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WEEK 8
TOPIC: FOREIGN TRADE (INTERNATIONAL TRADE)
CONTENT:
- Tariffs and reasons for the imposition of tariffs
- Tools for trade restriction and export promotion
- Documents in foreign trade
SUB-TOPIC 1: TARIFFS AND REASONS FOR THE IMPOSITION OF TARIFFS
WHAT IS TARIFFS? Import tariff which is also called import duty, is the tax levied on goods imported into the country. The tax is expressed either as a percentage i.e., fraction of the value of an imported good or per unit of it. When expressed as a fraction of the value of good, it is called an ad valorem import tax. Example, is an import duty of 10 percent of value of an imported cars, so that import duty of N200,000 would be paid on a car costing N2 million. When expressed on per unit basis, it is called a specific duty. In order words, while an ad valorem duty is calculated on the monetary values of the imported goods, a specific duty is calculated on the weight of quantity of imported goods, irrespective of their monetary value or the market price. Imported duties are assessed and collected in Nigeria by the customs Authority called the Nigerian Customs Service (NCS).
REASONS FOR THE IMPOSITION OF TARIFF
- Revenue generation: Tariff revenue is a major component of government total revenue. It comes only after the government revenue derived from petroleum activities
- Infant industry protection: Industries have to be protected against unfair competition from abroad. Imposition of tariffs on imports coming from other countries competitors is a way of accomplishing this protection.
- To prevent dumping of goods: Sometimes foreign suppliers deliberately sell imports at a very low prices, even if this means they would be making a loss by so doing. Their home governments too may subsidize them to enable them to sell cheaply in other countries.
- A tool for settling political score: Tariffs may be imposed on goods emanating from countries perceived to be unfriendly.
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