## How to calculate nominal rate of protection

The effective rate of protection is a more complex concept: consider that the same product—clothing—costs $100 on international markets. The material that is imported to make the clothing (material inputs) sells for $60. In a free-trade situation, a firm can charge no more than $100 for In our illustration, suppose nominal rate of tariff on imported component is 30 per cent, then: That is to say, effective rate of protection in this case is 10% as against 20% nominal rate of protection. From importers point of view, nominal rate of tariff is important for it affects the domestic price of the imported products. industries can offset protection to input-using industries. For example, protection to the textiles industry has a negative impact on incentives to produce garments. Depending on the magnitudes involved, even though the nominal rate of protection to the garments industry is positive, the effective rate may be positive, zero, or negative. Effective VS. Nominal Rates of Protection Tariff protection is often not what it seems. The amount of protection given to any one product depends on the tariff rate and on whether there are tariffs n the inputs used to produce it. The nominal rate of protection is the rate that is levied on a given product The effective rate of production takes into account the nominal rate and any tariffs on

## nominal rate of protection: The protection afforded an industry directly by the tariff and/or NTB on its output, ignoring effects of other trade barriers on the industry's inputs. Contrasts with the ERP.

Divide the border production price by the price paid for the item in the market (domestic producer price) to find the nominal protection coefficient for imported goods. For instance, a border price of $100 per unit divided by a domestic price of $50 per unit would yield a nominal protection coefficient (NPC) of 100/50 = 2. ADVERTISEMENTS: When considering a tariff, one normally thinks of the duty compared to the cost of the import; thus a Rs 25 tax on a Rs 100 item would be a 25% tariff. Economists refer to this as the nominal tariff. However, the actual amount of protection is measured by something called an effective tariff. If the home country imposes a 20% tariff on shoes, but no tariff on leather, shoes would sell for $180 in the home country, and the value added for the domestic shoe maker would increase by $30, from $50 to $80. The domestic shoe maker is afforded a 60% effective rate of protection per dollar of value added. This allows domestic VALUE ADDED (and prices) to rise by up to £10 with the domestic product still remaining fully competitive with the imported product. The nominal rate of protection accorded to domestic suppliers is thus 10% of the price of the imports. Compare EFFECTIVE RATE OF PROTECTION. The highest effective rate of protection was, however, 20.7 percent in the case of footwear. The highest nominal tariff rate in Japan was 25.4 percent on food, beverages and tobacco with the corresponding effective tariff rate of 50.3 percent. Included in the securities portfolio as of 31st December 2007 and 2006, respectively are corporate bonds bearing either fixed rate coupons (€827 million nominal value; 2006: €489 million) or floating rate coupons (€3,219 million nominal value; 2006: €993 million) as well as capital protected Notes of Hedgefunds (€275 million nominal value; 2006: €0 million) and other funds (€4 million nominal value).

### ADVERTISEMENTS: When considering a tariff, one normally thinks of the duty compared to the cost of the import; thus a Rs 25 tax on a Rs 100 item would be a 25% tariff. Economists refer to this as the nominal tariff. However, the actual amount of protection is measured by something called an effective tariff.

Effective VS. Nominal Rates of Protection Tariff protection is often not what it seems. The amount of protection given to any one product depends on the tariff rate and on whether there are tariffs n the inputs used to produce it. The nominal rate of protection is the rate that is levied on a given product The effective rate of production takes into account the nominal rate and any tariffs on

### Effective VS. Nominal Rates of Protection Tariff protection is often not what it seems. The amount of protection given to any one product depends on the tariff rate and on whether there are tariffs n the inputs used to produce it. The nominal rate of protection is the rate that is levied on a given product The effective rate of production takes into account the nominal rate and any tariffs on

This allows domestic VALUE ADDED (and prices) to rise by up to £10 with the domestic product still remaining fully competitive with the imported product. The nominal rate of protection accorded to domestic suppliers is thus 10% of the price of the imports. Compare EFFECTIVE RATE OF PROTECTION. The highest effective rate of protection was, however, 20.7 percent in the case of footwear. The highest nominal tariff rate in Japan was 25.4 percent on food, beverages and tobacco with the corresponding effective tariff rate of 50.3 percent. Included in the securities portfolio as of 31st December 2007 and 2006, respectively are corporate bonds bearing either fixed rate coupons (€827 million nominal value; 2006: €489 million) or floating rate coupons (€3,219 million nominal value; 2006: €993 million) as well as capital protected Notes of Hedgefunds (€275 million nominal value; 2006: €0 million) and other funds (€4 million nominal value).

## nominal rate of protection: The protection afforded an industry directly by the tariff and/or NTB on its output, ignoring effects of other trade barriers on the industry's inputs. Contrasts with the ERP.

economists have calculated effective rates of protection in cheerful disregard of the structure of nominal rates and given level of tariff escalation can induce Effective rate of protection show that the level of production's protection through import tax (nominal rate of protection – NRP), this coefficient is calculated by. possible to calculate a Relative Rate of Assistance, RRA, defined in This in turn means that nominal rates of protection for rice would be above trend in.

possible to calculate a Relative Rate of Assistance, RRA, defined in This in turn means that nominal rates of protection for rice would be above trend in. Divide the border production price by the price paid for the item in the market ( domestic producer price) to find the nominal protection coefficient for imported goods evaluate a proposal from the Australian delegation to calculate effective rates of A5.2 Ranking of two industries by nominal rate of assistance, producer some degree by tariff protection to local production of the materials, etc he uses. The effective rate of protection for a tradable item is It can also be calculated as the difference