market analysis section market access map workshop on tools and methods for trade and trade policy...

Market Analysis Section

Market Access Map

Workshop on Tools and Methods

for Trade and Trade Policy Analysis

Helen Lassen & Thierry Paulmier

11th – 15th September 2006, Geneva

Geneva, 12 September 2006 12/09/06 -2Market Access Map

Workshop on Tools & Methods for Trade & Trade Policy Analysis

http://www.macmap.org

MAcMap Homepage

Type your username,

password and click on ‘login’



Data in Market Access Map

• Applied tariffs: MFN and preferences for 178 countries– 2006 data for 98 countries– 2005 data for 57 countries

• Bound tariffs for WTO members

• Ad valorem equivalents of specific tariffs

• Tariff quotas

• Trade flows



Market Access Map – a tool for trade policy analysis

1. Profile of key products, markets, competitors and tariffs2. Compare market access conditions in key markets vs competitors:

2.1 Considering preferences2.2 Considering specific duties using AVEs

3. Simulating tariff reductions on applied or bound tariffs to analyse:3.1 Change in your access to export markets3.2 Erosion of preferences3.3 Impact on own tariffs

4. Bound tariffs 4.1 Simulating bindings on products that have not yet been bound4.1 Simulating bindings for non WTO members

5. Aggregation analysis



1. Profile of key products, markets, competitors and tariffs



Click to see tariffs applied by Germany to Nepal relative to

competitors



In the German market for “carpets” Nepal has a tariff advantage over the top 2

suppliers



In the US market for “men’s trousers” Nepal has a tariff

disadvantage relative to Mexico



Instead of using “Country Analysis” you can build your own query with the key products and markets you wish to analyse in

terms of protection



Example:

• Costa Rica is world’s 2nd largest exporter of 620711 – mens / boys cotton briefs

• Costa Rica exports almost all to the USA and Costa Rica is the major supplier to this market for this product

• How competitive is Costa Rica in the US market from a tariff perspective compared with other major suppliers to the US market like El Salvador, Thailand, Indonesia, Mexico, India and China?

• Are there other markets (among the top 20) that offer Costa Rica preferential access for this product?

• What tariffs do Costa Rica’s competitors face in these markets?

2. Compare market access conditions in key markets vs competitors:2.1 Considering preferences



Currently only Mexico gets preferential

treatment for this product



Which other countries import

the product?

We can find this using the Trade Flows module.



Of these markets, only the EU and Canada offer Costa Rica a

preferential rate for this product



The EU offers Costa Rica a preferential rate of 0% but many other suppliers also face a rate of 0%, so Costa

Rica has no particular advantage



In the Canadian market however, only

a few suppliers get preferential treatment.

The difference between Costa Rica’s preference and the MFN rate is quite

large.



2. Compare market access conditions in key markets vs competitors:2.2 Considering specific duties using AVEs

Example:

• Switzerland imports bananas from a variety of sources and applies an MFN tariff to most of the major suppliers

• Switzerland’s MFN tariff for bananas is a specific tariff of CHF 140 / ton

• Since the supplying countries face the same MFN rate is there any difference in the market access conditions they face?



• Ad valorem equivalents of specific tariffs are calculated as

AVE = Specific tariff per unit

Unit Value

Ad Valorem Equivalents

• AVEs allow us to compare the protection levels of different countries

• AVEs allow us to aggregate tariffs at the sector or regional level; and



If South Africa’s exported fish fillets were worth $200 per ton

If Ghana’s exported fish fillets were worth $100 per ton

the equivalent tariff would be 100%

the equivalent tariff faced would be only 50% !

Imagine Switzerlandapplies a tariff of $100 per ton to imports of fish fillets from Ghana &South Africa

Why AVEs sometimes differ even if specific tariff faced is the same



We can see that the AVEs of specific

applied tariffs (based on bilateral unit

values) are different for each country even

though the specific tariff is the same



Simulation Analysis

3. Simulating tariff reductions on applied or bound tariffs to analyse:

3.1 Access to export markets

3.2 Erosion of preferences

3.3 Impact on own tariffs



3.1 Simulating tariff reductions to analyse change in your access to export markets

Example:

• A number of supplying countries would like to see an improvement in market access barriers to the EU market for agricultural products.

• The EU in the Doha trade talks, proposed a “tiered approach” of formula cuts based on the linear formula with different coefficients of reduction applying to different bands of tariffs

• How would this proposal alter the real market access conditions for agricultural products?


Workshop on Tools & Methods for Trade & Trade Policy AnalysisThe fact that some of the reduced tariffs are in red indicates that

some or all of the tariff lines within the 6-digit

group are now less than the MFN applied

rate



Some users will also be able to view the bound tariff data at

the tariff line to see the cuts to each detailed product



3.2 Simulating tariff reduction on a NAMA product to analyse preference erosion

Example:

• We will look at the potential for Bangladesh’s preference in the EU market to be eroded by a reduction in the MFN rate on 030613 shrimps.

• We will simulate the effect using “bound tariffs” in order to see the cut and then look at the applied tariffs to check the preferential rates faced by Bangladesh and any competitors

• In the case of this product the MFN applied rate is almost the same as the bound tariff rate



Open the “Detailed Analysis” module and then the sub

module “Tariff Simulations”

Choose to simulate reductions on “Bound”



We wish to compare the Linear, Swiss and ABI formulas



The Swiss formula cuts the high MFN tariff by more than the Linear formula but the ABI

causes the biggest cut. Why?



This ABI formula is just like a Swiss formula where the “tm” is equal to the EU’s

average bound tariff for NAMA products. In this case it is 3.9% –

we can look this up in the Country Analysis

module



So, if we were to run a Swiss tariff reduction with a coefficient of 3.9%, we should get the same result as

using the ABI formula in this example



We see that the results are the same for a Swiss

formula with 3.9% coefficient and this ABI

formula.



We then compare the applied tariffs faced by Bangladesh with competitors to see to what

extent Bangladesh’s preferential margin would be reduced by the cuts in the bound tariff



3.3 Simulating a tariff reductionTo analyse the impact on one’s own tariffs

Example:

• India would like to compare the effects of tariff cuts on its NAMA products.

• Formulas to be tested include: – The ABI formula using the average bound tariff for agricultural products and a

coefficient of 2– A Swiss formula with coefficient of 30%– A 50% Less than the Swiss formula cut (also with coefficient of 30%)

• India wishes to identify the formula that cuts its tariffs the least



A cut 50% less than the Swiss formula (coefficient of 30%) is 50% of the difference between the initial tariff and the

final tariff plus the final tariff or(T-((T*30)/(T+30)))*0.5+(T*30)/(T+30)

We can simplify it to (initial tariff + final tariff)*0.5



In the case of the ABI formula we are using India’s national

average bound tariff for NAMA products multiplied by 2,

which is 2 x 34.3% = 68.6%

So this would be the same as running a Swiss formula with

coefficient of 68.6%



The Swiss formula cuts tariffs the most. All final tariffs are, in the Swiss

scenario, below 30% - regardless of their initial level.

The ABI formula cuts are less extensive because the “equivalent Swiss

coefficient” is 68.6%, but in some products the applied MFN rate is still

affected.

In the “less than formula cut

scenario”, the final tariff is only

sometimes below the applied MFN rate



4.1 Simulating bindings of unbound products

Example:

• Cameroon would like to simulate the effect of the ABI formula;

and

• Estimate bindings on non-bound products by applying a mark up of 20 percentage points.



This shows us the ABI formula applied to only those lines that

have been bound. We now need to use the MFN multiplier to estimate the unbound lines



We need to multiply the MFN rate by 1 and then add 20

percentage points. Then click “Show Results” We should then sort the table

by the column heading tariff source. This will sort out all the products that have the

“MFN” tariff as the source (i.e. the lines where the bindings

have been estimated based on the MFN rate)



In the first line, we can see that the MFN rate is 30%, the estimate bound

rate is 50% and the reduced tariff after

applying the ABI formula is 38.08%



Example

• Russia wishes to estimate bound tariffs at double the general applied rate

• Then it wishes to test the effect of a Swiss formula (30%) on these estimated bindings

4.2 Simulating bindings and applying a cut for non WTO member



Select the option to simulate a reduction on Applied tariffs (because

there are no bound tariffs for Russia)



Select all products and select any partner

country with whom Russia has no trade agreement



To simulate the bound tariffs we multiply the

initial applied tariff by 2, then we use this “new

rate” in the Swiss formula with a coefficient of 30%


Workshop on Tools & Methods for Trade & Trade Policy AnalysisNotice that the reduction of “double the general applied rate” using a Swiss formula

(30%) leaves the general rate untouched on low tariffs but the reverse occurs when the

general rate is more than 15%



Example

• We wish to examine the AVEs of the specific tariffs applied by Switzerland to imports of chocolate (180690) from Brazil, Australia and the USA

• Then we wish compare these AVEs with the AVE that Switzerland applies to the “world” on average.

4.2 Aggregation Analysis



First we need to create a country group of “all countries except Switzerland”, which we

will call “World”.



We also need to create as “groups” the individual

countries we wish to examine so they will appear later as items in the “My Groups”

section



Next, we run a query selecting as exporters the 4 “groups”

we created: the World; Australia; Brazil; and USA



We see that the average AVE applied by

Switzerland to the world for chocolate is 7%.

Australia faces an AVE more than double the

average. Brazil and the USA also face an above

average AVE



5. Special notes about the data

• AVEs for applied tariffs are derived from unit values based on bilateral trade flows at the tariff line level where this data is available.

– 3 years of trade data are used– Outliers are fitted into the normal range of world unit values (upper limit or lower limit depending on the

outlier)

• AVEs of bound tariffs are based on WTO member methodologies for NAMA and agricultural products



Online training course now available www.macmap.info



For more information please contact

[email protected]

market analysis section market access map workshop on tools and methods for trade and trade policy...

Documents