THE NUMBERS:
Temporary tariffs, 2000-2008
|
Total 2000-2008 |
Annual average 2000-2008 |
2008 Only |
| WORLD |
1701 |
189 |
155 |
| India |
326 |
36 |
31 |
| U.S. |
209 |
23 |
30 |
| EU |
171 |
19 |
15 |
| China* |
117 |
17 |
4 |
| Turkey |
123 |
14 |
15 |
| Argentina |
106 |
12 |
6 |
| All Other |
639 |
72 |
58 |
| * WTO data for China cover only 2002-2008 |
WHAT THEY MEAN:
Last week, Obama administration imposed a three-year tariff on Chinese automobile tires. As of this Saturday, rates jump from the permanent 4 percent rate to 35 percent for the next 12 months, then fall to 30 percent and 25 percent before returning to normal. The tariff is unusual on two counts — (a) as the first use of a special clause of China’s 1999 WTO accession agreement authorizing easy “safeguard” tariffs (though the Bush administration used a very similar clause to impose a quota on Chinese clothes and household linens between 2006 and 2009), and (b) as a step requested by a trade union rather than a business group. Otherwise the tariff, and its likely effects, are less dramatic than some reactions suggest. The context:
All but three significant trading economies have permanent tariff systems. (Hong Kong and Libya have none; Singapore imposes tariffs only on beer and a local liquor called samsu. ) The World Bank calculates the average worldwide tariff on manufactured goods at about 7 percent, and the average U.S. tariff at about 3 percent. In this context a 35 percent tire tariff is high — though easily comparable to America’s permanent 32 percent tariff on acrylic sweaters and polyester pullover shirts, and well below the still higher tariff rates on orange juice, butter and cheap shoes.
On top of this, the United States and many other countries have laws which, in special circumstances, impose temporary tariffs above permanent rates. These come in three types: “anti-dumping” tariffs are used most frequently, at an average of 166 per year since 2000; “countervailing duties” are second at an 14-per-year average; and “safeguards” (like the tire tariff) are rarest, averaging 8 per year. The WTO’s statistical office, which publishes a semiannual count of tariffs imposed under these laws, finds 155 around the world in 2008, including 138 anti-dumping penalties, 11 countervailing duties, and six safeguards. The total is slightly below the average of 189 per year since 2000, and a bit closer to the decade’s 2007 low of 114 tariffs than to its 254-tariff peak in 2000. By country, India is the most enthusiastic user of temporary tariffs, averaging 36 per year, followed by the United States (23), the European Union (19), China (17), Turkey (14) and Argentina (12). Brief descriptions of each law:
- Anti-dumping: Five-year penalties meant to compensate for “below-cost sales” of goods, which account for 1498 of the 1701 temporary tariffs imposed since 2000. By sector they most often hit steel, other metals and chemicals, which together faced 750 anti-dumping tariffs during the decade; by country, Chinese goods are the most frequent targets, at 359 tariffs for the decade and 52 of the 138 imposed in 2008. (American goods got 75 penalties, the fourth-most in the world after China, Taiwan and Korea.) India is the most frequent user, at 36 per year, followed by the United States, the European Union, China and Turkey. China’s most recent such penalty, incidentally, is a tariff imposed on September 7th, on rubber from Korea and Russia used to make automobile tires.
- Countervailing duty: Also five-year tariffs, meant to offset industrial subsidies. These are much less common than anti-dumping penalties, averaging 14 per year since 2000. The 2008 CVD total was 11. America is the most frequent user, averaging about 7 per year; the European Union and Canada both average about two per year.
- Safeguards: These are three-year emergency relief tariffs, not based on claims of unfair trade practices but meant to ease competition when imports suddenly jump. Rarer and shorter than antidumping and countervailing duty tariffs, safeguards are often bigger decisions than either, since they normally — though not on the tire case — are imposed on all imports of a particular product rather than goods from a single country. Turkey and Jordan have used the procedure most frequently in this decade, respectively accounting for 11 and 6 of the 75 safeguard uses since 2000, though the best-known case affecting the largest amount of trade was the Bush administration’s steel policy of 2002-2003.
Finally, temporary tariffs may be frequent but usually affect only a small fraction of trade. For the United States, the three types together usually affect about 0.1 percent of imports, with occasional peaks (as in 2002) at about 1.0 percent. The rubber-tire tariff affects a bit more than $1 billion in imports, or 0.3 percent of imports from China and 0.05 percent of total imports. America’s permanent tariff system, excluding permanently duty-free goods and products imported under free trade agreements and “preference” programs waiving tariffs for poor countries, applies to about $650 billion worth of goods, or 30 percent of imports.
The “Trade Fact of the Week” is curtsey of the
DLC’s Trade & Global Markets Project.
