lesson 4.pptx

7/24/2019 Lesson 4.pptx

1/8

Lesson No.

International Economics: Theory and Policy

byFlt t Iftikhar Ahmed

LESSON NO. 04

The General Agreement on

Tariffs and Trade (GATT)


2/8

International Trade By : Flt Lt Iftikhar Ahmed 2

The General Agreement on

Tariffs and Trade (GATT

LEARNING OBJECTIVES

1. Learn the basic principles underpinning the

GATT.

2. Identify the special provisions and allowableexceptions to the basic principles of the GATT.


3/8


Tariffs

GATT was meant to be ust one part of a

much broader agreement to establish an

International Trade !rgani"ation #IT!$

The IT! was conceived during the %retton&oods conference 'ew (ampshire in 1)**

+omplementary to the International ,onetary

-und #I,-$ and the &orld %an The IT! never came into existence


4/8


The primary way in which countries either

liberali"e trade or protect their economies.

+omplete elimination of tariffs and other

barriers to trade mean free trade.

There are two basic ways in which tariffs may

be levied/

i. 0pecific Tariffsii. Ad valorem Tariffs.


5/8


A Specific Tariff is levied as a fixed chargeper unit of imports. e.g. Govt levies a s. .31specific tariff on every wristwatch imported into 4a.

An Ad valorem Tariff is levied as a fixed

percentage of the value of the commodity

imported. e.g. a 2.3 5 ad valorem tariff on importedautomobiles.

!ccasionally6 both tariffs are levied on thesame product simultaneously. This is nown

as a two-part tariff.


6/8

International Trade By : Flt Lt Iftikhar Ahmed

7ifferent tariffs are generally applied to

different commodities6 countries have a tariff

schedule.

0ome Govts rarely apply the same tariff to allgoods and services imported into the country.

The 8nited Arab 9mirates sets a 3 5 tariff on almost all

items6

&hile %olivia levies tariffs either at 56 2.3 56 3 56 :.3

56 or 1 5.


7/8International Trade By : Flt Lt Iftikhar Ahmed !

!eas"ring Protectionism:

A#erage Tariff $ates

!ne method used to measure the degree of

protectionism within an economy is the

average tariff rate.

4roblem with this method arises if a countryhas most of its trade in a few categories with

"ero tariffs but has high tariffs in many

categories. In this case6 the average tariffmay overstate the degree of protection in the

economy.


8/8International Trade By : Flt Lt Iftikhar Ahmed "

Trade%&eighted A#erage Tariff

This problem can be avoided6 to a certain

extent6 if one calculates the trade weighted

average tariff.

The simple way to calculate a trade;weightedaverage tariffrate is to divide the total tariff

revenue by the total value of imports.

the best way to overstate the degree ofprotection is to use the average tariff rate on

dutiable imports.

lesson 4.pptx

Documents