Weighted and Unweighted average tariff

1. (Unweighted) average tariff – the mean (average) value of tariff in a country schedule (or part of the schedule).

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

Example: given 3 goods with specified tariffs:

A – 10%; B – 15%, C – 20%.

Average tariff: _____________________________________

Average tariffindicates how much protection is applied by an economy on average. In general, lower protection level indicate a greater degree of integration with the global economy.

Disadvantage: average tariffdoesn’t take into account the quantity of goods imported.

2. Weighted-average tariff – the sum of the tariffs in a country schedule (or part of the schedule) multiplied by a product share in the total import (weighting factor).

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

_______________________________________________________________________

Weighted-average tariff takes into account the quantity of goods imported.

Example: given 3 goods with specified tariffs and volumes of imports:

Tariffs: A – 10%; B – 15%, C – 20%;

Volumes of imports: A – $500; B – $200; C – $100.

Weighted-average tariff: _________________________________

_________________________________

__________________________________

Disadvantage: The Weighted-average tariff underestimates the country’s level of protection because heavily protected products are imported less (due to high tariffs) and therefore receive a small weight in the structure of import. For example, a good facing a 200% tariff may not be imported at all (this is called a PROHIBITIVE TARIFF).

EXERCISES

TOPIC#3. TARIFF REGULATION:

WEIGHTED AND UNWEIGHTED AVERAGE TARIFF

Exercise#1. Suppose that the nominal tariff rates on the six imports into a country, as well as the import values are listed below.

Good
Value/quantity	$400	$600	$500	$300	$400/ 100 units	$100/ 10 units
Tariff rates	10%	5%	free	30%	$0,5/unit	$2,5/unit

Calculate the anweighted- and weighted-average nominal tariff rates.

The anweighted nominal tariff rate: ______________________________________________________________________

____________________________________________________________________

The weighted nominal tariff rate: ______________________________________________________________________

______________________________________________________________________

Exercise#2. Table 1 show the import value and tariff rates across different sectors of the economy.Please, calculate the simple and weighted average tariff rates respectively for the 3 major economic sectors. Please, fill in the tables 2.

Table 1. Sectoral Imports and Tariff Rates

Major Sectors	Sectors	Import Value, mln. $	Tariff Rates, %
Variant#1	Variant#2
Agriculture, Fising and Forestry	Agriculture	45,384
Fising	35,218		50,4
Forestry	21,486		60,97
Industry	Mining and Quarrying	16,041		10,15
Food Manufacturing	78,621	60,8	30,33
Non-Food Manufacturing	52,414	48,5	22,4
Services	Construction	5,148	30,7	17,3
Transportation	14,513	25,6	15,4
Finance	2,789	15,3	18,5
Private Services	9,621	12,53	5,65

Table 2. Average Tariff Rates (for major sectors)

Major Sectors	Variant#1	Variant#2
Simple Average Tariff Rates, %	Weighted Average Tariff Rates, %	Simple Average Tariff Rates, %	Weighted Average Tariff Rates, %
Agriculture, Fising and Forestry
Industry
Services
TOTAL

SELF-CONTROL QUESTIONS

Дата добавления: 2015-11-14