Why Low Tariffs are Good for the Afghan Economy?

World Trade Organization (WTO)

Why Low Tariffs are Good for the Afghan Economy?

Low Tariffs Reduce the Price of Inputs for Afghan Producers, Making Their Products More Price Competitive

The Afghan economy is still in its infancy and Afghan producers need to have access to the best inputs at the lowest price.  Low cost inputs will make Afghan producers more competitive domestically and in foreign markets.

Low Tariffs Reduce the Cost of Living

Protectionism is expensive as it raises prices.  High tariffs put the heaviest burden on poor people because they must pay a high price for staple goods.  

Low Tariffs Enables More Choice of Products

Lower tariffs provide the impetus to import more goods and services.  As a consequence, Afghan consumers are provided with a broad selection and price range of products from which to choose.

Low Tariffs Encourages Producers to Innovate

Domestic companies rarely innovate without serious competition, locally or from abroad.  Erecting tariff walls to protect local industries make those industries inefficient and less competitive over the long term.

Low Tariffs Attracts Foreign Investment to Afghanistan

Lower tariffs are synonymous with a business friendly environment.  To stimulate investment in Afghanistan, investors look for open, dynamic, and a market driven business climate that is anchored by a low tariff regime so that inputs to production are available at the lowest possible cost.  Since investors have a choice of investment destinations, it is in Afghanistan’s best interest to create the best conditions to attract foreign investment, including setting up a low tariff regime.

High Tariffs in a Country with Porous Borders Bolsters Corruption

Afghanistan has porous borders with six countries and is difficult to police. This means that high tariffs will only serve to worsen corruption at the borders and undermine the rule of law.  Goods will enter Afghanistan, regardless.