A1: A bound tariff is the uppermost tariff rate on any one good that a country has committed not to exceed, either through its participation in the WTO or a trade agreement with one or more countries. In other words, they have bound themselves not to tax an imported good at a higher rate than this.

What are bound vs applied rates?

The WTO agreement includes commitments by countries to bind their tariff rates at an agreed-upon maximum rate for each import product category. The maximum tariff in a product category is called the bound tariff rate. ... The actual tariff rate is called the applied tariff rate.

What does it mean for a tariff to be bound?

Commitment not to increase a rate of duty beyond an agreed level. Once a rate of duty is bound, it may not be raised without compensating the affected parties.