TYPES OF TRADE POLICY

 National trade policy: Every country formulates this policy to

safeguard the best interest of its trade and citizens. This policy is
always in consonance with the national foreign policy.
 Bilateral trade policy: This policy is formed between two nations to
regulate the trade and business relations with each other. The
national trade policies of both the nations and their negotiations
under the trade agreement are considered while formulating bilateral
trade policy.
 International trade policy: International economic organizations, such
as Organization for Economic Co-operation and Development (OECD),
World Trade Organization (WTO) and International Monetary Fund
(IMF), define the international trade policy under their charter. The
policies uphold the best interests of both developed and developing
nations.
 Instruments of trade policy;
1. Tariffs
2. Non-tariff Barriers to Trade

 With free trade, nothing hinders or gets in the way of

two nations trading with each other.
 Countries sometimes set up trade barriers to restrict
trade because they want to produce and sell their
own goods:
 There are costs and benefits related to free trade as
well as trade barriers.
TARIFFS ARE TAXES CHARGED FOR
GOODS THAT LEAVE OR ENTER A
COUNTRY.
IN ORDER TO GET A PRODUCT FROM
ANOTHER COUNTRY, YOU HAVE TO
PAY EXTRA FOR IT.
TARIFFS, OR CUSTOMS DUTIES, MAY
BE LEVIED ON IMPORTED GOODS BY
A GOVERNMENT EITHER:
• TO RAISE REVENUE
• TO PROTECT DOMESTIC
INDUSTRIES
WHAT IS THE INFANT INDUSTRY ARGUMENT?

A tariff can protect a new industry while it gains

experience and reduces costs
THE PRINCIPLE OF THE TARIFF ESCALATION

A situation where the import duties on

components or raw materials are lowest and
move progressively higher on semi-finished goods
upwards to the finished goods
GENERAL AND CONVENTIONAL TARIFF:

The general tariff schedule is determined by

the state legislature.
 The conventional tariff schedule is evolved
through the commercial agreements of the
home country with other countries. It does not
permit changes in tariff rates according to the
changes in domestic conditions or
requirements.
NON-TARIFFS
 QUOTA
• A quota is a restriction on the amount of a
good that can be imported into country.
• Putting a quota on a good creates a
shortage, which causes the price of the
good to rise.
Consumers are less likely to buy this good
because it’s now more expensive than the
good produced in the home country.
• Quotas encourage people to buy domestic
products, rather than foreign goods (boosts
country’s economy).
 EMBARGO
• Trade embargoes forbid trade
with another country.
• The government orders a
complete ban on trade with
another country.
• The embargo is the harshest
type of trade barrier and is
usually enacted for political
purposes to hurt a country
economically.
 SANCTIONS

 The dictionary definition of the word sanction is defined as – an

official order, such as the stopping of trade that is taken
against a country in order to make it obey international law.
 Countries impose sanctions on other countries to limit their trade
activity.
 Sanctions can include increased administrative actions or
additional customs and trade procedures that slow or limit a
country’s ability to trade.
Most of us have heard of the terms “sanctions” and “embargoes”. They are
often used interchangeably, but they are quite different.
Trade sanctions target specific types of transactions, as in a prohibition to
sell arms to a specific business, country, government or regime. An
embargo represents a complete prohibition of all trade activities between
countries.
VOLUNTARY EXPORT RESTRAINTS

 Exporting countries sometimes use voluntary

export restraints. Voluntary export restraints
set limits on the number of goods and services
a country can export to specified countries.
These restraints are typically based on
availability and political alliances.
BENEFITS OF TRADE BARRIERS
 Trade barriers provide many benefits:
 They protect homeland industries from
competition.
 They protects jobs.
 They help provide extra income for the
government.
 They increase the number of goods people can
choose from.
 They decreases the costs of these goods through
increased competition. .
 LEGISLATION OF AZERBAIJAN REPUBLIC

 Law of Customs tariff of Azerbaijan Republic

 1995 version

 2013 version-in force

 SEASONAL DUTIES

Term of use of seasonal

duties may not exceed
six months in a year.
 PUNITIVE TARIFFS
Punitive tariffs may be used to remedy trade
distortions resulting from measures adopted by other
countries. For example, the Antidumping Agreement
allows countries to use “antidumping-duties” to
remedy proven cases of dumping; similarly, the
Subsidies Agreement allows countries to impose
countervailing duties when an exporting country
provides its manufacturers with subsidies that, while
not specifically banned, nonetheless damage the
domestic industry of an importing country
SPECIAL ANTI-DUMPING COMPENSATORY
 Temporary duties may be:
 special duties
 antidumping duties
 compensatory duties.
protective measure when
commodities are imported to the
customs territory of the
Azerbaijan Republic in volumes
and on terms which cause
damage or could cause damage
to local producers of similar
commodities

Compensatory duties shall apply to

imported commodities, when in
production of such commodities or
on their export direct or indirect
subsidies were used, if such import
causes damage to local producers of
similar commodities
 RATES OF CUSTOMS DUTIES

 The rates of customs duties for export-import

operations in Azerbaijan are determined by the
Cabinet of Ministers
 in 2017, “Commodity Nomenclature of Foreign
Economic Activity, Rates of Import and Export
Customs Duties” approved by the decision of
the country’s Cabinet of Ministers. And came
into force on 1 January 2018.
 DUTIES RATES
 Advolar Import duties rates in AR-0%, 5%, 15%
 Export duties-only special goods:
 Group 41. Raw hides and skins and leather-1000kg/500$
 Group 44. Wood and articles of wood-1m3/1000 $
 Group 72. Iron and steel-1000kg/5 $
 Group 74. Copper and articles thereof-1000kg/15 $
 Group 76. Aluminum and articles thereof-1000kg/15 $
 Group 78. Lead and articles thereof-1000kg/15 $
 Group 79 Zinc and articles thereof- 1000kg/15 $
 Group 80. Tin and articles thereof-1000kg/15 $
 THE HARMONIZED SYSTEM

The Harmonised System (HS) Classification,

also called the HS Nomenclature, is the World
Customs Organization’s Harmonized
Commodity Description and Coding System. It
is an international customs classification
system which allocates a unique 6-digit HS
code to each group of products. The system
was initially adopted by the Customs
Cooperation Council in 1983.
The earliest uniform statistical nomenclature
convention
was signed by 29 countries
on 31 December 1913
 HISTORICAL BACKGROUND….
 The HS is governed by "The International
Convention on the Harmonized Commodity
Description and Coding System", which was
adopted in June 1983 and entered into force
January 1988. The HS Committee also prepares
amendments updating the HS every 5 – 6 years.
The latest HS edition now in force is the 2017
edition , following those of 2002, 2007
and 2012,As of February 2019, over 211
countries, territories and economic or Customs
unions are applying HS in practice.(157
countries+EU)
 HS STRUCTURE

 The HS comprises approximately 5,300

article/product descriptions that appear as
headings and subheadings, arranged in 99
chapters, grouped in 21 sections. The six digits
can be broken down into three parts.
 Chapter 77 is reserved for possible future use

 Two additional chapters, chapters 98 and 99,

are reserved for national use.
 WHAT IS AN EU COMBINED NOMENCLATURE
CODE?

The Combined Nomenclature ( CN ) is the EU's

eight-digit coding system, comprising the
Harmonised System ( HS ) codes with further EU
subdivisions. It serves the EU's common customs
tariff and provides statistics for trade within the
EU and between the EU and the rest of the world.
 AZERBAIJAN HS CODES
 Our country joined International Convention on
Harmonized System for the Description and
Coding of Goods in May 2000.