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DATA DAY Direct Measures of Protection. 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

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DATA DAY Direct Measures of Protection

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DATA DAYDirect Measures of Protection


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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


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  • 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


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  • 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


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  • 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


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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


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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: t

  • P = P*(1+ t) = 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


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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


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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.


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

Bound

I

Binding overhang

MFN

II

Preferential margins

Applied

III

Actual protection

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


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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


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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)


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From European Trade Policy in 2001...

G.S.P

L.D.C.

East Timor

Afghanistan

C.F.D..

Myanmar

Yemen

A.C.P.

C.A.C.M.

Cambodia

Bangladesh

Honduras

Brunei

Andorra

Tonga

Nepal

Maldives

Panama

El Salvador

Australia

Lesotho

Cape Verde

Togo

Guatemala

Nicaragua

Bhutan

Samoa

New Zealand

Botswana

Japan

Costa Rica

Ethiopia

Ctrl. Afr. Rep.

Senegal

Laos

Sao Tome

Hong Kong

Korea, Rep.

Andean

Group

Bolivia

Zambia

Tuvalu

Angola

Burkina Faso

Ecuador

Singapore

Colombia

Peru

Venezuela

Kiribati

Madagascar

Benin

U.S.

Canada

Sudan

Solomon Isl.

Eq. Guinea

Uganda

E.E.A.

Malawi

Vanuatu

Mali

Gambia

Comoros

Haiti

Guinea-Bissau

Norway

Burundi

Cuba

Somalia

Niger

Rwanda

Tanzania

W.T.O.

Macao

Liechtenstein

Guinea

Mauritania

Pakistan

Eritrea

Iceland

Chad

Liberia

Sierra Leone

Mozambique

Djibouti

Mexico

Paraguay

E.F.T.A.

Switzerland

Zimbabwe

South Africa

Suriname

St. Lucia

Kenya

Seychelles

Argentina

Dominica

Congo

Barbados

Qatar

Bahrain

Malaysia

Nauru

Dominican Rep.

Antigua

Namibia

Bulgaria

Thailand

Gabon

Cook Isl.

Swaziland

Congo Dem.Rep.

Jamaica

Hungary

U.A.E

Czech Rep.

Romania

Cameroon

Kyrgyzstan

Trinidad

Guyana

Palau

Mauritius

Poland

Albania

St. Vincent

Indonesia

Chile

Slovakia

Micronesia

Ghana

Grenada

Latvia

Tokelau

Uruguay

Marshall Isl.

Ivory Coast

Nigeria

India

Estonia

Kuwait

Slovenia

Brazil

Papua

Montserrat

Belize

Mongolia

Bermuda

Niue

St. Kitts

Yugoslavia

Morocco

Israel

Macedonia

Bahamas

Fiji

Sri Lanka

Egypt

Malta

Taiwan

Uzbekistan

Philippines

Turkey

Cyprus

Anguilla

Euromed

Belarus

Turkmenistan

Oman

Tunisia

Russia

Iran

Georgia

Syria

Lithuania

Palestinian auth.

Jordan

Algeria

Vietnam

Libya

Kazakhstan

Lebanon

Gibraltar

Greenland

Iraq

Aruba

Ukraine

Bosnia & Herzegovina

Tajikistan

Korea, Dem. Rep.

China

Armenia

Moldova

Azerbaijan

Croatia

Saudi Arabia

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


To eu trade policy in 2004 l.jpg

ToEU Trade Policy in 2004

Palau

Micronesia

EPA/Caribbean

G.S.P

EPA/Pacific

Marshall Isl.

Bahamas

EPA/CA

Tonga

Nauru

Cook Isl.

Niue

Barbados

Dominica

St. Vincent

Trinidad

Guyana

EBA

Tuvalu

Sao Tome

Kiribati

Haiti

Bahrain

Grenada

Bilat. Agreem.

Jamaica

Australia

Laos

Samoa

Vanuatu

Eq. Guinea

Belize

Antigua

Suriname

Yemen

Andorra

Afghanistan

St. Lucia

St. Kitts

Singapore

Chad

Dominican Rep.

Somalia

Chinese Taipei

Bhutan

Bangladesh

Ctrl. Afr. Rep.

Cape Verde

Cambodia

Solomon Isl.

Bolivia

Liberia

Maldives

Congo

Togo

Nicaragua

E.E.A.

W.T.O.

Cameroon

Panama

Senegal

Costa Rica

Eritrea

Guinea

Myanmar *

Gabon

Norway

El Salvador

Mauritania

Nepal

Peru

Liechtenstein

Korea, Rep.

Ethiopia

Niger

Gambia

Iceland

Mozambique

Guatemala

Ecuador

Sudan

Djibouti

Switzerland

Sierra Leone

Angola

Colombia

Venezuela

Congo DR

Papua

Benin

Mali

U.S.

Romania

Comoros

Zambia

Malawi

Tanzania

Pakistan

Honduras

Guinea-Bissau

Fiji

Uganda

Burundi

Lesotho

G.S.P /Drugs

New Zealand

Rwanda

Madagascar

Burkina Faso

Japan

Uruguay

Kenya

Mauritius

Namibia

Cuba

TDCA

Hong Kong

Seychelles

Ghana

Nigeria

Botswana

Mongolia

Canada

Zimbabwe

Côte d’Ivoire

Swaziland

South Africa

Bulgaria

EPA/ESA

Brunei

EUCAA

EPA/WA

Qatar

India

EPA/SADC

Chile

Iraq

Hungary

EU enlargement

Santa Helena

Georgia

MEUFTA

Poland

China

Macao

Indonesia

U.A.E

Brazil

Bosnia & Herzegovina

Mexico

Paraguay

Slovakia

Lithuania

Kuwait

Malaysia

Kyrgyzstan

Estonia

Montserrat

Armenia

Czech Rep.

Norfolk Islands

Croatia

Thailand

Slovenia

Yugoslavia

Macedonia

Philippines

Cyprus

Malta

Latvia

New Caledonia

Turks & Caicos Islands

Albania

Morocco

Israel

Tokelau

GSP/Labor rights

Turkey

Falklands Isl.

St Pierre & Miqu

Argentina

Egypt

Tunisia

Anguilla

Sri Lanka

Korea, Dem. Rep.

Oman

Turkmenistan

Libya

Russia

Iran

Bermuda

Uzbekistan

Syria

Euromed

Moldova

Jordan

Algeria

Kazakhstan

Lebanon

Guam

Vietnam

Gibraltar

Greenland

Belarus

Sandw. Isl.

Christmas Isl.

Ukraine

Tajikistan

Cocos Islands

Antarctica

EUPAAA

Aruba

Bouvet Islands

Azerbaijan

Netherlands Antilles

Pitcairn

Saudi Arabia

Palest. Auth

Cayman Islands

French Polyn.

McDonald Isl.

Mariana Islands

Wallis & Futuna

Virgin Islands

US Minor outl. Islands

Mayotte

East Timor


Us trade policy in 2004 l.jpg

Tokelau

Falklands Isl.

US Trade Policy in 2004

Anguilla

New Caledonia

Micronesia

AGOA

Palau

Iraq

Libya

Marshall Isl.

Gabon

Mauritania

Switzerland

Andorra

St Pierre & Miqu

Zambia

U.A.E

Botswana

Cook Isl.

Nigeria

Mongolia

Nauru

Turkmenistan

Sao Tome

Mali

ATPA

Brunei

Bolivia

New Zealand

Chad

Mozambique

Niue

Cape Verde

Sierra Leone

Peru

Ecuador

Kuwait

Malta

Maldives

Chinese Taipei

Congo DR

Cameroon

Colombia

Pakistan

W.T.O.

Seychelles

Mauritius

Ghana

Macedonia

Senegal

South Africa

Czech Rep.

Guinea

Qatar

Norway

Georgia

Brazil

Gambia

Kenya

Fiji

Romania

Congo

China

Ethiopia

Niger

Togo

Estonia

Iceland

Korea, Rep.

Philippines

Djibouti

Rwanda

Côte d’Ivoire

Poland

Cyprus

Liechtenstein

Angola

Papua

Suriname

Venezuela

Namibia

Malawi

Benin

E.U.

Malaysia

Tanzania

Bulgaria

Tunisia

Thailand

Cuba

Uganda

Swaziland

Paraguay

Macao

Guinea-Bissau

Lesotho

Myanmar

Madagascar

Armenia

Bahrain

Japan

Australia

Zimbabwe

Kiribati

Latvia

Eq. Guinea

Egypt

Nepal

Burkina Faso

NAFTA

Ctrl. Afr. Rep.

Slovenia

Chile

Bilateral FTA

Oman

Solomon Isl.

Israel

Argentina

Bhutan

Hungary

Canada

India

Lithuania

Turkey

Russia

Cambodia

Morocco

Belarus

Burundi

Singapore

Mexico

Tuvalu

Kyrgyzstan

Sri Lanka

Uruguay

Indonesia

Ukraine

Albania

Slovakia

Hong Kong

Kazakhstan

St. Vincent

St. Kitts

El Salvador

Norfolk Islands

USPFTA

Lebanon

Bangladesh

Barbados

Nicaragua

Tonga

Panama

Haiti

Costa Rica

Christmas Isl.

Yugoslavia

CAFTA

Tajikistan

Somalia

Croatia

Dominican Rep.

USJFTA

Belize

Antigua

Honduras

G.S.P

Bosnia & Herzegovina

Grenada

Yemen

Trinidad

Guatemala

Moldova

Jordan

Jamaica

St. Lucia

Comoros

Dominica

Korea, Dem. Rep.

Liberia

Guyana

Aruba

Samoa

Vanuatu

Algeria

Bermuda

Netherlands Antilles

Bahamas

Santa Helena

Guam

Montserrat

Gibraltar

Greenland

C.B.I.

Eritrea

Vietnam

Palest. Auth

Cocos Islands

Antarctica

Uzbekistan

Wallis & Futuna

Mayotte

Bouvet Islands

Laos

East Timor

Azerbaijan

US Minor outl. Islands

Pitcairn

Sandw. Isl.

Syria

Sudan

Saudi Arabia

Cayman Islands

French Polyn.

McDonald Isl.

Afghanistan

Mariana Islands

Iran

Turks & Caicos Islands

Virgin Islands


Available databases l.jpg

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


New analytical approaches l.jpg

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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TRAINS (in WITS)

United

Nations

COMTRADEHS6

CAMAD:

- WTO

- UNCTAD

- ITC

IDBCTS

MMP on line (TL)

BACIHS6

MAcMap HS6

joint with CEPII

MMP for GTAP

MIRAGE

GTAP

GTAP6

LINKAGE...


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Liberalisation

scenarios

5,000 products

MAcMaps

163 Countries

208 partners

5,000 products

Raw data of protection

Tariff line level

Partial equilibrium

Tariff line level modelling

CTS database

Agreggated data of protection (GTAP sectors)

Baseline 2025

GTAP database

excepted protection

Welfare

Trade

Factor incomes

Terms of trade

Custom revenues

15 years

MIRAGE

R regions

I sectors


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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


Macmap methodology the reference group l.jpg

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).


Example of weighting l.jpg

Example of weighting

EU

Trade weight

US

Brazil

Ref. Group A

Japan

Ref. Group Weight

Australia

Other Ref. Group A ’s countries


Conclusion l.jpg

Conclusion

  • 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


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  • 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).


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