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PPI | Trade Fact of the Week | March 30, 2005
U.S. Tariffs Collected on Sri Lankan Imports in January: $26 Million


Editor's Notes: The PPI "Trade Fact of the Week" is a weekly email newsletter published by PPI's Trade & Global Markets Project. To sign up for a free subscription, click here. (Just make sure to check the box next to "Trade & Global Markets.")

Original links are included though some may have expired.



The Numbers:

Imports from Scandinavia, Jan. 2005: $1.937 billion
Imports from Sri Lanka, Jan. 2005: $0.198 billion

Tariffs on Scandinavian goods, Jan. 2005: $15 million
Tariffs on Sri Lankan goods, Jan. 2005: $26 million

What They Mean:

Almost half a million Sri Lankans work making clothes. In January, 23 million pairs of gloves, 25 million pieces of ladies' underwear, nine million T-shirts and a million suits left the port of Colombo for the United States. Sticking with the island despite the December tsunami (which spared inland garment factories, and did only minor damage to the Colombo port), as well as competitive pressures from India and China, the buyers paid Sri Lanka $198 million for the clothes. Then they paid $26 million in tariffs to the U.S. Customs Bureau. The tariff is the equivalent of a tax of 13 cents on the dollar.

In the same month, 4,000 cars and nearly a million gallons of vodka arrived from Sweden in America's Atlantic ports. Twelve thousand cell-phones and 10,000 cubic meters of wood from Finland joined them. So did two million kilos of cod, turbot, and other fish from Iceland; 200,000 kilos of crab and salmon from Greenland and the Faeroes; hundreds of thousands of barrels of North Sea crude from Norway, along with 75 tons of smoked salmon and $4 million in turbojet parts. Denmark supplied, among other things, 667 tons of cheese for American tables and $65 million in insulin and blood sera for our hospitals and clinics. The value of the Scandinavian goods was just under $2 billion. Did the buyers of Absolut vodka, Nokia phones, lox, oil, and Volvos pay $260 million, as they would if they faced a tariff like that on Sri Lankan goods? No. They paid $15 million, or less than a penny per dollar.

Why the disparity? The nine postwar international trade agreements have eliminated or deeply cut American tariffs on most types of goods. The Volvos, for example, get a 2.5 percent tariff. Nokia phones, Absolut vodka, Danish insulin, and Norwegian lox get no tariffs at all; neither do turbojets or fresh fish. The main exceptions, where tariffs have been left high, are clothes, shoes, and a few other household goods. (Cheese is also an exception. So are light pickup trucks.) Thus Sri Lanka's top exports -- cotton pants, cotton shirts, and bras -- all have tariffs between 16 percent and 20 percent. Special low-income preference programs excuse most of Latin America and Africa from these taxes. Asia's low-income countries -- Sri Lanka, Bangladesh, Cambodia, Nepal, Mongolia, and others -- have no similar program.

Further Reading:

PPI explains why American tariffs are easy on Saudi Arabia, Ghana, Japan, and the United Kingdom, but tough on Sri Lanka, Pakistan, Cambodia, and Bangladesh:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108
&subsecid=900010&contentid=253112

Help on the way? -- Sen. Gordon Smith (R-OR) and Sen. Dianne Feinstein (D-CA), joined by Senators Baucus and Santorum, introduce a relief bill for Sri Lanka, Bangladesh, Cambodia and other Asian least-developed countries:
http://gsmith.senate.gov/press/2004/01-27-05.htm and
http://www.senate.gov/~feinstein/05releases/r-ldc0207.htm

PPI looks at Bangladesh, child labor and American trade policy:
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108
&subsecID=127&contentID=252971

Tsunami relief -- The Maldives, another Smith/Feinstein bill beneficiary, need to replace a hundred smashed or sunk fishing boats; restore 19 of the country's 87 tourist resorts; and repair nine destroyed schools and 55 extensively damaged schools. (The total number of schools in the Maldives is 315.) The Asian Development Bank estimates that the Maldives' cleanup bill will eventually reach $470 million, or almost two-thirds of the country's total GDP. ADB reports on tsunami damage and recovery requirements for Indonesia, India, the Maldives, and Sri Lanka:
http://www.adb.org/tsunami/

The Maldives Permanent Mission to the United Nations:
http://www.un.int/maldives/

The Embassy of Sri Lanka:
http://www.slembassyusa.org/





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