Preferential Tariff

Preferential Tariff


an especially advantageous import tax established by a given state for all or some goods of certain countries and not applied to the goods of other countries.

The imperialist powers use preferential tariffs primarily to obtain cheap raw material and foodstuffs from dependent and developing countries. Preferential tariffs were the rule in trade between a metropolis and its colonies. Great Britain made extensive use of preferential tariffs in its trade with the countries of the sterling zone. Since World War II the United States, France, Belgium, and the Netherlands have used preferential tariffs. For example, virtually all primary goods imported into the United States from the countries of Latin America and from the Philippines are so taxed and in many cases are imported duty-free. This gives the United States grounds for seeking a reduction in prices for raw material and food imported from these countries and to dictate the prices at which the United States exports its goods.

The political interests of the importing countries are important in establishing preferential tariffs. For example, before the people’s revolution in Cuba in 1959, the United States used preferential tariffs in trade with Cuba. However, the socialist transformation in Cuba led, in October 1962, to Cuba’s being officially deprived of customs preferences and entered on the list of countries that did not enjoy most-favored-nation status in the United States. The customs privileges and preferential tariffs of the African countries that are associated with the Common Market enable Western European monopolies to cut prices on raw materials exported by the African countries and to raise prices on industrial goods exported by the Western European monopolies. According to figures from the UN Economic Commission for Africa, the African countries had suffered a loss of $7 billion by 1970 as the result of unequal conditions of trade with the European Economic Community.

Cartel duties are a variation on preferential duties. They are established by agreements and treaties among a number of countries that have enterprises or associations belonging to an international cartel and producing and selling output from a particular industrial sector. For example, cartel duties on aluminum were employed until World War II by Canada, France, Germany and other countries that belonged to the international aluminum cartel. The rates of cartel duties are established at lower levels than general rates, either by a percentage discount from the general rate or by freezing the existing rate for the life of an international customs agreement or treaty. The basic purpose of cartel duties is to facilitate division of sales markets in order to obtain monopoly profits and to expand foreign trade. Cartel duties have become increasingly common in the 1960’s and 1970’s in connection with the enormous concentration of economic power and of the production and marketing of certain types of output in the hands of the international monopolies.

The socialist countries use preferential tariffs in trade with the developing, countries of Asia, Africa, and Latin America, in order to give these countries unselfish assistance. In order to achieve a further expansion of trade with the developing countries, the USSR abolished, on Jan. 1, 1965, customs duties on goods originating in and imported from the developing countries of Asia, Africa, and Latin America. The Soviet-Indonesian trade agreement of March 1974 stipulates that the parties will give one another most-favored-nation status in all trade matters.


References in periodicals archive ?
He clarified that under the EU-Israel Association Agreement, "products originating from Israel's internationally-recognized borders benefit from preferential tariff treatment upon their entry into the EU".
The EU has moved to exclude Israeli settlement products from the preferential tariff treatment it provides to Israeli goods.
During a meeting with the Ambassador of Belarus in Damascus Alexander Ponomarev on Saturday, al-Jazaeri called for granting preferential tariff treatment to certain goods traded between Syria and Belarus while awaiting for tangible steps towards accession to the Union.
Earlier on, the PPP introduced the South Asian Preferential Tariff Agreement as well as the concept of groups of people, like Parliamentarians and Judges, travelling in the SAARC countries without visas.
The Kingdom of Bahrain has ratified two agreements related to this Protocol, the Framework Agreement on Trade Preferential System and Protocol on the Preferential Tariff Scheme between the Member States of the Organization of Islamic Cooperation.
Similarly, Pakistan would provide market access, at preferential tariff rates, for products of export interest for Indonesia.
In addition to expanding growth in the region, Mitsubishi Electric said it will take advantage of preferential tariff treatment under Mexico's trade agreements to supply more products to the rest of the world.
It provides an access to an online database of current MFN Tariff, Preferential Tariff of top 25 destinations with which India has entered into regional or bilateral agreements or variants of them, Rules of Origin ("Ro0"), Sanitary and Phytosanitary Measures ("SPS") and Technical Barriers to Trade ("TBT") requirements of various products that an Indian trader requires for ensuring successful trade transactions.
Yilmaz also underlined importance of OIC Preferential Trade System, noting, "framework agreement and preferential tariff protocol of the system have taken effect.
Chairman of the Association of Indonesian Electronic Companies (Apindo) Sofjan Wanandi said there is no preferential tariff facility for imports from Hong Kong despite the Asean-China Free Trade Agreement (ACFTA).
FOZ DO IGUACU: South America's Mercosur trade partners signed a preferential tariff deal Wednesday with several developing nations including India, officials said.