A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A tariff average measures the average level of nominal tariff protection. There are two types of tariff averages: a simple average and a trade weighted average. The example below illustrates how those two types of tariff averages are calculated.
|
Tariff line number |
Duty rate |
Import value |
Duty collected |
|
0101.11.10 |
50% |
10 |
5 |
|
0101.11.90 |
10% |
100 |
10 |
|
0101.19.10 |
0% |
1000 |
0 |
|
0101.19.90 |
20% |
100 |
20 |
|
|
|
|
|
|
Total (4 tariff lines) |
80% (Sum of duties) |
1210 (Sum of import values) |
35 (sum of duties collected) |
Tariff Averages:
ARITHMETIC = Sum of duties/Number of tariff lines = 80/4 = 20%
TRADE WEIGHTED = (Sum of duties collected/Sum of import values) X 100 = (35/1210) X 100 = 2.9%
It should be noted that the trade weighted average is often lower than the arithmetic average. This is because theoretically, low duties carry more imports than high duties. Subsequently, in the trade weighted average, low duties are given more weight than high duties, thus introducing a downward bias. In the arithmetic average, each duty carries the same weight, whatever its level of imports.