Trade Barrier

Topics: International trade, Free trade / Pages: 4 (776 words) / Published: Aug 19th, 2013
Definition: Trade barriers work on the same principle: the imposition of some sort of cost on trade that raises the price of the trade products.
Trade barriers are often criticized for the effect they have on the developing world because rich-country players call most of the shots and set trade policies. Goods such as crops that developing countries are best at producing still face high barriers and offers high taxes on food imports and subsidies for farmers in developed economies lead to overproduction and dumping on world markets, thus lowering prices and hurting poor-country farmers.
1. Ad valorem :
An ad valorem tax is a tax based on the quantity of an item, such as cents per kilogram, regardless of price. Imposed at the time of a transaction . ex:- sales tax or value-added tax (VAT). * Sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow (or require) the seller to collect funds for the tax from the consumer at the point of purchase.
Two types of sales tax: * The first is a consumption tax which is a straight percentage tax placed on the sale of a good. These are the traditional type of sales tax. * The second type of sales tax is a value added tax. On a value added tax (VAT), the net tax amount is the difference between the input costs and the sales price. * It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products.

2. Bound tariff rate: Maximum rate of tariff allowed by World Trade Organization (WTO) to any member state for imports from another member state. 3. Environmental tariff: A tax placed on products being imported to or

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