Low nominal tariff rate
QUESTION 1
There are two questions related to Tariffs
1.Is it possible for a low nominal tariff rate to understate the effective rate of protection? What is tariff escalation?
2.How can tariffs be justified?
Each student should respond both questions by one paragraph for each
QUESTION 2
There are two questions related to Nontariff Trade Barriers
Each student should respond both questions by one paragraph for each.
1. Describe some of the differences between tariffs and quotas?
2. What are the intent and impact of domestic content requirements?
QUESTION 3
There are two questions related to Trade Regulations and Industrial Policies
1. Has industrial policy contributed significantly to Japan’s economic growth?
2. Explain how advocates of strategic trade policy differ from the classical free traders in their treatment of externalities?
QUESTION 4
There are two questions related to Trade Policies for the Developing Nations.
1. What are some of the growth strategies that have been employed by the developing nations? How successful are these strategies?
2. Describe the flying-geese pattern of economic growth? What countries have pursued this strategy?
Sample Solution
Yes, it is possible for a low nominal tariff rate to understate the effective rate of protection. Tariff escalation occurs when different goods from the same industry are subject to different tariffs depending on their level of processing or sophistication. In this instance, the nominal tariff rate may be lower than what is actually experienced by consumers due to the increased cost associated with these more advanced products; this form of tariff structure is known as tariff escalation (“Tariff Escalation: Definition & Example”, 2019).
For example, in some countries imports containing components which have been subjected to value-added processes in other nations may be charged higher duties then those without while simultaneously being charged at a lower overall rate. This can lead to further distortions within domestic markets as domestically produced versions may be less expensive even though they are technically subject to a greater amount of taxation (Crisp et al., 2017).
In conclusion, while an initially low nominal tariff rate may appear favorable on paper it can still effectively act as an inhibitor against international trade if not properly assessed via deeper analysis into potential nuances such as escalated rates across certain classes of goods . By understanding how protectionist policies such as these influence both foreign and domestic pricing organizations and governments alike can better understand how best to adjust regulations so that all parties benefit.
