Ad Valorem Tariff Barriers

Tariff Barriers

1. Tariff barriers and
2. Non-tariff barriers, both includes import quotas, exchange controls, and other obstacles to trade.

In some cases, these barriers effectively prevent the exporter from selling its goods in that foreign country. In other cases, they represent an extra cost of doing business that can be built into the export price.

A tariff : Is a tax levied by the foreign government on goods imported into that country (or import duty). The tariff increases the price at which the goods are sold in the importing country and therefore makes them less competitive with locally produced goods.

Non-Tariff Barriers
The various types of non-tariff barriers (or NTB) that impede the flow of international trade include consist of: import quotas, exchange controls, customs delays, government purchasing policies, subsidies, customs calculation procedures, boycotts, technical barriers, bribes and voluntary restraints.

Additional steps are continuously being taken through the General Agreement on Tariffs and Trade or GATT or now referred to as WTO World Trade Organization since 1995, to reduce trade barriers to imports from non-members.

Types of Tariffs
A tariff may be one of the following four kinds:

(1) Ad valorem (2) Specific (3) Alternative
(4) Compound

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1. Ad Valorem duty
The kind most commonly used, is one that is calculated as a percentage of the value of the imported goods - for example, 10, 25 or 35 per cent.

This may be based, depending on the country, either on destination (c.i.f.), or on the value of the goods at the port in the country of origin (f.o.b.).

2. A Specific duty
Is a tax of so much local currency per unit of the goods imported (based on weight, number, length, volume or other unit of measurement. Specific duties are often levied on foodstuffs and raw materials.

3. An Alternative duty
Is where both an Ad valorem duty and A Specific duty are prescribed for a product, with the requirement that the more onerous one shall be Ad valorem duty value plus 10 cents per kilo.

4. Compound duties
Are imposed on manufactured goods that contain raw materials that are themselves subject to import duty. The "specific" part of the compound duty (called compensatory duty) is levied as protection for the local raw material industry.

Dutiable Weights

Depending on the country, the Dutiable weights used to calculate specific import duties may be the gross weight, the legal weight, or the net weight.

The dutiable weight is the actual weight upon which duty must be paid.

The gross weight is the weight of the goods and all interior, exterior containers and packing material.

The legal weight (used mainly by Latin American countries) is the weight of the goods and of the immediate interior containers.

The net weight is the weight of the goods without the packing materials.
However, in a few countries, it is defined as including the weight of the immediate container.

Very often, there is a fixed percentage allowance (called the tare) used by the customs authorities for determining gross weight from net weight, and vice-versa. Most countries using specific duties employ different types of dutiable weights for difference commodities.

It is essential for an exporter to know what dutiable weight is being used for its product as it may be able to vary its packing accordingly.

In some countries (such as Switzerland, Venezuela and Colombia) most specific duties are levied on gross weight, whatever the nature of the goods.

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Tariff Lists
Dutiable Value
Anti Dumping Duties

"Anti-dumping are additional duties to
match the difference between prices..."

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