No tariff king: India’s import duties low, Donald Trump’s jibe misplaced

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New Delhi | Updated: May 13, 2019 6:56:31 AM

US President Donald Trump may call India the “tariff king”, but data show New Delhi has exercised “maximum self-restraint” in taxing imports.

The US hasn’t shown any restraint and hit the maximum ceiling of tariff barriers it’s entitled to impose under the WTO rules, say analysts.

US President Donald Trump may call India the “tariff king”, but data show New Delhi has exercised “maximum self-restraint” in taxing imports. While India’s average bound rate — or the maximum duty it is allowed to charge under the World Trade Organization (WTO) framework — is as much as 48.5%, its actual applied tariff is as low as 13.8%, according to the WTO data. On a trade-weightage basis, the tariff is even lower — just 7.5%.

In contrast, China’s applied tariff of 9.8% is almost as high as its permissible limit (bound rate) of 10%, while South Korea’s is 13.7% against 16.5%. Importantly, at an average of 3.4%, the actual US tariff is as much as it is allowed to slap.

In other words, the US hasn’t shown any restraint and hit the maximum ceiling of tariff barriers it’s entitled to impose under the WTO rules, say analysts. The bound rates for countries are determined after serious negotiations at the WTO on a range of issues and indicators, including the stage of the development of an economy. Brazil, a member of the so-called BRICS grouping like China, charges as much as 13.4%, compared with its bound rate of 31.4%. Importantly, on a trade weightage basis, the tariff levels of both South Korea (9%) and Brazil (10.3%) are higher than India’s (7.5%), while Beijing’s (5.2%) is closer to New Delhi’s. The tariff rates are based on the WTO’s World Tariff Profile 2018.

While US commerce secretary Wilbur Ross on May 7 flayed India for imposing “not justified” tariff on ICT products (20%), motorcycles (50%) automobiles (60%) and alcoholic beverages (150%), the US charges 350% on tobacco (350%), 163.8% on peanuts, 48% on footwear, 38% on glassware for toilet and 32% on shoes. In fact, analysts say in some cases, duties are very difficult to calculate or implement. For instance, for every wristwatch, the tariff is 93 cents plus 4.8% on the value of the case plus 2.2% on the value of strap, band, and bracelet, they added. This means one needs to know the value of each component separately.

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