Prohibitive Duty

Prohibitive Duty

Summary of Prohibitive Duty

A rate of duty so high as to effectively preclude entry of an item. Generally, prohibitive duties increase the selling price to such a level that the item cannot compete with domestic substitutes. Prohibitive duties are designed to protect domestic infant or ailing industries from vigorous competition or to retaliate for duty increases by other countries.

(Main Author: William J. Miller)

Prohibitive Duty and the GATT Policy Negotiations

In relation to the GATT Policy Negotiations, Christopher Mark (1993) provided the following explanation and/or definition of Prohibitive Duty: A tariff rate that is sufficiently high that it effectively precludes most or all imports. Prohibitive duties are usually intended to protect infant or ailing industries from foreign competition or to retaliate against another country's trade practices.


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