Applied tariff rate
Also called: Applied rate, MFN applied rate · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
The applied tariff rate is the customs duty a country actually charges on an import today. A WTO member can charge any rate up to its bound rate, the legal ceiling it has promised not to cross, so the applied rate is often lower. It is also called the MFN applied rate because it applies equally to all WTO members that do not get special preferences.
Example
India's simple average bound rate is about 50%, but its average applied MFN tariff is only about 17%. Importers pay the lower applied rate.
Don't confuse with
- Bound tariff rate: this is the maximum tariff a country has legally committed to at the WTO. The applied rate is what is actually charged, and it can go up to the bound rate without breaking WTO rules.
Related concepts
- Tariff
- Ad valorem tariff
- Specific tariff
- Compound tariff
- Mixed tariff
- Export duties
- Duty drawback
- Tariff escalation
- Tariff peak
- Effective rate of protection