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Tariff

If offshore assembly provisions were extended to include more goods, what would this do to the actual level of protection provided by a country's nominal tariff schedule? Explain. If the extension of the provisions is made to final goods but not to intermediate goods, what would this do to the effective rate of protection (ERP) for the country provided by its tariff schedule? Explain.

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If offshore assembly provisions were extended to include more goods, what would this do to the actual level of protection provided by a country's nominal tariff schedule? Explain.
If offshore assembly provisions were extended to include more goods then actual level of protection provided by the country's nominal tariff would go down. The US Offshore Assembly Provision allows US made components to reenter the United States free of duty after being processed/ assembled abroad. In case of OAP, the duties are levied only on the foreign value-added included in the final imports. This means that the level of protection on US made components that reenter the US is far lower than what it would have been had there been no offshore provisions. The nominal tariff rate is ...

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