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Import Duties

June 2021

I would also implement an import duty (or tariff) on all imports. The rate would be set after expert analysis but say it could be 15%. It might be determined that the rate should be more for both economic and environmental reasons. An worldwide consistent import duty would encourage local manufacture and production. It would also compensate government for the loss of tax income from local manufacturing / production forgone. As illustrated in the previous section, in someways at the present the importation of manufactured goods is a big tax rort. Tax is avoided compared to local manufacture. It would also go some way to compensating Australia - and other countries - for the loss of capital to overseas countries.

Now I can hear the economic rationalists saying now - "But if we introduce import duties other countries will impose import duties on Australia - so there won't be any net benefit to Australia. It is more efficient to let the country that can manufacture/produce at the lowest price to sell their product to us and we concentrate on what we do well." To that I say - we need to move away from economic rationalism because it does not operate to our - the people's - benefit in a carbon constrained world. Why? It is not all about efficiency and maximising profit for capitalists. The impact of import duties is to deter importation to Australia lowering our impact on global emissions from transportation and to encourage local manufacture. And if each country in the world imposes import duties on all other countries - preferably at the same rate - then that will act to decrease carbon dioxide emissions from transportation in a worldwide context. It is much better for the each country and for the world as a whole for each country to produce and manufacture what the country needs within its own borders - as close to its end use as practical. More local manufacture means more local employment, the more tax paid to the Government of that country and the less world wide transportation that uses fossil fuel use. Consequently it might be determined that an import duty rate higher than the nominal 15% would serve this purpose better.

It would be best if the import duty rate was standard for all countries. If the rate is consistent for all countries then no country has a greater advantage in selling their product into other countries. For example, if Australia and the US were offering to sell wheat into China there would be no competitive difference for the two countries if they both had a 15% import duty placed on their wheat compared to them both having a zero import duty. It would be a level playing field. Though both countries would be less competitive than a local Chinese wheat grower. Which is exactly what is meant to be achieved - encouragement of local production to lessen transport around the world.

It would be counter productive for individual countries to impose different import duties. That could encourage trade wars. There should be an international agreement on a consistent import duty rate for all countries - ideally it should be encouraged by the WTO, doing something useful for a change.

A consistent 15% (or some other consistent percentage) would actually promote freer trade than the shemozzle of the varying import duties, rules and restrictions that vary between pairs and groups of countries, that afflict world trade. The so called "free trade agreements" that are negotiated between individual countries are anything but free. Not that I have ever read one but I hear they are immensely long documents that are a bureaucratic and administrative nightmare to oversee and implement. I also hear that exporters try to work around them if they can. If it was actual free trade there wouldn't need to be a document full of rules, trade items between two countries would just cross the two borders largely uninhibited. What I am proposing for all the world with a single consistent percentage import duty applicable to all countries. It could be written down but doesn't need to be. If some countries still wanted further protection on some of their industries perhaps there may be additional agreements between countries to maintain those. But there would be a heck of a lot less because all local industry would already have a level of protection (though it is not implemented for the purpose of protection) from the default 15% import duty (and the cost of import transportation which also may rise as a result of carbon taxes).

The ease of local manufacture is increasing, because of the automation of manufacturing production with robotics. Previously a car assembly line was hugely labour intensive. Car assembly in the future will be largely done by robots with much less labour - mainly people supervising the robotics and associated computers. Robotics may make it economic to manufacture on a smaller scale. While the downside of this is that there is less labour employed, the upside is that there will be at least some labour used for car manufacture in Australia. If cars are all being imported into Australia there is no manufacturing labour - so any increase is a positive. And it is probable that any new car industry in Australia would be for the production of electric cars.

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