When the European Community was originally formed, it was determined that the co

Question

When the European Community was originally formed, it was determined that the common external tariff on outside world products should be equal to the average of the preunion tariffs of partner countries on the outside world. This rule was adopted so that there would not be a net increase in protection against the outside world. Thus some partners raised tariffs on some products and lowered them on others. See if you can show how this “averaging” rule would complicate the process of making welfare judgments about the likely effects of the original formation of the EC on the member countries.

Explanation / Answer

Since the completion of the internal market, goods can circulate freely between Member States. The 'Common Customs Tariff' (CCT) therefore applies to the import of goods across the external borders of the EU.

The tariff is common to all EU members, but the rates of duty differ from one kind of import to another depending on what they are and where they come from. The rates depend on the economic sensitivity of products.

The tariff is therefore the name given to the combination of the nomenclature (or classification of goods) and the duty rates which apply to each class of goods. In addition the tariff contains all other Community legislation that has an effect on the level of customs duty payable on a particular import, for example country of origin.

The tariff is a concept, a collection of laws as opposed to a single codified law in itself. There is however a kind of working tariff, called TARIC, which is not actually a piece of legislation.

Through the tariff, the Community applies the principle that domestic producers should be able to compete fairly and equally on the internal market with manufacturers exporting from other countries.

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