?

Geoff Jehle examines the primary instruments of national trade policy, often termed commercial policy, including quantitative restrictions (e.g., quotas), tariffs, non-tariff barriers, and export taxes.

What are the three tariff methods?

The three types of tariff are Most Favored Nation (MFN), Preferential and Bound Tariff.

What are three main instruments of trade policy?

Trade policy uses seven main instruments: tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative policies, and antidumping duties. Tariffs are the oldest and simplest instrument of trade policy.

What is considered the simplest instrument of trade policy?

A tariff, the simplest of trade policies, is a tax levied when a good is imported. Specific tariffs are levied as a fixed charge for each unit of goods imported (for example, $3 per barrel of oil). In either case, the effect of the tariff is to raise the cost of shipping goods to a country.

What is a real world example of a tariff?

An example of a tariff could be a tariff on steel. This means that any steel imported from another country would incur a tariff, for example, 5% of the value of the imported goods, paid by the individual or business importing the goods.

What is a high tariff rate?

A tariff is a tax or duty imposed by one nation on the imported goods or services of another nation. High tariffs usually reduce the importation of a given product because the high tariff leads to a high price for the customers of that product.

What is bound tariff rate at WTO?

The bound tariff is the maximum MFN tariff level for a given commodity line. When countries join the WTO or when WTO members negotiate tariff levels with each other during trade rounds, they make agreements about bound tariff rates, rather than actually applied rates.