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A tax on the value of imported commodities intended to increase their cost to the domestic consumer. Tariffs, the rate of which tend to rise with the stage of processing, are normally designed to regulate imports for a variety of reasons of state economic policy. These may include a concern for the balance of payments, the protection of infant industries, strategic sectors and sectors suffering from competition from imports, and retaliation against and protection from dumping. Tariffs may be preferential (favouring some importers over others) or non-discriminatory (extending the treatment of the most favoured nation to all trading partners).
Although it may be implemented on a bilateral basis, trade policy is set within the international context of the General Agreement on Tariffs and Trade (GA TT) which began in 1947 with 23 members and, since January 1995, of the World Trade Organisation (WTO) with 123 members then covering more than 90 per cent of world trade. The objectives of the WTO/GA TT are to reduce tariffs, to remove other non-tariff barriers (NTBs) which are probably more important than tariffs in influencing the level and composition of international trade and to eliminate trade restriction. Reciprocity and non-discrimination based upon the most favoured nation clause underpin the working of GATT which since its formation in 1948 set out to achieve its objectives via a series of eight negotiating rounds (the latest being the Uruguay Round completed in 1994) and rules governing trade relations emanating from these rounds. Whilst the average level of tariffs was around 40 per cent in 1940, the level in 1995 was about 4 per cent. (RL)
Suggested Reading Dicken, P. 1998: Global Shift: transforming the world economy, 3rd edn. London: Paul Chapman Publishing, ch. 3. |
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