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Part 2.—THE EXPORT SHIPMENT
Chapter V.-TRADE RESTRICTIONS
The widespread extension of the number and variety of trade-control measures in effect throughout the world is an outstanding and increasingly important factor in international trade. Further, the frequency with which these trade controls are changed or modified has practically doubled in the past few years. It is, therefore, more important than ever that exporters have exact and current information regarding the customs treatment of their products in foreign countries, and that they exercise the greatest care in planning their export shipments, if foreign competition is to be met, difficulties and delays avoided, and satisfactory delivery of the goods assured. Even those concerns which are not direct exporters, but which carry on their foreign business through export agents or forwarding companies, will find it advantageous to be informed of the customs treatment of their goods abroad.
KNOWLEDGE OF TRADE BARRIERS ESSENTIAL
The foreign importer is, in general, responsible for the payment of import duties, the obtaining of any required import licenses or exchange permits, and compliance with other customs requirements associated with trade-control measures. It is essential, however, that the exporter, whether conducting his foreign business directly or indirectly, have a general, and in many circumstances an exact, knowledge of the trade barriers to be met in the country or countries to which he wishes to ship. It is desirable also that he have some knowledge of the purposes for which these barriers have been imposed, as this information may often be of help in suggesting the best means of overcoming such obstacles.
QUOTA RESTRICTIONS The exporter must also know whether there is any quota or importlicense restriction on his product, what this restriction may be in amount, the period for which it is in effect, and the method of obtaining any permits or licenses which may be required, even though such permits are ordinarily obtained by the importer in the foreign country. He will need to know whether there is any absolute prohibition on the importation of his goods. If there is such a prohibition, he will want to know whether it is a direct and open one, and for a substantial period, or a temporary one resulting from the exhaustion of a quota. Indirect, but none the less effective, prohibitions often arise from the commercial policy of the importing country in the matter of balancing trade and consequent selective granting of exchange or import permits.
OTHER TRADE-CONTROL MEASURES
The exporter will also need to inform himself of the existing situation in regard to other trade barriers or trade-control measures, such as commercial treaties and preferential arrangements, monopolies or other centralized control of imports, sanitary requirements, internal taxes and regulations insofar as they apply to imported goods, exchange controls, compensatory trade requirements and possibilities, etc.
In order that the shipper may know what to anticipate in the way of trade-control measures abroad, the various principal types now in effect are discussed briefly below:
The most general type of trade restriction or control is the import duty or tariff. Until recently, this was the only means of controlling imports on any broad scale in a large number of countries. At present, the effect of import duties in controlling imports has in many countries been largely nullified by the imposition of more drastic measures, such as exchange controls or quotas, but, even in such cases, the amount of the duties must be taken into account for such goods as may be able to overcome the other trade barriers.
Import duties may be designated as for revenue or for protection. Revenue duties are intended to provide funds for the operation of the government, and, in many countries, such duties are an important and sometimes even a major source of government revenue. They may be very high on a limited number of products, usually luxury goods such as alcoholic beverages and tobacco, as has been the case for many years in the United Kingdom. On the other hand, they may be relatively low but apply to most classes of imported goods.
Protective duties, as the name implies, are intended to protect the domestic producers against competition from imported goods. The height of protective duties will vary from country to country and from product to product in each country. They may be so high as practically to exclude all imports, or they may serve simply to equalize in part or in whole the differences in cost of production of the imported and domestic article.
As a practical matter, it is often difficult to distinguish between revenue and protective duties, and, in general, the trader need not be concerned with the distinction. His more immediate concern will be the actual height of the duty on his product, whatever its purpose, and with the method of application of that'duty. The most important distinction from a trading standpoint is that revenue duties are often offset by excise duties or taxes on similar goods of domestic manufacture, these excise duties usually being only slightly less than the corresponding customs duties. While a high duty of this type may have the effect of considerably raising prices and thus affecting consumption, the amount of protection is measured not by the height of the import duty, but by the difference between the import and the excise duties.
AD VALORES AND SPECIFIC DUTIES
Import duties may be ad valorem or specific or a combination of the two. Ad valorem duties are applied as a percentage of the value of the goods, while specific duties are fixed amounts, according to weight, number, volume, or other measure. Combination duties may consist of an ad valorem plus a specific duty, or the tariff may provide that either an ad valorem rate or a specific duty, whichever is higher, shall apply on the given product. An important point to be noted in connection with ad valorem duties is the value basis on which the duty is applied, this basis varying considerably in different countries. While the method of determining dutiable valuation does not affect the rate of duty, it may considerably change the amount of duty payable. For a further discussion of dutiable valuations, see chapter VI.
The amount of specific duties payable, when such duties are assessed by weight, will vary according to whether the dutiable weight is net, gross, or legal weight. This point is also discussed in chapter VI.
Preferential duty systems are established to favor the exchange of goods between certain groups of countries or units. Such systems are usually intended to facilitate trade between colonies or dominions and the mother country. Possibly the outstanding and most widespread system of this type is in the British Commonwealth of Nations, although France, Portugal, and some other countries have similar preferential arrangements on a smaller scale.
In the case of France and certain of its colonial areas, the preferences granted extend to complete free trade between these areas and the mother country. Similar duty-free exchange of goods is also in effect, in part, in the British preferential system. Usually, however, there is simply a lower level of duties extended to the goods imported from the country to which preference is extended.
Preferential duty arrangements are also in effect between certain pairs or groups of countries standing in a special relationship to each other because of geographical propinquity or otherwise. Such a preferential arrangement exists between the United States and Cuba. Preferential reductions in duties on individual products have also become fairly general in recent years in connection with bilateral trade agreements. In certain instances, as in the case of the United Kingdom and Canada, the granting of preferential duty is conditional upon fulfillment of certain requirements such as direct shipment. Other countries, notably Portugal, will rebate part of the amount of duty carried by vessels of their flag.
Customs tariffs having two or more schedules of duties are established either to extend preferential treatment to goods from certain countries, for the purpose of having available a higher schedule of duties for retaliatory purposes, or to provide facilities for tariff bargaining. Canada, for example, has three main tariff schedules and two additional special columns. The general or highest schedule of rates applies to goods imported from countries having no treaty arrangements with Canada; the intermediate tariff, somewhat lower than the general, is extended to goods from countries having commercial treaties with Canada; and the third, or British preferential rates, apply to imports from most parts of the British Empire. In addition, Čanada has a number of rates somewhat below the intermediate schedule which apply to certain foreign countries to which it is desired to show special consideration, and a few rates below the British preferential which are extended to specified British Empire goods under certain conditions.
In general, the Latin American and Far Eastern countries have single-column tariffs, while the double- or multiple-column tariffs are more common in Europe. Countries having most-favored-nation treaties or agreements receive the rates of the minimum or lowest tariff from the importing country, in most cases.
It is to be understood, of course, that the rates in each column of a multiple tariff will vary considerably. For example, it is quite possible for rates on certain goods under a preferential tariff to be higher than those in the general tariff on other goods but the rates on any given product will be graduated according to whether the general, intermediate, or preferential rates apply.
SPECIAL OR ANTIDUMPING DUTIES
A number of countries have authorized the government to take measures against the dumping of foreign goods, but straight "dumping regulations" which, in the interest of the treasury revenue and as a protection to local industries, authorize the imposition of additional or dumping duties upon products imported at less than the prevailing price in the country of origin, and operating to the detriment of local industry, are not very common. Usually the laws are rather vague as to what constitutes dumping, and have never been enforced.
Antidumping duties, British Dominions. So far, straight dumping duties, as defined above, have been limited in foreign countries to the four major British Dominions, Canada, the Union of South Africa, Australia, and New Zealand. Even in these areas the practice varies. In Canada, additional or dumping duty may be applied if the goods are of a kind or class made or produced in Canada, and if the export or actual selling price is less than the fair market value when sold for home consumption in the country of export or less than the “dutiable value” as prescribed for customs uses. In the Union of South Africa, the imposition of dumping duties is dependent upon whether the Minister of Finance is satisfied that the goods are of a class or kind produced or manufactured in the Union and that detri