World Trade Organization and tariffs World Trade Organization is an international organization that deals with the rules that govern trade between nations. The main activity that the organization involves is negotiation and agreements that are signed and ratified in the parliaments in the nations. The main goal of the organization is to help producer of goods and services, importers and exporters to conduct business (Alexander and Andenæs, 46).
Tariffs are custom duties on merchandise imports. Tariffs are meant to give a price advantage to locally produced goods over same goods that are imported and this leads to raising revenue for governments. Tariffs are mainly imposed to restrict trade that occurs between nations as they increase the prices of imported goods and services making them more expensive to consumers. Tariffs also have been used in providing additional revenue for the government and to domestic producers at the expenses of foreign producers and customers (Alexander and Andenæs, 38). This is used as one of the tools to shape policies of trade.
Types of barriers imposed by Saudi Arabia for exports and imports
There are different trade barriers that are used in Saudi Arabia. The first strategy that has been used is tariffs. Saudi Arabia implies the GCC common external tariffs of five percent of most of the products used in the nation with limited number of expectation. Saudi Arabia implies twelve percent on the local products in some cases to protect the industries of the nations. Textile products are among the products that implies the 12 per cent import tariffs. Higher rates of the tariffs implies to smaller group. There is also implication of 15 per cent for other products such as aluminum and furniture. Majority of food products are subjected to five percent import duty. The level of imports duties ties to the level of local production of similar goods.
Import prohibitions and licensing either is used in Saudi Arabia where the importation of certain articles is the prohibition of some goods or require approval from other appropriate authority. In the country, there is prohibition of goods such as pork products, used clothing, firearms, and automobiles (Alexander and Andenæs, 33). Importation of some products requires special approval such as agricultural feeds, books, visual or audio media and religious materials.
In importation and exportation in Saudi Arabia, there is documentation that is required. most products such as agricultural biotechnology products needs certification that is authenticated by the local chamber of commerce in the country that the goods originate concerning the fitness of the products to be consumed by human and for sale in the country of origin.
Government procurement has also been used as a barrier to import and export of goods and services. According to the local decree of the country, contracts in the country must subcontract 30 percent of the value of a contract to the government with inclusion of support services. Saudi Arabia also gives 10 percent price preference for goods by GCC as compared to non-GCC products in the procurement of all government services.
Intellectual property rights have also been used as a barrier to imports and exports of goods and services produced in Saudi Arabia. Service barriers include the use of practices such as insurance and banking policies (Alexander and Andenæs, 23). Investment barriers have also been used in the country where all foreign investment in the country requires a license from investment authority in the country. This is renewed annually depending on the sector.
Work cited
Alexander, Kern, and Mads Tønnesson Andenæs. The World Trade Organization and Trade in Services. Leiden: Martinus Nijhoff Publishers, 2008. Print.
