LET’S TALK TRADE
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In case you were wondering, the tariffs shown in this video are the average of all MFN applied rates around the world for each of those goods.
The practical side of tariffs
Tariffs can take many different forms, but the most popular by far are those expressed as a percentage of the product's value. These are called ad valorem duties and they are calculated using the customs value of the imported goods. However, tariffs can also be expressed as a “specific duty” (for example, a set amount per kilogram or other unit of measure). Countries sometimes also combine both types in compound or mixed duties.
All countries structure and disseminate their tariff information based on a national or regional tariff nomenclature. Practically all of this work is based on the “Harmonized System” (HS), an international convention administered by the World Customs Organization. This is why knowing the exact “HS classification” of a product is typically the first step in determining the tariff to be paid.
While practically all countries levy tariffs on imports, some of them also levy duties on the exportation of certain products.
Tariffs at the WTO
The first thing to know about tariffs in the WTO is that they are covered by the Most Favoured Nation treatment obligation: it means that, with some exceptions, a member of the WTO should charge the same tariff on a product for imports from all other WTO trading partners (check Let's Talk Most Favoured Nation to learn more).
Beyond the MFN principle, which applies to import and export tariffs, Article II of the GATT 1994 provides that WTO members can set the maximum tariff level they can levy on imports from other WTO members. These “bound duties” become a commitment, or a promise made to all trading partners who are also part of the WTO, and they result from negotiations at the WTO.
Bound duties vary considerably across countries, regions and from product to product.
Although a WTO member cannot go above this promised level, it has the liberty of applying any level below this commitment. In fact, many of them apply tariff levels that are significantly lower than what they have promised. The duty levels used in practice are known as the MFN applied duties. As an exception, a WTO member may also apply even lower tariffs on products originating in certain countries (preferential duties) under certain conditions. Some of these exceptions include Article XXIV of the GATT 1994, which allows the establishment of regional trade agreements and customs unions, and the Enabling Clause, which allows for special and differential treatment for developing countries and least developed countries.
Bound duties are contained in a member's “Schedules of concessions”, known informally as a “Goods Schedule”. These legal instruments are an integral part of the WTO Agreement, and they are one of the main tools used by the WTO to ensure transparency, security and predictability for world trade. Although practitioners typically refer to “the” Schedule of a member, these concessions and commitments can change over time and, as a result, they are often contained in several legal instruments that, together, set out the member's individual obligations at the WTO.
Read more about the Goods Schedules and how they change over time.
How much will I pay to import this product?
If you want to obtain specific tariff information about certain countries, products or sectors, these are some WTO resources that are freely available to all users:
- World Tariff Profiles: a joint publication of the WTO, the International Trade Centre (ITC) and the United Nations Conference on Trade and Development (UNCTAD), which provides comprehensive summary information on the tariffs and non-tariff measures imposed by over 170 countries and customs territories. Tariff data are presented in comparative tables and in one-page profiles for each economy.
- Tariff Analysis Online: an advanced online database that allows users to gain detailed information for specific products, including bound and applied tariffs at the national tariff line level (HS-8 digits or more) as well as import data. It also allows the users to undertake queries and analyse different aspects of the data.
- Tariff Download Facility: This database allows users to download in bulk information on Most- Favoured-Nation (MFN) applied and bound tariffs for all WTO members, aggregated at the HS-6 level.
- WTO Data Portal: Contains general statistical indicators related to WTO issues, including bound and MFN applied tariffs.
Special thanks to …
Our experts in this video:
- Suja Rishikesh Mavroidis, WTO Market Access Director
- Roy Santana, Counsellor at the Market Access Division
… and to you. This video was produced by the WTO's audio-visual unit for information purposes, and for as wide dissemination as possible. Please share and recommend this video and others in this series from our social networks, or download it from this page (instructions near the playback window).
PS: By the time you have watched this, the line Suja and Roy drew on the ground has long disappeared. We used (imported) biodegradable chalk.