Country Y's domestic price for wheat is $300 per tonne, while the world price is $250 per tonne. An anti‑dumping duty is to be imposed equal to the price difference plus 10 % of the world price. Before the duty, wheat imports amount to 80 000 tonnes. After the duty is introduced, imports fall by 25 %.

a) Calculate the duty per tonne.

b) Compute the total revenue the government will collect from the duty after the 25 % reduction in imports.

c) Country Z enjoys a preferential tariff of 5 % on wheat imported from Country Y. Assuming the same post‑duty import volume, does the anti‑dumping duty comply with the WTO most‑favoured‑nation principle? Explain briefly.

Question

Country Y's domestic price for wheat is $300 per tonne, while the world price is $250 per tonne. An anti‑dumping duty is to be imposed equal to the price difference plus 10 % of the world price. Before the duty, wheat imports amount to 80 000 tonnes. After the duty is introduced, imports fall by 25 %.

a) Calculate the duty per tonne.

b) Compute the total revenue the government will collect from the duty after the 25 % reduction in imports.

c) Country Z enjoys a preferential tariff of 5 % on wheat imported from Country Y. Assuming the same post‑duty import volume, does the anti‑dumping duty comply with the WTO most‑favoured‑nation principle? Explain briefly.

Accepted Answer

Duty per tonne = 75; total revenue = 4500000; does not comply with MFN (No)

Gce Model Questions Vol1 2023 Government Question 47

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