Unit 12 Customs Tariffs and International Trade

Pre-text Assignments

12.1.1 Practice the reading of the following words and guess their meaning:

tariff general, barter, duty, record, result, exchange transit, preferentially, licence, procedure, quota, area, domestic

12.1.2 Give the initial forms of the following words and state what parts of speech they belong to:

permissible	equipment	completely	valuation	account
protection	arrangement	comparative	differentiate	restrictive

12.1.3 Read the following words and their translation. Try to memorize the vocabulary:

trace back interfere with costly permissible restrain consequence impel mercantilist dictum discourage encourage revenue tariff yield en route quantitative commodity windfall ad valorem tariffs trade prefrences

проследить вмешиваться дорогой допустимый сдерживать; обуздывать;удерживать следствие побуждать, принуждать,подталкивать расчетливый афоризм, изречение,максима, сентенция не одобрять; мешатьосуществлению,препятствовать, отговаривать ободрять; поощрять, поддерживать фискальный тариф, фискальные пошлины приносить урожай, давать плоды; давать такой-то результат, приводить к чему-л. по пути, по дороге; в пути количественный товар неожиданная удача, неожиданный доход тарифы, взимаемые соответственно стоимости товара предпочтения ( особые торговые преимущества, предоставляемые торговым партнерам из дружественных стран в целях развития экспорта )

Read the text about major types and forms of customs tariffs

Text A

Tariffs

International trade includes all economic transactions that are made between countries. Accounts of barter of goods or of services among different people can be traced back almost as far as the record of human history. International trade, however, is specifically an exchange between members of different nations. Accounts and explanations of such trade begins only with the rise of the modern nation-state at the close of the European Middle Ages.

All nations interfere with international transactions to at least some degree. Tariffs may be imposed on imports — in some instances making them so costlyas to bar completely the entry of the goods involved. Quotas may limit the permissible volume of imports. State subsidies may be offered to encourage exports. Money-capital exports may be restricted or prohibited. Investments by foreigners in domestic plants and equipment may be similarly restrained. These interferences may be simply the result of special-interest pleading, because particular groups suffer as a consequence of import competition. Or a government may impose restrictions because it feels impelled to take account of factors that comparative advantage sets aside.

The general pattern of interference follows the old mercantilist dictum of discouraging imports and encouraging exports.

Such interference or trade barriers may include state trading organizations and government procurement practice that may be used preferentially. Customs classification and valuation procedures, health regulations and marking requirements may also have a restrictive effect on trade. Excise taxes may act as a barrier to trade if they are levied at higher rates on imports than on domestic goods.

Different government regulations and practices also act as barriers to trade. For example, a tariff, or duty, which is a tax levied on a commodity when it crosses the boundary of the Customs area. The boundary may be that of a nation or group of nations that have agreed to impose a common tax on goods entering their territory. Protective tariffs are designed to shield domestic

production from foreign competition by raising the price of the imported commodity. Revenue tariffs are designed to obtain revenue rather than to restrict imports. Still, protective tariffs, unless they are so high as to keep out imports, yield revenue, and revenue tariffs give some protection to any domestic producer of the duty-bearing goods. A transit duty, or transit tax, is a tax levied on commodities passing through a Customs area en route to another country. Similarly, an export duty, or export tax, is a tax imposed on commodities leaving a Customs area.

Other practices may also act as barriers to trade. Quotas of quantitative restrictions may prohibit the importation of certain commodities or limit the amounts imported. Such quotas are usually administered by requiring importers to have licences to bring in particular commodities. Quotas raise prices just as tariffs do, but, being set in physical terms, their impact on imports is direct, with an absolute ceiling set on supply. Increased prices will not bring more goods in. There is also a difference between tariffs and quotas in their effect on revenues. With tariffs, the government receives the revenue; under quotas, the import licence holders obtain a windfall in the form of the difference between the high domestic price and the low international price of the import.

Tariffs on imports may be applied in several ways. If they are imposed according to the physical quantity of an import, they are called specific tariffs. If they are levied according to the value of the import, they are known as ad valorem tariffs.

Tariffs may differentiate among the countries from which the imports are obtained. They may, for instance, be lower between countries that have previously entered into special arrangements, such as the trade preferences accorded to each other by members of the Commonwealth.

(3200 symbols)

12.2.1 Answer the following questions:

1) What is a tariff or duty?

2) What are protective tariffs designed to do?

3) What are revenue tariffs aimed at?

4) On what is a transit tariff or transit duty levied?

5) On what is an export duty or export tax imposed?

6) What are quotas usually introduced for?

7) In what way do quotas differ from tariffs?

8) What are the two ways in which tariffs or imports may be applied?

9) What trade preferences do members of the Commonwealth have?

10) How can tariffs encourage domestic production?