1

DATA DAY

Direct Measures of Protection

2

Market Access

Beyond obvious negotiations purposes… Information on market access conditions allows

exporters to: Evaluate the competitiveness of the product with

respect to suppliers from other countries under different tariff schemes

Select markets/market segments in which the product has the best prospects

Adapt, where necessary, the product to conform to the target market’s import regulations

3

Information on market access conditions allows trade promotion agencies to: Evaluate the actual prospects for market access for a

given product and destination Compare obstacles to market access in the different

markets

4

Information on market access conditions allows trade analysts and policy makers to: Evaluate the cost of foreign and domestic protection Simulate the gains associated with various scenarios

of trade liberalisation Compare the benefits of multilateralism versus

regionalism

5

Measurement of protection has come to the forefront of the policy debate for three reasons: Until very recently direct evidence on protection - tariffs - was

not reflecting the actual protection. Non-tariff measures play an increasing role as tariffs are

progressively phased out. Indirect (econometric) evidence on protection lead to order of

magnitudes hardly matching the direct measures: trade costs

We focus here on tariffs

6

Issues to be tackled when using tariffs

Measurement of protection Bound, applied, preferential duties Ad valorem equivalents of specific tariffs Tariff quotas TRQ rents Erosion of preferences Differences among developing economies Modelling liberalisation scenarios at the detailed level Exceptions and sensitive products

7

Different types of tariffs Tariff scheme defined at the tariff line level More detailed than the HS6, differ from one country to another. Series of different instruments grouped under the term 'tariff'. Specific tariff: t. Ad valorem duty: P = P*(1+ ) = P*+t Compound tariff: ad valorem + specific Mixed duty: conditional choice between ad valorem and specific Technical duty: based on alcohol content, sugar content... Tariff quotas

8

Different tariff levels

Bound tariff: commitment at the WTO, tariff can be higher if and only if compensations are conceded to partners (or because of additional duties levied under certain circumstances). Generally equal or below (MFN applied).

Most Favoured Nation (MFN) tariff. -> Binding overhang. Preferential tariff below the MFN. -> Preferential margin. WTO definition: MFN == applied protection Economic literature: Preferential tariff == applied protection

9

Discriminatory tariffs

According to the GATT a country should not discriminate among trading partners (members of the WTO).

Two exceptions. Regional agreements that liberalise a 'substantial part'

of their bilateral trade. More generally Preferential Trade Agreements (PTAs).

Specific schemes favouring development (unilateral preferences).

de facto discrimination: specific tariffs (ad valorem equivalent will be a function of the unit value). Different tariff lines by entry port or season, etc.

10

Preferential margins

Binding overhangMFN

Bound

Applied

I

II

III

For each individual tariff line k, importer s and exporter r, the picture is:

Policy simulations can not rely on averages of (MFN) tariffs

k = 1,2…10,000 while i = 1,2, …50

On the top of this, tariff lines combine instruments

Actual protection

11

The trade-off between information and tractability

Every country reports policy instruments at the tariff line level Some countries report trade at the tariff line level Tariff lines nomenclatures are specific to countries The bridge between instruments reported is the HS6 (some

5,000 products) HS6 trade reported by the majority of countries Mirror data for non reporters Individual country study: tariff line Multi-country: scenarios modelled at the HS6 level

AVE of specific tariffs AVE of tariff quotas Quota rents calculated

12

Need to aggregate instruments and to average tariff lines

Algorithm when choice is proposed at tariff line level if V>$130 then t=(x% + $y) else t=65% V is not observable !

Need to aggregate instruments x% on line 1234567890 and y% on line 1234567891 into z% on position 123456

Need to transform specific tariffs into AVEs $x per ton into y%

Need to calculate AVEs of TRQs 30% for the x first tons (in quota tariff rate) 230% for the additional tons (out of quota tariff rate)

GuatemalaAustralia

Bulgaria

Canada

Estonia

Hong Kong

Hungary

Israel

Japan

Korea, Rep.

Macao

Mongolia

New Zealand

Poland

Romania

Singapore

Turkey

Swaziland

Lithuania

Taiwan

Korea, Dem. Rep.

Algeria

Cyprus

Egypt

Lebanon

Malta

Morocco

Syria

Tunisia

Micronesia

ArmeniaAzerbaijan

Belarus

Bosnia & HerzegovinaChina

Iran

Iraq

Kyrgyzstan

Libya

Moldova

Palau

Russia

Saudi Arabia

Tajikistan

Turkmenistan

Ukraine

Vietnam

Yemen

Uzbekistan

Marshall Isl.

Oman

Nauru

Albania

Argentina

Bahrain

Brazil

Brunei

Ivory Coast

Croatia

Cuba

Georgia

Guyana

Indonesia

JordanKazakhstan

Malaysia

Mali

Mexico

Namibia

Pakistan

Paraguay

Philippines

Qatar

St. Kitts

Slovenia

South Africa

Sri Lanka

Thailand

UruguayIndia

Dominican Rep.

Kuwait

Laos

Afghanistan

Nepal

Bhutan

Cambodia

Maldives

Myanmar

Bangladesh

Bahamas

Cape Verde

Comoros

Congo Dem.Rep.

Eq. Guinea

Eritrea

Ethiopia

Kiribati

Liberia

Samoa

Seychelles

Somalia

Sudan

Tonga

Tuvalu

Vanuatu

Sao Tome

Antigua

Belize

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Barbados

Ctrl. Afr. Rep.

Chad

Congo

Djibouti

Dominica

Fiji

Gabon

Gambia

Ghana Grenada

Guinea

Guinea-BissauHaiti

Jamaica

Kenya

Lesotho

Madagascar

Malawi

Mauritania

Mauritius

Mozambique

Nigeria

Papua

St. Lucia

St. Vincent

Sierra Leone

Tanzania

Togo

Trinidad

Uganda

Zambia

Zimbabwe

W.T.O.

G.S.P

Andean Group

A.C.P. C.A.C.M.

L.D.C.

Euromed

E.F.T.A.

Chile

Rwanda

Angola

E.E.A.

Czech Rep.

Bermuda

Senegal

Niger

Slovakia

YugoslaviaMacedonia

Suriname

Latvia

East Timor

Solomon Isl.

Greenland

Montserrat

Aruba

Anguilla

Gibraltar

Niue

Tokelau

Cook Isl.

Costa Rica

Nicaragua

Honduras

El SalvadorPanama

Norway

Liechtenstein

Iceland

Switzerland

Peru

Bolivia

Venezuela

Ecuador Colombia

U.A.E

U.S.

Andorra

Palestinian auth.

Note: An underlined country's name signals a bilateral agreement with the EU.

C.F.D..

From European Trade Policy in 2001...

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Guatemala

Australia

BulgariaCanada

Estonia

Hong Kong

Hungary

Israel

Japan

Korea, Rep.

Macao

Mongolia

New Zealand

Poland

Romania

Singapore

Turkey

Swaziland

Lithuania

Chinese Taipei

Korea, Dem. Rep.

Algeria

Cyprus

Egypt

Lebanon

MaltaMorocco

Syria

Tunisia

Micronesia

Armenia

Azerbaijan

Belarus

Bosnia & HerzegovinaChina

Iran

Iraq

Kyrgyzstan

LibyaMoldova

Palau

Russia

Saudi Arabia

Tajikistan

Turkmenistan

Ukraine

Vietnam

Yemen

Uzbekistan

Marshall Isl.

Oman

Nauru

Albania

Argentina

Bahrain

Brazil

BruneiCôte d’Ivoire

Croatia

Cuba

Georgia

Guyana

Indonesia

JordanKazakhstan

Malaysia

Mali

Mexico

Namibia

Pakistan

Paraguay

Philippines

Qatar

St. Kitts

Slovenia

South Africa

Sri Lanka

Thailand

Uruguay

India

Dominican Rep.

Kuwait

Laos

Afghanistan

Nepal

Bhutan

Cambodia

Maldives

Myanmar *

Bangladesh

Bahamas

Cape Verde

Comoros

Congo DR

Eq. Guinea

Eritrea

Ethiopia

Kiribati

Liberia

Samoa

Seychelles

Somalia

Sudan

Tonga

Tuvalu

Vanuatu

Sao Tome

AntiguaBelize

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Barbados

Ctrl. Afr. Rep.

Chad

Congo

Djibouti

Dominica

Fiji

Gabon

Gambia

Ghana

Grenada

Guinea

Guinea-Bissau

HaitiJamaica

Kenya

Lesotho

Madagascar

Malawi

Mauritania

Mauritius

Mozambique

Nigeria

Papua

St. Lucia

St. Vincent

Sierra Leone

Tanzania

Togo

Trinidad

Uganda

Zambia

Zimbabwe

W.T.O.

G.S.P

EBA

Euromed

Chile

Rwanda

Angola

E.E.A.

Czech Rep.

Bermuda

Senegal

Niger

Slovakia

YugoslaviaMacedonia

Suriname

Latvia

East Timor

Solomon Isl.

Greenland

Montserrat

Aruba

Anguilla

Gibraltar

Niue

Tokelau

Cook Isl.

Costa Rica

Nicaragua

Honduras

El Salvador

Panama

Norway

Liechtenstein

Iceland

Switzerland

Peru

Bolivia

Venezuela

Ecuador

Colombia

U.A.E

U.S.

Andorra

Bilat. Agreem.

Netherlands Antilles

Antarctica

Bouvet Islands

Cocos IslandsChristmas Isl.

Falklands Isl.

Sandw. Isl.

Guam

McDonald Isl.Cayman Islands

Mariana Islands

New Caledonia

Norfolk Islands

French Polyn.

St Pierre & Miqu

Pitcairn

Santa Helena

Turks & Caicos Islands

US Minor outl. IslandsVirgin IslandsWallis & Futuna

Mayotte

G.S.P /Drugs

GSP/Labor rights

TDCA

EUCAA

MEUFTA

EPA/CA

EPA/WA

EPA/ESA

EPA/Caribbean

EPA/SADC

EPA/Pacific

EU enlargement

Palest. Auth

EUPAAA

To EU Trade Policy in 2004

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Guatemala

Australia

Bulgaria

Canada

Estonia

Hong Kong

Hungary

Israel

Japan

Korea, Rep.

Macao

Mongolia

New Zealand

Poland

Romania

Singapore

Turkey

Swaziland

Lithuania

Chinese Taipei

Korea, Dem. Rep.

Algeria

Cyprus

Egypt

Lebanon

Malta

Morocco

Syria

Tunisia

Micronesia

Armenia

Azerbaijan

Belarus

Bosnia & Herzegovina

China

Iran

Iraq

Kyrgyzstan

Libya

Moldova

Palau

Russia

Saudi Arabia

Tajikistan

Turkmenistan

Ukraine

Vietnam

Yemen

Uzbekistan

Marshall Isl.

Oman

Nauru

Albania

Argentina

Bahrain

Brazil

Brunei

Côte d’Ivoire

Croatia

Cuba

Georgia

Guyana

Indonesia

Jordan

Kazakhstan

Malaysia

Mali

Mexico

Namibia

Pakistan

Paraguay

Philippines

Qatar

St. Kitts

Slovenia

South Africa

Sri Lanka

Thailand

Uruguay

India

Dominican Rep.

Kuwait

Laos

Afghanistan

Nepal

Bhutan

Cambodia

Maldives

Myanmar

Bangladesh

Bahamas

Cape Verde

Comoros

Congo DR

Eq. Guinea

Eritrea

Ethiopia

Kiribati

Liberia

Samoa

Seychelles

Somalia

Sudan

Tonga

Tuvalu

Vanuatu

Sao Tome

AntiguaBelize

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Barbados

Ctrl. Afr. Rep.

Chad

Congo

Djibouti

Dominica

Fiji

Gabon

Gambia

Ghana

Grenada

Guinea

Guinea-Bissau

Haiti

Jamaica

Kenya

LesothoMadagascar

Malawi

Mauritania

Mauritius

Mozambique

Nigeria

Papua

St. Lucia

St. Vincent

Sierra Leone

Tanzania

Togo

Trinidad

Uganda

Zambia

Zimbabwe

W.T.O.

G.S.P

AGOA

Chile

Rwanda

Angola

Czech Rep.

Bermuda

Senegal

Niger

Slovakia

Yugoslavia

Macedonia

Suriname

Latvia

East Timor

Solomon Isl.

GreenlandMontserrat

Aruba

Anguilla

Gibraltar

Niue

Tokelau

Cook Isl.

Costa RicaNicaragua

Honduras

El Salvador

Panama

Norway

Liechtenstein

Iceland

Switzerland

Peru

Bolivia

Venezuela

Ecuador

Colombia

U.A.E

E.U.

Andorra

Netherlands Antilles

Antarctica

Bouvet Islands

Cocos Islands

Christmas Isl.

Falklands Isl.

Sandw. Isl.

Guam

McDonald Isl.Cayman Islands

Mariana Islands

New Caledonia

Norfolk Islands

French Polyn.

St Pierre & Miqu

Pitcairn

Santa Helena

Turks & Caicos Islands

US Minor outl. Islands

Virgin Islands

Wallis & Futuna Mayotte

Palest. AuthC.B.I.

ATPA

NAFTABilateral FTA

CAFTAUSJFTA

USPFTA

US Trade Policy in 2004

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Available databases National statistics

USITC interactive tariff and trade dataweb TARIC (EU)

International statistics: TRAINS in WITS MAcMap CTS (Consolidated Tariff Schedule) IDB (Integrated Database System) CAMAD (Common Analytical Market Access Database), launched in 2005

(WTO, UNCTAD, ITC)

Preferences taken into account? TRAINs on CD GTAP 5 vs GTAP 6 MAcMap

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New analytical approaches

Detailed databases of tariffs Used in CGE models Used in partial equilibrium models Shock tariffs at the tariff line level Use the model at the tariff line level (partial equilibrium) Use the model at the tariff line level (frontier of research in CGE) Alternatively aggregate to the sector level (CGE)

Issue of aggregation Issue of endogeneity

AVEs of NTBs calculated at the HS6 level Border effects cleaned from tariffs An example (multi-region sectoral CGE)...

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MAcMap HS6joint with CEPII

MIRAGE

CAMAD: - WTO - UNCTAD - ITC

TRAINS (in WITS)

MMP for GTAP

GTAP6

MMP on line (TL)

BACIHS6

COMTRADEHS6

UnitedNations

GTAPLINKAGE...

IDBCTS

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Raw data of protectionTariff line level

MAcMaps163 Countries208 partners5,000 products

Liberalisationscenarios5,000 products

Agreggated data of protection (GTAP sectors)

GTAP databaseexcepted protection

MIRAGER regionsI sectors

WelfareTradeFactor incomesTerms of tradeCustom revenues15 years

CTS database

Baseline 2025

Partial equilibriumTariff line level modelling

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Objectives and scope of MAcMap

Fully harmonised & exhaustive picture of world wide protection

Actual impact of tariff reduction. Bound >= MFN (applied) >= applied (preferential) New Applied rate = Min [New Bound rate, Current protection]

Exhaustive coverage all reporting countries (importers) all partners all products at the most disaggregated level

21

MAcMap Methodology : The Reference Group

Clustering on countries (real GDP per capita, trade openness) 5 reference groups

Group of exporters : Computation of unit values, ERGUV.

Group of importers : weights for the MAcMap methodology of aggregation (limits the endogeneity problem).

22

Example of weighting

Brazil

EU

US

Japan

Australia

Other Ref. Group A ’s countries

Ref. Group A

Trade weight

Ref. Group Weight

23

The direct approaches conclude to limited protection for most countries and sectors

Hardly fits the evidence provided by comparing trade to benchmark

Hardly fits the perception of exporters There must be some “hidden protection” and/or NTBs

not taken into account in EAVs Success of the “indirect” approaches There are two indirect approaches:

Deviation from expected trade patterns Deviations from the LOP

Conclusion

24

Actual deviations are due to trade costs Trade costs include all costs incurred in getting a good to

a final user other than the marginal cost of producing the good itself: Transportation costs (both freight costs and time costs) Policy barriers (tariffs and non-tariff barriers) Additional taxes Information costs Contract enforcement costs Costs associated with the use of different currencies Legal and regulatory costs Local distribution costs (wholesale and retail).