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post #1 of 3 (permalink) Old 05-09-03, 06:36 PM Thread Starter
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confused Tariff Rates

G'day Everybody,

I was wondering if anybody out there could help me to understand what tariff rates are and all about.

I am interested to know what effects will it or does it have on the Australian automotive industry. What effects will it have if it's lowered or increased, etc.

Example, will it be harder or easier for Aussie manufactures to sell their cars?

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post #2 of 3 (permalink) Old 05-09-03, 07:37 PM
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Basically Protectionism of domestic economies.

The economic definition of tarriffs in general is a tax on imports aimed at moderating tbe flow of imported goods, especially those competing with goods produced in the domestic economy. Trade restrictions on general usually benefit domestic producers, but hamper consumers by limiting choice, or restricting to a higer cost product.

Import Quotas (another form of tarriff) on the other hand is a legal limit on the quantity of a particular commodity that can be imported per year. But to have effect, this must be restricted to below a level that would otherwise be allowed under free trade. A good example of this is the American Govt (by union influence) limiting the Monaro/GTO imports to 18000 units per year.

Why Have Tarriffs?
To protect infant and emerging industries such as Biotech and the like
To protect declining industries
To protect from anti-dumping of foreign products onto the Australian economy
To Protect industries that would otherwise be inefficient in global terms. This is pretty much were the Australian car industry lies - simply other car manufactures in the world have access to more economically efficient production methods.

This is not to say that Australian manufactures can't make good products, its just economically, other manufactures are capable of making a cheaper substitute product, either by investment in technology/machinery or cheap supply - which includes both raw materials and labour. Two good examples are Toyota Japan which gains advantages in production through technology, and Hyuandai who gains through supply (cheap labour, cheap parts).

Interesting to note that some areas of automotive tarriff protection have jumped from 40% in 1990 to around 15% in general in 2000, however it is important to note that Australia does not have a particular fixed rate, it often varies with free trade agreements per country involved.

Its the sort of topic you could spend hours explaining, if u have any further qu, let me know.
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post #3 of 3 (permalink) Old 05-10-03, 09:54 PM Thread Starter
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Thank you very much for your response dave_au. It has given me a better understanding of what it is there for.

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