Specific duty

CUSTOMS and DUTY

Every country has to ensure that the proportion of imports to exports has a positive effect on its economy. Too many cheap imports can damage a country’s economy, as sales of the country’s home-produced goods will suffer. Too many expensive exports can also be harmful because few people will buy them. Therefore, each country has the right to impose duty on imported goods in order to control prices and protect its economy.

Types of duty

Export duty

Export duty is sometimes imposed on goods when they leave the country (for example on oil exports from Russia). However, this kind of duty is not commonly imposed because in many cases it would make the goods too expensive for the world market.

Import duty

This kind of duty is imposed on goods when they are brought into a country. There are two types of import duty:

1. Protective duty: Protective duty is imposed to prevent home producers losing business because of cheaper foreign imports. Importers in Italy, for ex ample, may try to import shoes from South America as they are cheaper than Italian shoes; this process is known as dumping. This, of course, would be a threat to the Italian shoe industry. To prevent this, the Italian government would impose protective duty on South American shoes, which would increase the price so much that they would no longer be able to compete with Italian shoes

2. Preferential duty: Preferential duty is a lower rate of duty imposed on countries with whom there is a trade agreement. Such agreements may be bilateral (between two countries, such.as Germany and Israel) or multilateral (between three or more countries). Groups of countries which have multilateral trade agreements include NAFTA (the North American Free Trade Association, made up of Canada, the US and Mexico) and ASEAN (the Association of Southeast Asian Nations, made up of Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand). This lower rate of duty is imposed to encourage importers to trade with the preferred countries rather than with non-member nations.

Excise duty

The purpose of excise duty is to raise money for the government. It is imposed on certain home-produced products such as luxury goods, cigarette oil and alcohol.

Home-produced goods

To impose duty

Export duty

Import duty

Protective duty

Dumping

Preferential duty

Trade agreement

Bilateral

Multilateral

Excise duty

Luxury goods

Exercise 1 What kind of duty do you think was imposed in each case?

1. An exporter in Switzerland sent a consignment of cheese to an importer in Sweden.

2. An importer in Japan wanted to buy cheap cameras from Taiwan.

3. A group of American tourists bought a quantity of expensive perfume while on holiday in France.

4. A German tobacco company imported cigars from Cuba.

5. An Indian tea company sent a large quantity of tea to England.

Calculating duty

Duty is calculated in several ways:

Ad valorem duty

Ad valorem duty is charged as a percentage of the value of the goods, i.e. the more expensive the goods, the higher the duty.

Specific duty

Specific duty, also known as fixed duty, is calculated as a fixed sum of money per unit of quantity or weight, e.g. 5 cents per kilo, 10 dollars per 1000 units etc.

Дата добавления: 2015-10-29