Thread by @CoppetainPU

@juniordrblog OK, I'll give it a try.

Countries charge import duties (or tariffs) on goods that enter the country. For example the EU charges 8% per pair on some types of shoes.

(So does the UK, because all EU members have the same tariffs)

1/n

@juniordrblog Sorry computer glitch. The next tweet was meant to say that originally there were no disciplines on tariffs. Countries could set them at any rate, and raise or lower them at will

1a/n

@juniordrblog Then came the depression when countries complained that others had unfair advantages so they raised tariffs against each other to protect their producers.

It was a trade war. (Sounds familiar? 'Fraid so)

Rather than protect jobs, the trade war just worsened the depression.

2/n

@juniordrblog And that meant jobs were lost.

To cut a long story short, the Second World War followed, and afterwards world leaders decided they needed to do something about it.

One thing they did was to negotiate to get rid of the free-for-all in tariffs, and to reduce them gradually.

3/n

@juniordrblog The negotiations produced agreements, in which each country agreed to set limits on its tariffs.

From 1947 until now more products were brought into these agreements, and the ceilings were gradually lowered.

That's how the EU's tariff for those shoes has ended up at 8%

4/n

@juniordrblog The EU's 8% for shoes was the result of negotiations with other countries in what is now the WTO.

The others agreed in return to set lower tariffs on products the EU (and UK) wanted to sell to them.

5/n

@juniordrblog Because it was the result of a negotiation, the 8% tariff on shoes is part of an agreement.

All the negotiated rates are legally binding commitments in the WTO.

To keep it simple, the tariff rates have two legal implications in the WTO .

6/n

@juniordrblog First the 8% tariff on shoes (and all other agreed tariff rates) is a legal ceiling.

The EU can reduce it to, say 5% or scrap it completely without breaking its promise.

But to raise it to 20% would be breaking its promise, or violating the WTO commitment, unless ...

7/n

@juniordrblog ... unless it went back to WTO members to renegotiate so that it could raise the tariff above the 8% ceiling. It might have to give something in exchange.

(There are rules about which WTO members, but I won't go into that here.)

8/n

@juniordrblog The 2nd legal obligation is for that 8% tariff to apply to imports from all other WTO members.

Trade specialists talk about MFN, stands for "most-favoured-nation" treatment.

It sounds weird, but it means not discriminating between trading partners, treating them equally

9/n

@juniordrblog You can have a free trade agreement (such as the EU-Japan deal, which recently took effect), or even the EU single market, which is a very sophisticated and far-reaching free trade agreement.

10/n

@juniordrblog Or you can discriminate in favour of poorer countries by cutting tariffs on their products or allowing them in duty-free without doing the same for other countries.

The EU (& UK) has numerous "preferences" schemes for developing countries. That's it, as simply as I can

11/ends

@juniordrblog BONUS:

at the end of the last big negotiation (the 1986-94 "Uruguay Round", which involved over 120 countries and created the WTO, this was the entire set of agreements.

A revised rule book on the left and over 20,000 pages mainly listing the tariff ceilings each bound legally

@juniordrblog @threadreaderapp unroll