Abstract
Contrary to the allegation that tariffs are low and do not matter anymore, this chapter shows that tariffs still matter. Many countries have high tariffs, and countries with low tariff averages often have “sensitive” sectors with high tariffs. The simple average of bound tariffs at the WTO (World Trade Organization) is much higher than the applied rates, and this “water in the tariffs” reduces the credibility of the WTO and its negotiations. Tariffs are still a key element in FTAs, and FTAs lead to substantial tariff cuts. Tariff preferences are discriminatory, and the hierarchies of tariff discrimination by the EU and the USA are shown as illustrations. Countries have up to 15,000 tariff lines and the chapter argues that this excessive detail is a historical anomaly that should be abolished.
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Notes
- 1.
The number of countries is less than the number of WTO members (164) due to data availability, or because some WTO members have no bindings. Data is for 2015 in about three-fourth of the cases, and other years during 2010–2016 for the rest, except three observations with tariff data before 2010. Trade Analysis Information System (TRAINS) is a tariff and trade database of United Nations Conference on Trade and Development (UNCTAD). WTO-CTS is the Consolidated Tariff Scedules database of the World Trade Organisation (WTO). IDB is the Integrated Data Base of the WTO. All the databases are accessible through the World Integrated Trade Solution (WITS) software/search engine.
- 2.
Observe that not all tariffs are bound and therefore the bound and MFN-applied tariff averages are not strictly comparable. Since non-bound products tend to have higher MFN-applied tariffs, Table 4.1 may understate the extent of water in the tariffs.
- 3.
Bound and MFN-applied tariffs are ranked separately to show the ranges, and so countries generally have different ranks for bound and applied tariffs.
- 4.
The figure is approximate. For 2014, the figure was 14,968, based on data from the WITS/TRAINS database.
- 5.
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Melchior, A. (2018). Tariffs: The Most and the Least Favoured Nations. In: Free Trade Agreements and Globalisation. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-92834-0_4
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