World Industry. Trade Barriers as measured by the MFN (Most Favored Nation) applied tariff rates - Essay Example

? Industry Analyses World Industry Trade Barriers as measured by the MFN (Most Favored Nation) applied tariff rates When we look at trade in clothes washing machines in the world, Issues to do with access to the international markets have been and remain one of the most important things that are on the multilateral trade system’s agenda. Prohibitions on import of these washing machines have the purposes of promotion of competition, health, security, safety, and environmental safety. There are bans put on importing used machineries in many countries and where this ban is not in effect, seriously huge tariffs are imposed on these machinery. The use of tariff concessions and exemptions is simply an industrial policy tool to safeguard a country’s interests. There is a general discrimination when it comes to domestic sales and the excise taxes in terms of discriminating or putting trade barriers to imports and in many cases this has been engineered by the need to protect what is considered local. Countries have been seen to levy import tax and tariff-inclusive prices for goods while carrying out this policy. To the effecting country, this is a benefit derived from controlled international imports, while to those involved in the import trade is quite a heavy burden considering they are in business to make profits and grow (Gereffi, 2001, pp. 1-5). Barriers to international trade for clothes washing machines include requirements for registration and bureaucratic documentations; tariffs; the customs valuation, imposition of minimum prices for imports and the requirements of pre-shipment inspections; other levies, taxes and various charges including domestic taxes; prohibitions slapped on imports, restrictions, issues of licensing and quotas imposed on imports; some contingency measures imposed to control market panic; and the various standards and technical requirements most of which are never met by even the local producers (Francois, et al., 2000, pp.2-58). It is thought that when we have a uniform sort of tariff structure for washing machines, it is better than having considerable dispersion where large tariffs peaks and troughs are experienced in different countries. This is because the economic inefficiency or welfare costs do increase in a tariff regime with the degree of a given dispersion. This has been attributed to the fact that we have a considerable weight loss which increases to a larger extent than does the increase in the tariff rates. Another argument posed is that washing machines having a uniform tariff structure get a very strong support coming from a political economy given that such uniform tariffs are easier to handle and of course more transparent than the non-uniform tariff rates. This could be due to the fact that the political power influence from conflicting groups is drastically reduced. This has a lot to do with the fact that uniform tariff rates require cross-industrial consensus and are less likely to get escalated as compared to the non-uniform ones (Fleisher & Bensoussan, 2010, pp.8-156). The data in tables 1 to 10 below show tariff rates and their averages across the world as investigated by WTO on MFN for clothes washing machines (WTO, 2010). Average duties, minimum average duty, maximum average duty and mean of such averages has been calculated and tabulated as per every year for the duration of 10 years starting from 2001 to 2010. Table 1: 2001 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Egypt MFN 2001 HS96 845020 1 1 40.0 40 40 0.0 0 2 India MFN 2001 HS96 845020 1 1 35.0 35 35 0.0 0 3 Pakistan MFN 2001 HS96 845020 1 1 30.0 30 30 0.0 0 4 Jordan MFN 2001 HS96 845020 1 1 30.0 30 30 0.0 0 5 Zimbabwe MFN 2001 HS96 845020 2 2 22.5 5 40 0.0 0 6 Zambia MFN 2001 HS96 845020 1 1 25.0 25 25 0.0 0 7 China MFN 2001 HS96 845020 1 1 22.0 22 22 0.0 0 8 Ghana MFN 2001 HS96 845020 1 1 20.0 20 20 0.0 0 9 Thailand MFN 2001 HS96 845020 1 1 20.0 20 20 0.0 0 10 Cameroon MFN 2001 HS96 845020 1 1 20.0 20 20 0.0 0 Mean 26.45 24.7 28.2 Table 2: 2002 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Viet Nam MFN 2002 HS96 845020 1 1 50.0 50 50 0.0 0 2 Burundi MFN 2002 HS92 845020 1 1 40.0 40 40 0.0 0 3 Egypt MFN 2002 HS96 845020 1 1 40.0 40 40 0.0 0 4 Bahamas MFN 2002 HS96 845020 1 1 35.0 35 35 0.0 0 5 Morocco MFN 2002 HS96 845020 1 1 32.5 32.5 32.5 0.0 0 6 Jordan MFN 2002 HS02 845020 1 1 30.0 30 30 0.0 0 7 Vanuatu MFN 2002 HS02 845020 1 1 25.0 25 25 0.0 0 8 Zambia MFN 2002 HS02 845020 1 1 25.0 25 25 0.0 0 9 Pakistan MFN 2002 HS02 845020 1 1 25.0 25 25 0.0 0 10 Nepal MFN 2002 HS02 845020 1 1 25.0 25 25 0.0 0 Mean 32.75 32.75 32.75 Table 3: 2003 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Viet Nam MFN 2003 HS02 845020 1 1 50.0 50 50 0.0 0 2 Egypt MFN 2003 HS96 845020 1 1 40.0 40 40 0.0 0 3 Jordan MFN 2003 HS02 845020 1 1 30.0 30 30 0.0 0 4 Nepal MFN 2003 HS02 845020 1 1 25.0 25 25 0.0 0 5 Tanzania MFN 2003 HS96 845020 1 1 25.0 25 25 0.0 0 6 Vanuatu MFN 2003 HS02 845020 1 1 25.0 25 25 0.0 0 7 Zambia MFN 2003 HS02 845020 1 1 25.0 25 25 0.0 0 8 Ghana MFN 2003 HS96 845020 1 1 20.0 20 20 0.0 0 9 Nigeria MFN 2003 HS96 845020 1 1 15.0 15 15 0.0 0 10 Panama MFN 2003 HS96 845020 1 1 15.0 15 15 0.0 0 Mean 27.0 27.0 27.0 Table 4: 2004 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Viet Nam MFN 2004 HS02 845020 1 1 50.0 50 50 0.0 0 2 Jordan MFN 2004 HS02 845020 1 1 30.0 30 30 0.0 0 3 Pakistan MFN 2004 HS02 845020 1 1 25.0 25 25 0.0 0 4 Vanuatu MFN 2004 HS02 845020 1 1 25.0 25 25 0.0 0 5 Zambia MFN 2004 HS02 845020 1 1 25.0 25 25 0.0 0 6 Colombia MFN 2004 HS02 845020 1 1 15.0 15 15 0.0 0 7 Ecuador MFN 2004 HS02 845020 1 1 15.0 15 15 0.0 0 8 Mauritius MFN 2004 HS02 845020 1 1 15.0 15 15 0.0 0 9 Panama MFN 2004 HS02 845020 1 1 15.0 15 15 0.0 0 10 Thailand MFN 2004 HS02 845020 1 1 15.0 15 15 0.0 0 Mean 23.0 23.0 23.0 Table 5: 2005 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Viet Nam MFN 2005 HS02 845020 1 1 50.0 50 50 0.0 0 2 Djibouti MFN 2005 HS92 845020 1 1 33.0 33 33 0.0 0 3 Jordan MFN 2005 HS02 845020 1 1 30.0 30 30 0.0 0 4 Pakistan MFN 2005 HS02 845020 1 1 25.0 25 25 0.0 0 5 Vanuatu MFN 2005 HS02 845020 1 1 25.0 25 25 0.0 0 6 Zambia MFN 2005 HS02 845020 1 1 25.0 25 25 0.0 0 7 Cameroon MFN 2005 HS02 845020 1 1 20.0 20 20 0.0 0 8 Uganda MFN 2005 HS02 845020 2 2 17.5 10 25 0.0 0 9 Tanzania MFN 2005 HS02 845020 2 2 17.5 10 25 0.0 0 10 Kenya MFN 2005 HS02 845020 2 2 17.5 10 25 0.0 0 Mean 26.05 23.8 28.3 Table 6: 2006 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Viet Nam MFN 2006 HS02 845020 1 1 50.0 50 50 0.0 0 2 Jordan MFN 2006 HS02 845020 1 1 30.0 30 30 0.0 0 3 Pakistan MFN 2006 HS02 845020 1 1 25.0 25 25 0.0 0 4 Vanuatu MFN 2006 HS02 845020 1 1 25.0 25 25 0.0 0 5 Zambia MFN 2006 HS02 845020 1 1 25.0 25 25 0.0 0 6 Central African Republic MFN 2006 HS02 845020 1 1 20.0 20 20 0.0 0 7 Congo MFN 2006 HS02 845020 1 1 20.0 20 20 0.0 0 8 Kenya MFN 2006 HS02 845020 2 2 17.5 10 25 0.0 0 9 Panama MFN 2006 HS02 845020 1 1 15.0 15 15 0.0 0 10 Colombia MFN 2006 HS02 845020 1 1 15.0 15 15 0.0 0 Mean 24.25 23.5 25.0 Table 7: 2007 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Viet Nam MFN 2007 HS02 845020 1 1 50.0 50 50 0.0 0 2 Jordan MFN 2007 HS07 845020 1 1 30.0 30 30 0.0 0 3 Vanuatu MFN 2007 HS02 845020 1 1 25.0 25 25 0.0 0 4 Zambia MFN 2007 HS07 845020 1 1 25.0 25 25 0.0 0 5 Pakistan MFN 2007 HS07 845020 1 1 25.0 25 25 0.0 0 6 Zimbabwe MFN 2007 HS07 845020 2 2 22.5 5 40 0.0 0 7 Gabon MFN 2007 HS02 845020 1 1 20.0 20 20 0.0 0 8 Gambia MFN 2007 HS92 845020 1 1 20.0 20 20 0.0 0 9 Ghana MFN 2007 HS02 845020 1 1 20.0 20 20 0.0 0 10 Kenya MFN 2007 HS07 845020 2 2 17.5 10 25 0.0 0 Mean 25.5 23.0 28.0 Table 8: 2008 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Pakistan MFN 2008 HS07 845020 1 1 35.0 35 35 0.0 0 2 Viet Nam MFN 2008 HS07 845020 1 1 30.0 30 30 0.0 0 3 Jordan MFN 2008 HS07 845020 1 1 30.0 30 30 0.0 0 4 Zambia MFN 2008 HS07 845020 1 1 25.0 25 25 0.0 0 5 Ghana MFN 2008 HS07 845020 1 1 20.0 20 20 0.0 0 6 Maldives MFN 2008 HS07 845020 1 1 20.0 20 20 0.0 0 7 Guyana MFN 2008 HS07 845020 2 2 17.5 5 30 0.0 0 8 Kenya MFN 2008 HS07 845020 2 2 17.5 10 25 0.0 0 9 Saint Kitts and Nevis MFN 2008 HS96 845020 2 2 15.0 5 25 0.0 0 10 Cambodia MFN 2008 HS02 845020 1 1 15.0 15 15 0.0 0 Mean 22.5 19.5 25.5 Table 9: 2009 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Pakistan MFN 2009 HS07 845020 1 1 35.0 35 35 0.0 0 2 Jordan MFN 2009 HS07 845020 1 1 30.0 30 30 0.0 0 3 Viet Nam MFN 2009 HS07 845020 1 1 29.0 29 29 0.0 0 4 Nepal MFN 2009 HS07 845020 1 1 25.0 25 25 0.0 0 5 Chad MFN 2009 HS07 845020 1 1 20.0 20 20 0.0 0 6 Gabon MFN 2009 HS07 845020 1 1 20.0 20 20 0.0 0 7 Gambia MFN 2009 HS92 845020 1 1 20.0 20 20 0.0 0 8 Ghana MFN 2009 HS07 845020 1 1 20.0 20 20 0.0 0 9 Cameroon MFN 2009 HS02 845020 1 1 20.0 20 20 0.0 0 10 Nigeria MFN 2009 HS07 845020 1 1 20.0 20 20 0.0 0 Mean 23.9 23.9 23.9 Table 10: 2010 World tariff rates tabulations for top-loading and front loading-type washing machines, of a dry linen capacity > 10 kg Count Country Binding Year Number of TL Number of AV duties Average of AV Duties Minimum AV Duty Maximum AV Duty Duty Free TL (%) Number of Non-AV Duty 1 Democratic Republic of the Congo MFN 2010 845020 B 1 1 100.0 100 100 0.0 0 2 Kuwait MFN 2010 845020 B 1 1 100.0 100 100 0.0 0 3 Rwanda MFN 2010 845020 B 1 1 100.0 100 100 0.0 0 4 Solomon Islands MFN 2010 845020 B 1 1 80.0 80 80 0.0 0 5 Pakistan MFN 2010 845020 B 1 1 75.0 75 75 0.0 0 6 Barbados MFN 2010 845020 B 1 1 70.0 70 70 0.0 0 7 Saint Kitts and Nevis MFN 2010 845020 B 1 1 70.0 70 70 0.0 0 8 Trinidad and Tobago MFN 2010 845020 B 1 1 70.0 70 70 0.0 0 9 Angola MFN 2010 845020 B 1 1 60.0 60 60 0.0 0 10 Egypt MFN 2010 845020 B 1 1 60.0 60 60 0.0 0 Mean 78.5 78.5 78.5 An interesting observation made in this analysis and research is the fact that countries with huge tariff rates tend to be the underdeveloped and developing ones. This could be attributed to the politics played within these countries, economic policies, and the social issues such as corruption and indigenization, among others (Ianchovichina & Martin, 2001, 421-45). Significant political, economic, social, technological, legal or environmental events that have affected the historical development of your industry over the period 2001-10 Politics have played a key role in the growth and development history of the washing machine industry. This has more to do with the policies implemented regarding the importation of these machines and their use. It gets even more complicated when the importation and use of such machines relates to used ones as opposed to new machines. The politics surrounding the importation of second hand clothes and new ones also could help explain the fact that few clothes washing machines have seen some international markets. The economic realities have seen the cloths washing machines cut a niche in the international market. This has been attributed to the fact that many people are appreciating the auto cleaning of cloths and are slowly leaving the manual ways. The fact that the clothing industry is one of the most booming sectors of many economies could help explain the faster growth and innovations in the clothes washing industry. The setup and subsequent switch-over times and their related costs have seen many people reluctant in the adoption of use of washing machines (Institut Francais de la Mode, 2004, pp.6-89). It is noted that cultural aspects have had to impact negatively on the wide acceptance and use of cloth washing machines. This is because of the belief held by many people in developing countries that manual washing is the best way to clean cloths. Besides, there is little trust in the benefits accrued from machine wash. One notable cultural practice in some countries has been the confining of machine washing to official cloths such as suits and shirts. This could be prompted by fear of spoiling the new suits instead of the need to wash using cloths washing machines. The seasonal aspects of work in the European and American cultures have seen less use of washing machines in the season where people go for holidays away from home (Hummels, 2001, pp.75-96). The environmental aspects of cleanliness and safeguard have worked to impede use of some of these machines in certain countries. This is because of the pollution brought about by chemicals used in this industry. The washing chemicals, especially if poorly handled could be hazardous to the environment. The washing machines do not use water and soap but rather depend on some chemicals which are petroleum based solvents. Historically, chemicals used in this industry have been carbon tetrachloride which is highly toxic; trichloroethane that is known to be very aggressive and quite harsh; Stoddard solvent which is known to be quite flammable and explosive having a flashpoint of 1000F/380 C; CFC-113-Freon that is known to destroy the Ozone layer; and the tetrachloroethylene (perchloroethylene) which is still harmful to the environment given that it is a petroleum based solvent. This industry also affects the cotton production which is influenced by agricultural practices. These agricultural practices use chemical compounds in producing cotton which is made into cloths that are washed by the washing machines. It is a cycle that if broken could see the environment gain a lot. Yet with the need for economic growth, a fine line could be found between these conflicting interests. Social factors relating to cloths washing machine industry have to do with the fact that they are confined to high income earners since most of the low income earners are not able to neither pay for the service nor buy the machines. Social acceptance levels of these machines is also still at a lower level as would have been expected given that they ease washing of clothes and save on time spent. There have not been serious legal issues surrounding the cloth washing machines industry. There have been innovations and technological advancements seen in this industry. These could be seen in light of new machines that are more sophisticated than the previous ones coming into the market. For instance, improvements in technology have led to development of automated washing machines that are faster and more efficient in the process in terms of short time taken, low consumption of chemicals and low power consumption. Indeed, the cloths washing machine industry has both the good and bad side. Doing away with trade tariffs in the international markets could act as an impetus to growth within this industry. The push for tariff rates unification should be hastened to spread the economic benefits to other countries. Change of some social and cultural perceptions is one sure way of widening the acceptance and use of these machines. Proper handling should however be put in place to ensure that pollution to the environment is reduced. References Fleisher, C. and Bensoussan, B. (2010), Business and Competitive Analysis: Effective Application of New and Classic Methods, Financial Times Prentice Hall Publishing, ISBN: 9780132161589, 8-156 Francois. J.F., Glisman, H.H. & Spinanger, D., (2000), "The cost of EU protection in textiles and clothing", Kiel Institute of World Economics, Working Paper no 997. Pp.2-58 Gereffi, G., (2001), "Global sourcing in the US apparel industry", Journal of Textile and Apparel, Technology and Management, 2, 1: pp.1-5. Hummels, D., J. Ishii and K.M. Yi, (2001), "The nature and growth of vertical specialization in world trade", Journal of International Economics vol. 54, no 1; pp.75-96 Ianchovichina, E. and Martin, W. (2001), "Implications of China's accession to the WTO for China and the WTO", World Economy, 24: 9, 421-45 Institut Francais de la Mode, (2004), "Study on the implications of the 2005 trade liberalization in the textile and clothing sector", study commissioned by the Commission of the European Communities, tender No ENTR/02/04, Consolidated Report, pp.6-89 WTO (2010), Tariffs Data, Retrieved on 9 05 2011, from Read More