Tarife D Ara lar Foreign Exchange by mikeholy


   Free trade maximizes world output and
    benefits all nations but all nations impose
    some restrictions on the free flow of
    international trade.
       Tariffs
       Non-tariff trade barriers
 Easily applied
 Most common tool
 Mostly taken from imports
 GATT tries to decrease the rates
       Turkey    : 8% (1999)
       USA       : 4,1% (2000)
       S.Korea   : 7,5% (2000)
   A tariff is a tax or duty levied on the
    traded commodity as it crosses a national

   Aim:

       To raise revenue for the government

       Protection of domestic industries
            Partial protection
            Prohibitive tariff
   Specific: Fixed sum per physical unit of
    the traded commodity.

   Ad valorem (FOB, CIF): Fixed percentage
    of the value of the traded commodity.

   Compound: Combination of ad valorem
    and specific tariff.
TARIFFS: Effects
   Production effect
       Domestic production increases
       Provides protection

   Consumption effect
       Consumption decreases
TARIFFS: Effects
   Foreign trade effect
       Imports fall

   Revenue effect
       Government tax revenue increases

   Income distribution effect
       Income transfer from consumers to producers
       Consumer and producer surpluses
TARIFFS: Effects
   Macroeconomic Effects:

       Balance of payments

       National income

       Terms of trade

       Income distribution
Effective Protection
   How much protection is actually provided
    to the domestic processing of the import-
    competing commodity.

   g=(tj-ai.ti)/(1-ai)
       g: rate of effective protection to producers of
        the final commodity.
       t: nominal tariff rate of final commodity
       ai: cost of imported input/price of final
        commodity before tariff
       ti: nominal tariff rate on the imported input
Special Trade Regimes
 1. Temporary imports and exports
 2. Entrepot
 3. Transit Transportation
       1959 Geneva TIR (Transit International Router) Agreement

 4. Border and coastal trade
 5. Free imports
 6. Free zone
   A. Quantitative Restrictions

   B. Foreign Exchange Restrictions

   C. New Protectionism

   D. Export and Import Taxes

   E. Monopolies and Cartels
A. Quantitative Restrictions
   Import Quotas
       An import quota is a direct quantitative
        restriction on the amount of a commodity
        allowed to be imported.

   Import Prohibitions
       Imports of some commodities are prohibited.
Import Quotas
   Aim:
       Balance of payments
       Sectoral protection

   Applied for a specific time period.

   Custom tariffs can also be applied.
Import Quotas
   Global Quota:
       Only quantity is determined. The determined
        quantity can be imported from any nation.

   Reserved Import Quota (Tahsisli Kota):
       Quotas are distributed among importers
        according to pre-determined criteria.

   Custom Tariff Quota (Gümrük Tarife
Import Quotas
   Production increases.

   Consumption decreases.

   Income distribution is effected.

   Scarcity surplus arises
       Surplus that arises as a result of the import
        scarcity due to high import prices.
Import Quotas
   Scarcity surplus:
       Mostly importer firms benefit.

       Exporter firm will benefit if it as a monopoly.

       If government is selling the import licenses
        with an auction, government will benefit.
Import Quotas vs. Tariffs :
   Disadvantages of quotas:
       1. Quotas are more strict.
       2. Commodities that cannot be imported
        legally, may enter the country illegally.
       3. The upper price limit in domestic sales is not
       4. No transparency.
       5. Necessities extensive bureaucracy in its
        determination, application and control.
       6. If demand for the commodity is high in the
        domestic market, having a share from the
        quota brings privilege.
Import Quotas vs. Tariffs :
   Advantages of a quota:
       1. In some cases tariffs are not effective in
        decreasing imports.
       2. The quantity of imports are definitely
Import Prohibitions
   Foreign exchange is saved by prohibiting imports
    of unnecessary and luxury goods.

   Domestic industry is protected from foreign

   Helps to cure trade deficits.

   Imports of illegal goods are stopped.

   Embargos
Import Prohibitions
   Larger effects on protection, consumption
    and income distribution.

   Government cannot raise revenues.

   In Turkey these restrictions are not
    applied any more.
       1981: Quotas
       1990: Import prohibitions
   A. Quantitative Restrictions

   B. Foreign Exchange Restrictions

   C. New Protectionism

   D. Export and Import Taxes

   E. Monopolies and Cartels
B. Foreign Exchange Restrictions
   Multiple Exchange Rate System:
       Under fixed exchange rate systems, different
        exchange rates might be applied in trade of
        some goods and services.

   Foreign Exchange Controls:
       Government controls and interventions on the
        foreign exchange operations.
Multiple Exchange Rate System
   Applied together with other tools like
    quotas or import prohibitions.

   Simply there are two exchange rates:

       High exchange rate in the market:
            Imports: Luxury goods
            Exports: Exports of goods that are encouraged
Multiple Exchange Rate System
    Low Official Exchange Rate

         Imports: Essential consumption goods, raw
          materials, intermediate and investment goods

         Exports: Easily exported traditional agricultural
Foreign Exchange Controls
   Applied under fixed exchange rate

   Applied with import quotas and under
    multiple exchange rate systems.

   Central Bank is the single authority to buy
    and sell foreign exchange.
Foreign Exchange Controls
   Developing countries apply frequently to
    control balance of payments deficits.

   National currency is not convertible.

   Before 1980’s, it caused a black market to
    emerge in Turkey (Tahtakale)
   A. Quantitative Restrictions

   B. Foreign Exchange Restrictions

   C. New Protectionism

   D. Export and Import Taxes

   E. Monopolies and Cartels
C. New Protectionism
   Voluntary Export Restraints
       Export quota
       Protection: Not to create unemployment in the
        domestic industries
       Political or economic pressure
       Example: Japan-USA steel and textile trade
       Resource allocation is deteriorated
       Benefit to the exporter country: To increase
        profits, quotas are filled with high quality,
        expensive products (product upgrading).
       Uruguay Round: New VERs are prohibited.
C. New Protectionism
   Technical, Administrative and Other
       Some are groundless: Japan prohibited
        imports of ski
       Labeling, packaging, marketing
       Environmental protection
       Costs of control; international monitoring
       Laws regarding public bids
C. New Protectionism
   Export Subsidies
       Aim: To increase profitability of exports
       Direct payments or the granting of tax relief and
        subsidized loans to the nation’s exporters or potential
        exporter’s and/or low-interest loans to foreign buyers so
        as to stimulate the nation’s exports.
       Economic effects: 
            Terms of trade effect: If export prices decrease in terms of
             foreign currency, terms of trade deteriorates.
            Foreign exchange earnings: If the import demand elasticity
             for the nation’s exports is high-enough, foreign exchange
             earnings will increase, besides the deterioration of the
             terms of trade.
C. New Protectionism
   Export Subsidies
       Domestic consumers lose.
            High price
            Subsidies are financed by their tax payments
       Export subsidies on industrial products are
        prohibited by GATT.
       Countervailing Duties: They are often imposed
        on imports to offset export subsidies by
        foreign governments.
C. New Protectionism
   Subsidies to industries that are sell in the
    domestic market:
       They compete with imports so they are protected
        against foreign competition.
       Good is sold at world prices in the domestic
        market. The difference between the world price
        and the domestic cost is paid to the producer.
       Consumer surplus does not fall, but the subsidy is
        financed by taxes.
       Burden on government budget.
       It might cause transfer of resources to inefficient,
        high cost industries.
   A. Quantitative Restrictions

   B. Foreign Exchange Restrictions

   C. New Protectionism

   D. Export and Import Taxes

   E. Monopolies and Cartels
D. Export and Import Taxes
   Countervailing taxes on imports:
       Mainly used for agriculture.
       It’s effects are similar to import quotas.
       In order to prevent imports with low world
        prices, the difference between the high
        domestic prices and low world prices are filled
        with an import tax.
       Example: EU Common Agriculture Policy
D. Export and Import Taxes
   Export Taxes:
       Aims to restrict exports.
       Common in developing countries. (Example:
        Cotton and hazelnut exports of Turkey before)
       Aim:
            Raise revenue for the government
            To encourage the usage of raw materials
            To protect natural resources
            To improve terms of trade
   A. Quantitative Restrictions

   B. Foreign Exchange Restrictions

   C. New Protectionism

   D. Export and Import Taxes

   E. Monopolies and Cartels
E. Monopolies and Cartels
    Dumping is the sale of a commodity at a lower
     price abroad than domestically.

    Types of dumping:
         Sporadic
         Predatory
         Persistent
E. Monopolies and Cartels
    Sporadic Dumping:

        Occasional sale of a commodity at below cost in order
         to unload an unforeseen and temporary surplus of
         the commodity without having to reduce domestic
E. Monopolies and Cartels
    Predatory Dumping:

        Temporary sale of a commodity at below cost or a
         lower price abroad in order to derive foreign
         producers out of business, after which prices are
         raised to take advantage of the monopoly power
E. Monopolies and Cartels
    Persistent Dumping:

         Continuous tendency of a domestic monopolist to
          maximize total profits by selling the commodity at a
          higher price in the domestic market than
          internationally (to meet the competition of foreign
E. Monopolies and Cartels
   Dumping: International price discrimination
       Conditions:
            Domestic and foreign markets must be separated.
            Demand elasticity of the product must be different in
             two markets. The good can be sold with a lower price
             where the demand elasticity is high; and with a
             higher price where demand elasticity is low. 
E. Monopolies and Cartels
   Dumping:

       GATT: Anti-dumping duties

       Dumping investigation
E. Monopolies and Cartels
    Avrupa Konseyi'nin, 10 Mart 2005 tarihli düzenlemesine göre, Avrupa
    Birliği'ne ithal edilen, Çin Halk Cumhuriyeti ve Suudi Arabistan menşeli
    polyester kesik elyaflara %5 ve %49,7 oranları arasında anti-damping
    vergisi uygulamaya başlamıştır.
    Bazı ülkeler kendi çelik üreticilerini korumak amacıyla damping, korunma
    ve sübvansiyon adı altında Türk demir-çelik ürünlerine telafi edici vergi
    uygulamaktadırlar. ABD, Türkiye'den ithal ettiği borular, inşaat demirleri
    ve filmaşine, Kanada soğuk yassı ve inşaat demirine, Singapur inşaat
    demirine, Endonezya filmaşine ve Mısır ise inşaat demirine telafi edici
    vergi uygulamaktadırlar. Ayrıca, Arjantin Türk lama demir ve L
    profillerine, Avrupa Birliği çelik halata, Rusya Federasyonu ise demir-çelik
    borulara haksız rekabete neden olduğu gerekçesi ile 2000 yılında anti-
    damping soruşturması başlatmış olup bu soruşturmalar halen devam
    etmektedir. Demir-çelik ürünlerimize karşı uygulanan anti-damping
    vergileri ihracatçılarımızın bu pazarlardaki paylarının azalmasına neden
    olmaktadır. (http://www.ihracatdunyasi.com/turkiye_dis_ticaret.html)

   anti-damping soruşturması.doc
E. Monopolies and Cartels
   Cartels:
       An international cartel is an organization of
        suppliers of a commodity located in different
        nations that agrees to restrict output and
        exports of the commodity with the aim of
        maximizing or increasing the total profit of the
E. Monopolies and Cartels
   Example: OPEC

   A cartel is more successful if there are
    only a few international suppliers of an
    essential commodity for which there are
    no close substitutes.

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