Session 3

Border measures vs internal measures

A measure is any act by a government.

Boarder measures affect the act of importation

 Tariffs1, quotas, import ban

 Also called “market access” barriers

Internal measures once the product has been imported [NT ONLY APPLIES HERE]
 Fiscal: taxes
 Non-fiscal: technical requirements

TARIFFS

Tariffs: Article II – there is no definition. Look at the nature, might be Value Added Tax
(VAT)

1. Ordinary customs duties (Article II:1(B) 1st sentence)

2. Other duties and charges (Article II:1(B) second sentence)
3. Anti-dumping/ countervailing duties (Article III:2(B))
4. Fees or other charges commensurate with the cost of services rendered (Article II:2(C)
and VIII

Bound rate: WTO good schedule with the commitment – International Legal document
Applicable rate: domestic goof schedule – National Legal document, sets out the currently
applicable tariffs

Bound rate is the maximum you can charge, whatever they charge it has to be applied on an
MFN basis.

Generalized System of Preferences

Types of tariffs:

1. Ad valorem (10%)
2. Specific tariffs (10 euro/kg)
It is easier, plus the value may decrease
3. Combined tariffs
 Compound/mixed (10% and 10 euro/kg)
 Alternative (10% or 10 euro/kg, whichever higher)

1
Ordinary customs duties, import duties
Tariff escalation means that the tariff increases according to the level of manufactured. Ex:
Cocoa seeds (1%) – Cocoa powder (5%)

Case Argentina – Textiles

Argentina had an ad valorem tariff. But applied a specific duty.

Panel said that if the binding is ad valorem, you can’t apply a specific duty.
AB said that you can apply a specific tariff as long as it is not higher than the ad valorem
equivalent. You have to monitor the price.

Example: Specific tariff is 10 euros [slide 53]

Harmonized System (HS)

Classification system for goods

Categorizes products to the 6-digit level

Reducing tariffs

 Linear formulae ‘cut all tariffs by 50%’

50 to 25
8 to 4
However, it is not efficient because 8 to 4 is less protective. 50 to 25 is still protective.

 Non linear formulae eg Swiss formula

Export tariff: not covered by Article II

 Why would a government impose this type of tariffs? Disincentives the export, lower
price at the domestic. Industrial policy purposes.

It is allowed because it not mentioned by Article II.

 Why would they introduce export duties on food products? Food security.

China and Vietnam were imposed not to establish export duties.

Other duties and tariffs: residual category. Not covered by II:2.

Case Peru – Agricultural products

Peru wanted to stabilize the price of sugar. They designed a price range.
Nature: there is something automatic. Peru lost.

Tariff rate quotas [does not fall under Article XI]

Combination of tariffs and quotas. Lower tariff for the first 100.000 metrics tons – 10%.
Afterwards back to 100% rate.

Case EC – Chicken Cuts

QUANTITATIVE RESTRICTIONS

Article XI
Quota 0: import prohibition.
General prohibition on quantitative restrictions.

 Quotas
 Import or export licenses
 Other measures
- Broad residual category
- Condition or burden that has a limiting effect
- Article XI protect competitive opportunities of imported products (but not trade flows)

Case India – Autos

Key facts: Indian government requires that importers of automotive kits sign a MOU pursuant
to which their exports must be equal to their imports > to promote exports to earn foreign
currency. Trade balance requirement.