Trade Policy Tools as are Used in Tanzania

Trade policies come in many varieties. Generally they consist of either taxes or subsidies, quantitative restrictions or encouragements, on either imported or exported goods, services and assets. In this section I want to describe many of the policies that Tanzania have implemented or is implementing. The purpose of this discussion is to raise awareness among scholars of the likely effects of each policy, by defining and describe the use of each policy.
The main trade policy tools are
1. Import Tariffs
2. Import Quotas
3. Voluntary Export Restraints (VERs)
4. Export Taxes
5. Export Subsidies
6. Voluntary Import Expansions
· Other Policies

Among the above mentioned policy tools import tariffs, export taxes and others trade polices (namely Government procurements, health and safety standards and red-tape barriers) are the ones mainly used and Tanzania economic management. Therefore only through these tools the Government has been able to intervein and moderate the economy. These trade policy tools have positive and negative impacts to the country depending on the nature of intervention.

Import Tariff

Intervention under this tool has been through annual tariff changes by the Government, either by raising import duty or lowering it to some products. Since January 2004 with the coming into force of the EAC Customs Union, this responsibility of altering import duty has been transfered to the EAC Council of Ministers. Essentially at national level, tariff reforms has resulted into reduction of import duty to average of 12% and this among others made prices of imported goods lower so resulting into some consumers welfare effects in the country. A t international level, the lowering of import duty has created what the trade experts call "Water", and this water has made negotiations under WTO difficulty because of water developed countries cannot find new market access opportunities to trade off with developing countries. The water is the result of widening differences between applied tariffs and the bound tariff under WTO. Therefore, all the efforts made by developing countries of restructuring their tariff structure including Tanzania has resulted into their punishment. Developed countries are seeking for new market access opportunity by ignoring the own tariff reduction made because they argue that those restructing were made by developing countries outside multilateral negotiations and that was to their own interests and cannot be counted now.

To be continued -------