27.Foreign trade policy

Policies enacted by the government sector of a domestic economy to discourage imports from, and encourage exports to, the foreign sector. The three most common foreign trade policies are tariffs, import quotas, and export subsidies. Tariffs and import quotas are designed to discourage imports and export subsidies are designed to encourage exports. The general goal of these foreign trade policies is to create or increase a country's balance of trade surplus, that is, to increase net exports.

Foreign trade policies are government actions, especially tariffs, import quotas, and export subsidies, designed to increase net exports by promoting exports or restricting imports. By increasing net exports (and creating a more "favorable" balance of trade), the domestic production of a nation increases, which then increases domestic income and employment.

While foreign trade policies can be beneficial to the aggregate domestic economy they tend to be most beneficial, and thus most commonly promoted by, domestic firms facing competition from foreign imports. Domestic firms benefit with higher sales, greater profits, and more income to resource owners. However, by increasing domestic prices and restricting accessing to imports, foreign trade policies also tend to be harmful to domestic consumers.

28.Goals and main directions of foreign trade policy

Foreign trade policies are government actions, especially tariffs, import quotas, and export subsidies, designed to increase net exports by promoting exports or restricting imports.

Tariffs

The first of three foreign trade policies designed to restrict imports and promote exports is tariffs on imports.

Tariffs are simply taxes placed on imports. They work like any other taxes. A tariff is added to the price of the imported good. The resulting price of the import is thus higher, which tends to decrease the quantity purchased. And if fewer imports are purchased, then more domestic production is sold.

Of course, while domestic producers benefit from tariffs, domestic consumers tend to suffer. They pay higher prices for both imports and domestic production.

Import Quotas

The second of three foreign trade policies designed to restrict imports and promote exports is quotas on imports. In general, a quota is simply a quantity restriction placed on a good, service, or activity. For example, employers often face hiring quotas for different demographic groups and sales representatives often have quotas for sales activities.

Import quotas are then merely legal restrictions on the quantities of imports that are imposed by the domestic government.

Import quotas can be established as a simple aggregate, presumably satisfied on a first-come-first-serve basis. Once the total is reached, then no more imports of the particular good are allowed. Alternatively, the total quota can be divided among foreign producers, perhaps pro-rated based on past imports.

However, once again, import quotas are harmful to domestic consumers. With fewer imports available in the domestic economy, consumers have fewer choices and those choices more often than not come at higher prices.

Export Subsidies

The third of three common foreign trade policies is export subsidies. In general, a subsidy is a payment made by the government sector, either to a business or consumer, with no expectations of receiving any production in exchange. That is, subsidies are merely gifts. They are also commonly thought of as negative taxes. Whereas taxes a payments flowing from businesses and consumers to government, subsidies are payments flowing from government to businesses and consumers.

Subsidies are usually paid to encourage or promote specific activity. For example, government might subsidize job training or school lunch programs to encourage these activities.

An export subsidy is then a subsidy paid to domestic producers to encourage exports of production to the foreign sector. This export subsidization effectively increases the overall revenue received by the domestic firms when exporting production, which is bound to encourage exports.

29. Customs tariff

Customs Union (CU) Kazakhstan, Russia and Belarus has a common customs area.

When importing goods and vehicles to Kazakhstan, the following is charged:

• customs duty;

• customs charges for customs clearance at a rate of 50 Euros for the base sheet of Cargo Customs Declaration and 20 Euros for each extra sheet of the Cargo Customs Declaration;

• value-added tax at 12% of taxable imports (the amount of taxable imports includes the customs good value and the amounts of taxes and other compulsory payments to the budget when importing the goods, exclusive of VAT;

• excise tax for some types of the goods.

According to the common customs tariff of the CU, the rates of import customs duties vary between 0% and 80%. Common Customs Code of the CU establishes different customs regimes and some of them provide full or partial exemption from customs duties.

Weight and cost restrictions of the goods for personal use It is allowed to import goods valued at no more than 1,500 Euros and a total weight up to 50 kg per one person without compulsory customs declaration and payment of customs duties. If this limit is exceeded, the fee shall be payable at a rate of 30% of the value of the goods, but no less than 4 Euros per one kilogram in excess.

The rates of export customs duties have been approved by the Decree of the Government of Kazakhstan dated June 7, 2010 No. 520 and vary between 10 and 30% except for particular goods.

Import/export of currency, securities, bills and checks:

• within the customs area of the CU – it is performed without any restrictions and customs declaration.

• from the third countries/to the third countries to the amount exceeding the equivalent of USD 10,000 it is subject to customs declaration in writing by filing the passenger customs declaration for total amount of imported or exported values.

30. Non tariff barriers

Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports, but are unlike the usual form of a tariff. Some common examples of NTB's are anti-dumping measures and countervailing duties, which, although called non-tariff barriers, have the effect of tariffs once they are enacted.

Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use. Some non-tariff trade barriers are expressly permitted in very limited circumstances, when they are deemed necessary to protect health, safety, sanitation, or depletable natural resources. In other forms, they are criticized as a means to evade free trade rules such as those of the World Trade Organization (WTO), the European Union (EU), or North American Free Trade Agreement (NAFTA) that restrict the use of tariffs.

Some of non-tariff barriers are not directly related to foreign economic regulations but nevertheless have a significant impact on foreign-economic activity and foreign trade between countries.

Trade between countries is referred to trade in goods, services and factors of production. Non-tariff barriers to trade include import quotas, special licenses, unreasonable standards for the quality of goods, bureaucratic delays at customs, export restrictions, limiting the activities of state trading, export subsidies, countervailing duties, technical barriers to trade, sanitary and phyto-sanitary measures, rules of origin, etc. Sometimes in this list they include macroeconomic measures affecting trade.

Six Types of Non-Tariff Barriers to Trade

1.Specific Limitations on Trade:

Import Licensing requirements

Proportion restrictions of foreign domestic goods (local content requirements)

Minimum import price limits

Free

Embargoes

2.Customs and Administrative Entry Procedures:

Valuation systems

Anti-dumping practices

Tariff classifications

Documentation requirements

Fees

3.Standards:

Standard disparities

Intergovernmental acceptances of testing methods and standards

Packaging, labeling, and marking

4.Government Participation in Trade:

Government procurement policies

Export subsidies

Countervailing duties

Domestic assistance programs

5.Charges on imports:

Prior import deposit subsidies

Administrative fees

Special supplementary duties

Import credit discrimination

Variable levies

Border taxes

6.Others:

Voluntary export restraints

Orderly marketing agreements

There are several different variants of division of non-tariff barriers. Some scholars divide between internal taxes, administrative barriers, health and sanitary regulations and government procurement policies. Others divide non-tariff barriers into more categories such as specific limitations on trade, customs and administrative entry procedures, standards, government participation in trade, charges on import, and other categories.