Binding’ tariffs
The market access schedules are not simply
announcements of tariff rates.They
represent commitments not to increase
tariffs above the listed rates — the rates
are “bound”. For developed countries,
the bound rates are generally the rates
actually charged. Most developing countries
have bound the rates somewhat
higher than the actual rates charged, so
the bound rates serve as ceilings.
Countries can break a commitment
(i.e. raise a tariff above the bound rate), but
only with difficulty. To do so they have to
negotiate with the countries most concerned
and that could result in compensation for
trading partners’ loss of trade.