Tariff Regulation of Imports under Transnationalization of Global Trade

Abstract

Transnationalization of global trade is an objective consequence of the processes taking place in the world economy at the present stage of development. The country’s participation in global value chains is mainly defined by the creation of conditions for attracting foreign direct investment, with the multinational corporations (MNCs) as a significant source of investments. However, MNCs seek to reduce the impact of existing barriers in global trade by the use of transfer pricing to maximize global profi ts. It might have a significant negative impact on the activities of domestic companies due to lower effectiveness of tariff protection that could negatively affect the domestic productive forces in the long term. The control of the customs value of goods imported by related counterparties carried out by identifying and confirming the unreliability of the declared customs value of goods is intended to neutralize such impact. At the same time, due to the non-declaration of information about the existence of a relationship between the seller and the buyer of imported goods the customs authorities often do not have the opportunity to prove the fact of such a relationship, which objectively hinders the possibility of controlling the customs value of goods and can be a source of reducing the effectiveness of tariff regulation of import activities. The paper shows the impacts of transfer pricing on the tariff protection of the Russian Federation and suggests practical measures to improve customs and tariff regulation of imports under transnationalization of the world economy.