If there is one thing that international trade community really values, it is certainty – of policy, of costs, and of a delivery schedule. Adam Smith, the Father of Economics, had long ago included the canon of certainty as one of the four tenets of a good tax system. Aligned with this recognition, the Trade Facilitation Agreement, negotiated under the aegis of the World Trade Organization, includes various provisions to promote certainty and reduce trade costs as well as time.Today, the world is in the midst of dire uncertainty, as the US government recalibrates its trade policy in perhaps the most unprecedented manner. Exercising powers under various domestic legislations, particularly International Emergency Economic Powers Act, the Donald Trump regime has decided to negate the fundamental principles of Most Favoured Nation by threatening to impose “reciprocal tariff” on trade partners. Such a tariff structure, even if it is to be implemented in less than half measure, would significantly increase classification disputes that beset customs administrations in most countries, including India. The reason for this is simple: the commodity’s classification under the World Customs Organization’s Harmonised System of Nomenclature-based national customs tariff determines the effective rate of tariff and applicability of non-tariff measures.
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