International Trade Law
Readings 4: Market Access Barriers
Van den Bossche & Zdouc, The Law and Policy of the World Trade
Organisation
Chapter 6: Tarif arrierr
Introduction
Two main categories of barriers tarifs (customs duties on
imports and exports and other charges on both) and non-tarif
barriers (quotas, bans, and other tarif barriers)
Tarif barriers are only on trade in goodsi
Curtomr Dutier on Importr
Definition an ypees
Definition of a Customs Duty on Imports
Financial charge or tax on imported goods, due because of their
importation market access is conditional upon payment
Not the moment of the collection of the charge is relevant in
determining whether it is a customs duty or an internal charge, but
the reason for the charge is
Types of Customs Duties
A valorem percentage of the value of the imported good
Non-a valorem specific (based on a unit of quantity), compound
(a valorem duty to which a specific duty is added/subtracted),
mixed (either a valorem duty or specific duty, whichever one is
higher), or ‘other’ (determined by technical factors)
A valorem are preferred, because they are more transparent,
index-linked, do not punish eficiencyi
Non-a valorem duties are uncommon for industrial goods, but for
agricultural goods they are still used (compound duties)
MFN-duties = regular customs duties applicable to all other WTO
members in line with Article I:1 of the GATT 1994
1
, Preferential duties = applied to specific countries pursuant to
conventional or autonomous arrangements
Duties = duties applicable to non-WTO Members and do no benefit
of MFN-treatment
National Customs Tarif
Follow the coding system of the Harmonized System (HS)
Many members have online database (TARIC of the EU) WTO has
own database in the Tarif Download Facility
Pureose of Customs Duties on Imeorts
Two main purposes: source of revenue for governments and as a
protection of domestic industries (developing countries will use
them to protect infant industries, whereas developed countries will
use them to protect industries in decline)
Customs Duties as a Lawful Instrument of Protection
WTO does not prohibit customs duties in general, and they are an
instrument of protection against imports allowed by the GATT 1994
Negotiations on the Re uction of Customs Duties
Success of Past Tarif Negotiations
Used to be 40 per cent a valorem on industrial goods, but now are
around 4 per cent a valorem
Importance of Customs Duties as Trade Barriers
Developing countries still maintain high customs duties (simple
average ranging between 10 and 15 per cent) and developed- as
well as developing countries maintain high customs duties when it
comes to sensitive industrial and agricultural products (textiles,
clothing, leather)
In very competitive market, even a small duty may act as a barrier
to trade
Tarif escalation can be problem for developing countries
discourages manufacturing and processing in countries where
those non-processed or raw materials are produced
Basic Rules Governing Tarif Negotiations
2
, Article XXVIII bis of the GATT 1994 basic principles are the
principle of reciprocity and mutual advantage and the MFN-
treatment obligation
Article XXXVI:8 of the GATT 1994 reciprocity does not apply to
its full extent between developed countries and developing
countries
Free-rider problem due to product-to-product negotiations
formula approach or sectoral approach needed
Organisation of Tarif Negotiations
Product-by-product negotiations are less commonly used in
bilateral or plurilateral negotiations outside a Negotiation Round or
when acceding the WTO
Formula approach can be linear (unfair to countries which have
already low customs duties) or non-linear reduction (Swiss formula,
requiring larger cuts of higher customs duties than of lower
customs duties when compared to the linear formula used before
this formula came into place)
Sectoral approach aim at reducing tarifs in specific sectors of
trade
Tiered approach same as formula approaches but with tiered
baselines
yarif Concessions an Sche ules of Concessions
Tarif Concessions or Tarif Bindings
Commitment not to raise the customs duty on a certain product
above an agreed level almost all developed country members
have bound their tarifs, whereas some developing countries have
not done so (ranging from 95% to 14% binding)
Schedules of Concessions
Annexed to the Marrakesh Protocol to the GATT 1994 (integral part
of the GATT 1994i)
Schedules must be GATT-consistenti (EC – Bananas III, AB)
Schedules are structured according to the HS
Interpretation of Tarif Schedules and Concession
3
Readings 4: Market Access Barriers
Van den Bossche & Zdouc, The Law and Policy of the World Trade
Organisation
Chapter 6: Tarif arrierr
Introduction
Two main categories of barriers tarifs (customs duties on
imports and exports and other charges on both) and non-tarif
barriers (quotas, bans, and other tarif barriers)
Tarif barriers are only on trade in goodsi
Curtomr Dutier on Importr
Definition an ypees
Definition of a Customs Duty on Imports
Financial charge or tax on imported goods, due because of their
importation market access is conditional upon payment
Not the moment of the collection of the charge is relevant in
determining whether it is a customs duty or an internal charge, but
the reason for the charge is
Types of Customs Duties
A valorem percentage of the value of the imported good
Non-a valorem specific (based on a unit of quantity), compound
(a valorem duty to which a specific duty is added/subtracted),
mixed (either a valorem duty or specific duty, whichever one is
higher), or ‘other’ (determined by technical factors)
A valorem are preferred, because they are more transparent,
index-linked, do not punish eficiencyi
Non-a valorem duties are uncommon for industrial goods, but for
agricultural goods they are still used (compound duties)
MFN-duties = regular customs duties applicable to all other WTO
members in line with Article I:1 of the GATT 1994
1
, Preferential duties = applied to specific countries pursuant to
conventional or autonomous arrangements
Duties = duties applicable to non-WTO Members and do no benefit
of MFN-treatment
National Customs Tarif
Follow the coding system of the Harmonized System (HS)
Many members have online database (TARIC of the EU) WTO has
own database in the Tarif Download Facility
Pureose of Customs Duties on Imeorts
Two main purposes: source of revenue for governments and as a
protection of domestic industries (developing countries will use
them to protect infant industries, whereas developed countries will
use them to protect industries in decline)
Customs Duties as a Lawful Instrument of Protection
WTO does not prohibit customs duties in general, and they are an
instrument of protection against imports allowed by the GATT 1994
Negotiations on the Re uction of Customs Duties
Success of Past Tarif Negotiations
Used to be 40 per cent a valorem on industrial goods, but now are
around 4 per cent a valorem
Importance of Customs Duties as Trade Barriers
Developing countries still maintain high customs duties (simple
average ranging between 10 and 15 per cent) and developed- as
well as developing countries maintain high customs duties when it
comes to sensitive industrial and agricultural products (textiles,
clothing, leather)
In very competitive market, even a small duty may act as a barrier
to trade
Tarif escalation can be problem for developing countries
discourages manufacturing and processing in countries where
those non-processed or raw materials are produced
Basic Rules Governing Tarif Negotiations
2
, Article XXVIII bis of the GATT 1994 basic principles are the
principle of reciprocity and mutual advantage and the MFN-
treatment obligation
Article XXXVI:8 of the GATT 1994 reciprocity does not apply to
its full extent between developed countries and developing
countries
Free-rider problem due to product-to-product negotiations
formula approach or sectoral approach needed
Organisation of Tarif Negotiations
Product-by-product negotiations are less commonly used in
bilateral or plurilateral negotiations outside a Negotiation Round or
when acceding the WTO
Formula approach can be linear (unfair to countries which have
already low customs duties) or non-linear reduction (Swiss formula,
requiring larger cuts of higher customs duties than of lower
customs duties when compared to the linear formula used before
this formula came into place)
Sectoral approach aim at reducing tarifs in specific sectors of
trade
Tiered approach same as formula approaches but with tiered
baselines
yarif Concessions an Sche ules of Concessions
Tarif Concessions or Tarif Bindings
Commitment not to raise the customs duty on a certain product
above an agreed level almost all developed country members
have bound their tarifs, whereas some developing countries have
not done so (ranging from 95% to 14% binding)
Schedules of Concessions
Annexed to the Marrakesh Protocol to the GATT 1994 (integral part
of the GATT 1994i)
Schedules must be GATT-consistenti (EC – Bananas III, AB)
Schedules are structured according to the HS
Interpretation of Tarif Schedules and Concession
3
