Developing Countries’ Trade and Market Access in the European

Union and the United States: Introducing Two New Databases1

Alejandro Forero-Rojas, Hibret Maemir, Ana M. Fernandes and

Aaditya Mattoo

The World Bank

April 2018

This technical note describes two new databases we have constructed to provide the first comprehensive and highly disaggregated picture of trade and tariffs faced by all countries in two major markets: the European Union (EU) and the United States (US), covering the period from the mid-1990s until 2016/2017.

COVERAGE OF THE DATABASES Each of the databases builds upon existing national data sources for imports and tariffs: Eurostat’s COMEXT and European Commission’s TARIC data sources for the EU and Census and US International Trade Commission (USITC) data sources for the US. The EU database is a panel covering all exports of any non-EU country to the group of EU15 countries of any 8-digit product in each year during the period 1997-2016. For this highly disaggregated trade flow, the EU database provides information on: the value and quantity; the applied most favored nation (MFN) tariff the country-product faces in the EU; the unilateral preferences that the country-product can benefit from in the EU in that year (African, Caribbean and Pacific Group of States or Generalized System of Preferences (GSP), Everything But Arms Initiative (EBA)); and the best preferential tariffs that the country-product can benefit from in the EU in that year.The US database is a panel covering all exports of any country to the US of any 8-digit product in each year during period 1997-2017. For this highly disaggregated trade flow, the US database provides information on: the value and quantity; the applied most favored nation (MFN) tariff the country-product-year faces in the US; the unilateral preferences the country-product 1 This work has been supported by Africa Chief Economist Office as well as by the World Bank’s Multidonor Trust Fund for Trade and Development and the Strategic Research Partnership on Economic Development. Questions on the datasets should be addressed to aforero@worldbank.org, hmaemir@worldbank.org, afernandes@worldbank.org, and amattoo@worldbank.org.

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can benefit from in the US in that year (e.g., GSP, Africa Growth and Opportunity Act (AGOA)); and the best preferential tariffs that the country-product can benefit from in the US in that year.

THE ADVANTAGES OF THE DATABASES These two databases, which are constructed by merging import and tariff data in each of the markets (EU or US), offer important advantages relative to the widely used trade and tariff datasets, such as the World Trade Integration Solution (WITS):1 – they provide information at a more disaggregated level, the 8-digit level;2 – they provide much better coverage in terms of years for all types of tariffs, be it the most favored nation or preferential tariffs (under a large number of programs and regimes) whereas the WITS/TRAINS data on tariffs has many MFN and preferential tariffs missing. Imputation techniques used in the literature to correct those missing tariff data may yield inaccurate tariff rates;3 – preferential tariff rates are constructed based on updated preferential trade agreements, whereas in the WITS/TRAINS data they are often not updated when the preferential rates are phased in and phased out;4 – they include indicators for whether particular products are subject to quotas in the EU;5 – they include information on the actual imports which have entered under different trade regimes (for example GSP) such that preference utilization rates can be computed.2

The databases are being made publicly available and can be requested free of charge at:http://www.worldbank.org/en/region/afr/brief/afrce-office-of-chief-economist-in-the-africa-region.

The technical note is organized as follows. Part 1 first describes the data sources and data cleaning procedures used to prepare the import data and the tariff data for the EU. It then shows the complete list of variables included in the final EU database and some summary statistics as well as how preference utilization rates can be calculated. Part 2 covers import data and tariff data for the US and is similarly organized.2 For EU, this information is available starting in 2000 only.

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PART 1. EUROPEAN UNION DATABASE

This section describes the data sources and data cleaning procedures used to prepare the import and tariff data for the EU.

A. EU Import Data The analysis relies on two types of import data: intra-EU import data and extra-EU import data. A.1. Intra-EU and extra-EU Trade The import data for the EU are extracted from Eurostat’s COMEXT database.3 The database contains the following information: importer country (EU member countries), partner country (EU and non-EU), product (CN 8-digit), import value, statistical regime under which the product is traded, period, value4, and quantity in tons. The time span covered is different for each member country and begins with the respective year of the country's accession to the EU. To avoid sample composition problems given the multiple expansions of the EU over the last two decades, we will consider only import flows into EU15 countries.5 The sample period covered is 1995-2016. Statistical Regime (SR)Trade flows are classified under different statistical procedures derived from customs procedures. Until 2010, EU imports were classified according to four statistical regimes: outward processing (Regime 3), Inward processing (suspension) (Regimes 5), Inward processing drawback (Regime 6), Economic processing arrangements for textiles (Regime 7), and total trade flows (regime 4) - the sum of imports under all regimes. This classification was simplified in December 2009: Regimes 5 and 6 were replaced by Regime 2 (inward processing) Regime 7 was closed. Regime 9 denotes imports not recorded from customs declarations. Normal imports are calculated by 3 The data can be downloaded from http://ec.europa.eu/eurostat/estat-navtree-portlet-prod/BulkDownloadListing?sort=1&dir=comext 4 Trade values are expressed in Euros since the introduction of the European Monetary System in 1999 using the fixed conversion rates from national currencies to the Euro, while all trade data before 1999 has been converted to Euros using bilateral national exchange rates to the ECU. 5 EU15 countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and United Kingdom.

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excluding inward and outward processing, i.e., SR1 = SR4-SR2-SR3-SR5-SR6-SR7-SR9. For our analysis, we use normal imports, imports of goods for final use in the EU. Alphanumeric product codes Some product codes are reported as alphanumeric for confidentiality reasons. For example, CN8 code 17SSS061 refers to confidential trade flows under Chapter 17 and in SITC group 061 ‘Sugars, molasses and honey’. These product codes are excluded from our analysis. A.2. EU-EXTRA Imports by Trade Regime (2000-2016)Eurostat also provides import data under different trade regimes (Prefs database). In addition to the basic information (similar to that provided for intra-EU imports), the Prefs database includes two more dimensions: eligibility and preference use.6

Eligibility: The eligibility reflects for each product code and partner country the tariff status as indicated in the TARIC database (described below) on the first day of each month. Eligibility codes are: E1 (Only Most Favored Nation (MFN))7, E2 (Only Generalized System of Preferences (GSP)), E3 (Only Preferences), E5 (GSP and Preferences), and EZ (Unknown). Preference use: The tariff regime or use shows the preference as reported in the data transmitted by the EU countries to Eurostat (source: customs declarations, box 36 of the Single Administrative Document) combined with the duty rate. Tariff regime codes in the COMEXT database are the following: (i) imports under MFN Zero (U10), (ii) imports under MFN Non-Zero (U11), (iii) imports under GSP Zero (U20), (iv) imports under GSP Non-Zero (U21), (v) imports under Preferences Zero (U30), (vi) import under Preferences Non-Zero (U31), and (vii) reported as “Unknown” (UZZ) when it has not been possible to identify the tariff regime or the requested regime is inconsistent with the eligibility. A.3. Imports considered in final sample Since all EU15 countries apply a similar tariff regime on partner countries, we will consider their imports as a bloc, that is, we aggregate for each partner country and each CN 8-digit product in each year import values and quantities (in tons) across the set of EU15 countries. Also note that we exclude EU28 countries from the set of partner countries.

B. EU Tariff DataThe raw tariff data are extracted from the online TARIC database provided by the European Commission8, defined at the 10-digit TARIC classification level.9 This database reports both MFN and preferential measures applying to products entering 6 This data that allows the calculation of preference utilization rates is available only after 2000. 7 MFN rate equal to zero or no preference.

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the EU market at 10-digit level from a given origin country for the period 1997-2016. Several procedures will need to be implemented in order to obtain a usable tariff database. In what follows, we explain how the tariff database is constructed. B.1 Introducing a time dimension

The TARIC database is updated every day so the construction of a usable tariff database requires a decision about which tariff rate to use. We choose to use the tariff rates active as of the first day of July of each year. B.2 Duty measure types includedThere are several types of measures applied to imports to the EU but we focus on the tariff measures classified as: 1) third country duty (MFN), 2) Customs Union duty, 3) Autonomous tariff suspension10, 4) tariff preferences, and 5) preferential suspensions.11 The products subject to a preferential quota and/or an MFN quota will be identified by an indicator variable for the presence of a quota but no ad-valorem equivalent of quotas will be calculated in our usable tariff database.

Table 1. Tariff Measure TypeCod Description Type103 Third country duty MFN106 Customs Union duty Pref.112 Autonomous tariff suspension MFN suspension122 Non-preferential tariff quota MFN quota dummy141 Preferential suspension Pref. suspension142 Tariff preference Pref.143 Preferential quota Pref. quota dummy147 Customs Union quota Pref. quota dummy

Normal MFN and Preferential tariffs are replaced by tariff suspensions when tariffs are suspended. B.3 Ad valorem tariffs and equivalentsThe raw TARIC database contains duty variables that are either ad valorem, specific or combined with an ad valorem component and a specific component. 8 The database can be downloaded from https://ec.europa.eu/taxation_customs/business/calculation-customs-duties/what-is-common-customs-tariff/taric_en9 The TARIC nomenclature is based on a further breakdown of the Combined Nomenclature (CN), which is comprised of the Harmonized System (HS) nomenclature with further Community subdivisions. 10 Tariff suspensions are a total or partial waiver of tariffs that are in force over a specific period of time. Tariff suspensions indicate a reduction of the tariff to zero, but in some cases, tariffs are suspended only partially (that is not all the way down to zero). Tariff suspensions are normally granted to raw materials, semi-finished goods or components not produced in Europe. 11 See Nilsson (2010) for a complete list of measures applied to imports to the EU.

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Besides the ad valorem duties, the EU applies several non-ad valorem type duties. We focus on specific tariffs expressed in terms of tons. To transform specific tariffs or combined tariffs into ad valorem tariffs, we calculate ad valorem equivalents (AVEs). AVEs of specific tariffs are calculated by dividing the specific tariff by the import unit price of each EU15 country as given by the equation below:

τ npta =

100∗τnpts

Pn pt❑

where τ npts is the specific tariff on product n (CN8) from trading partner p in year t. The price used to make the conversion (Pnpt❑ ) is the median of the unit values of EU15 imports of a given CN 8-digit product in a given year across partner countries expressed in tons, from Eurostat COMEXT database described above.12 13

Tariffs with additional codesTARIC contains further subdivisions (coded with an additional code), which are used for different purposes such as pharmaceutical use, agricultural component etc. For example, as shown in Table 2, product 3912398590 has two MFN tariff rates: MFN duty free rate and MFN rate of 6.5 percent. For those products with additional codes, we construct a tariff rate at the 10 digit-level considering the maximum tariff rate applied by the EU countries to the product, following Nilsson (2011).

Table 2. Sample Additional Codes

Product

Addit.

Codes Measure

Duty rate

3912398590

2500 MFN

0.000 %

3912398590

2501 MFN

6.500 %

Problematic tariffsAdditional duties on processed agricultural products (PAPs) A large number of EU imports of agricultural products are subject to highly complex tariffs, involving ad valorem components, specific components, and mathematical functions based on the content of the agricultural products. These include Agricultural Components (EA), Additional Duties for Sugar (AD S/Z), and Additional Duties for Flour (AD F/M). The tariff rates for processed agricultural codes are 12 The unit prices are calculated using the import flows from other EU member countries (intra-EU trade) as well as non-EU countries (extra-EU trade).13 The unit values for most of the CN 8-digit products exhibit substantial variability and are thus sensitive to the treatment of outliers. Following UNSD (2006), we define for each CN 8-digit product in each year acceptance thresholds for anomalous values by adding to or subtracting from quartile 1 or quartile 3 of the distribution of unit values, respectively, a symmetric step equal to 1.5 times the inter-quartile range, before computing the median.

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determined based on their content using the additional codes in the “Meursing Table”, which is also available in the TARIC website. Since it is not feasible to construct AVEs for such products, we simply generate an indicator variable to be able to identify those agricultural products in the final tariff database.Conditional duty ratesIn some cases, the tariff duty contains a conditional expression. This means that the measure is applicable only if certain conditions are fulfilled. For example, certain fruit and vegetable duties depend on the declared entry price. Also, the application of a preference may depend on the presentation of a specific certificate. In the cases where the duty is expressed as a condition, based on information on the particular import shipment that is not observed in the TARIC import data at the 8-digit CN level that we use, we simply generate an indicator variable to be able to identify the products subject to such conditional tariff rates.B.4 Aggregation of tariffsThe import data that we use for our analysis is available at the 8-digit CN level. Hence, the tariff data needs to be aggregated to that level. To aggregate tariffs from the 10-digit to the 8-digit level, we take the simple average of all ad-valorem duties (and AVEs) across all 10-digit tariff lines belonging to a given 8-digit CN. For the various indicator variables for products with problematic tariffs we construct the share of 10-digit tariff lines belonging to a given 8-digit CN for which the indicator variable takes the value of 1. B.5 Non-declarable productsThe product codes that are included in the TARIC dataset are those that are directly linked to the duty. For some products duties are defined at a more aggregated level (6-digit, 4-digit or 2-digit level). This means that the duty is applicable to all products classified under this code. To assign the tariff rate for all eight-digit products, we merge with the full list of existing CN8 codes. We then assigned the tariff to all of the leaves in a hierarchical fashion. For example, if a tariff is assigned to a product code at the 6-digit level (8504 10), all 8-digit codes within the 6-digit code (e.g. 8504 10 20, 8504 10 80, ...) inherit the duties applied at 6-digit. B.6 Bilateralizing the tariff dataFor preferential trade regimes, a separate file lists all countries included in a given country group with the start and end date of their group membership. The dataset contains information on: (A) Unique identifier of the country group; (B) Validity date of the country group; (C) Identifier of the country that is a member of the country group; among others. In the case where a country begins or stops being eligible for a specific trade regime, the country enters or exits the country group. We use this information to generate a bilateral tariff dataset with yearly variation. B.7 Exclusions

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Not all countries in a given country group are eligible for preferences on all products. The duties may not apply to a given product originating in an individual or several countries within the group. While some countries may be eligible for preferential access via a given scheme, they may have graduated from the scheme for specific products. The database contains exclusion information in a separate file. We assigned an exclusion indicator variable equal to one for all products excluded from given country group in a given year. B.8 Construction of preferential duties and identification of the best preferential dutyThe EU grants tariff preferences to partner countries unilaterally or in the context of bilateral or regional free trade agreements. We calculate the preferential tariff rates applied to the exports by EU’s preferential partners.

Given that one of our objectives in constructing this EU Database is to estimate the effects of the preferential agreements African countries benefit from, we construct separate preferential tariff rates for EBA countries (EBA Pref), ACP countries (ACP Pref), GSP, GSP+, and we group all the remaining preferential tariffs (Pref) without separately identifying the specific agreement.

i. A given country may benefit simultaneously from different preferential trade regimes in its exports to the EU. For countries that are eligible to multiple preferential regimes, we identify the best, that is the minimum, preferential tariff rate they can benefit from in their exports to the EU as our measure of preferential tariff rate for a country in each CN8 product and year. Due to the presence of combined tariffs, the identification of the best preferential tariff is complex but make a selection following the rules below (we start with rule I and move on to the next numbered rule if and only if it was not possible to determine a best preferential tariff rate according to rule i): if the ad valorem or specific preferential tariff rates are zero -  take zero;

ii. If the preferential tariff rates under all programs are expressed as ad valorem (positive) – take the minimum ad valorem tariff;

iii. If preferential tariff rates under all programs are expressed as specific – take the minimum specific tariff;

iv. If preferential tariff rates under all programs are expressed as combined – take the minimum ad valorem component;

v. If some preferential tariff rates are expressed as ad valorem and others as combined – take the minimum ad valorem tariff;

vi. If some preferential tariff rates are expressed as specific and other as combined – take the minimum specific tariff.

B.9 Harmonization of product codes across yearsCN8 codes undergo several revisions over the sample period but having a consistent product classification over time is critical for our analysis. In order to harmonize the product codes over time, the full list of existing CN8 codes in each year as well as the changes over time in the CN8 codes between each pair of years were downloaded from the Eurostat Ramon for the period 1988-2016. Then, we use

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the concordance algorithms developed by Pierce and Schott (2012) and adapted for Eurostat’s CN8 by Van Beveren, Bernard and Vandenbussche (2012), to generate a single set of CN8 codes that is consistent over time.14 Figure 1 shows the changes in CN classification across the different revisions.

Figure 1. Changes in the CN product classification

531

871

12571304

170

281

334315 303

144

223

10990

50

847

973

16 20

503

273

186

108

743

489

1202

1080

9675

257

127

381

255282

133

959

1048

43 36 40 4318 25 27

55

0

500

1,000

1,500

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

New CN Obsolete CN

Note: “Obsolete” refers to codes that are no longer used starting in the effective year and “new” refers to codes that will be used starting in the effective year.

B.10 List of variables in the final EU databaseThe final EU database that merges across the import data and the tariff data for the EU includes the variables listed in Table 3.

14 The details for the harmonization are available at https://sites.google.com/site/ilkevanbeveren/Concordances

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15

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Table 3. EU database: variable list and descriptionVariable name Descriptioniso3 PARTNER CTY: ISO3iso2 PARTNER CTY: ISO2year Yearcn8 PROD: CN 8-digit (Time-Consistent)Imports_tot TR-OBS: Imports Totaluv_ton TR-PROD-YR: Import value by TonImport_mfn_zero TR-OBS: Imports MFN ZeroImports_mfn_non_zero TR-OBS: Imports MFN Non ZeroImports_gsp_zero TR-OBS: Imports GSP ZeroImports_gsp_non_zero TR-OBS: Imports GSP Non- ZeroImports_ pref_zero TR-OBS: Imports Pref ZeroImports_pref_non_zero TR-OBS: Imports Pref Non Zeromfn_adv_tot TA-OBS: MFN Ad-Valorem Component (some in parts)mfn_ave_1 TA-OBS: MFN Specific Component 1 AVE (Calculated)mfn_specific_dummy TA-OBS MFN Specific Tariff Indicatormfn_quota_dummy_all TA-OBS: MFN Quota Indicatormfn_cond_dummy TA-OBS: MFN Conditional Tariff Indicatormfn_agricultural_dummy TA-OBS: MFN Agricultural Tariff Indicatormfn_complex_dummy TA-OBS: MFN Complex Tariff Indicatorbest_pref_adv_tot TA-OBS: Best Pref. Ad-Valorem Component (some in parts)ACP_pref_adv_tot TA-OBS: Pref.ACP Ad-Valorem Component (some in parts)ACP_pref_ave_1 TA-OBS: Pref.ACP Specific Component 1 AVE (Calculated)ACP_specific_dummy TA-OBS: Pref.ACP Specific Tariff IndicatorACP_quota_dummy_all TA-OBS: Pref.ACP Quota IndicatorACP_pref_cond_dummy TA-OBS: Pref.ACP Specific Component 1 UnitsACP_pref_agricultural_dummy TA-OBS: Pref.ACP Conditional Tariff IndicatorACP_pref_complex_dummy TA-OBS: Pref.ACP Agricultural Tariff IndicatorEBA_pref_adv_tot TA-OBS: Pref.EBA Ad-Valorem Component (some in parts)EBA_pref_ave_1 TA-OBS: Pref.EBA Specific Component 1 AVE (Calculated)EBA_specific_dummy TA-OBS: Pref.EBA Specific Tariff IndicatorEBA_quota_dummy_all TA-OBS: Pref.EBA Quota IndicatorEBA_pref_cond_dummy TA-OBS: Pref.EBA Specific Component 1 UnitsEBA_pref_agricultural_dummy TA-OBS: Pref.EBA Conditional Tariff IndicatorEBA_pref_complex_dummy TA-OBS: Pref.EBA Agricultural Tariff IndicatorEPA_tariff_dummy_all TA-OBS: Pref.EPA tariff indicator. cf. Quotas, complex, alcoholGSP_pref_adv_tot TA-OBS: Pref.GSP Ad-Valorem Component (some in parts)GSP_pref_ave_1 TA-OBS: Pref.GSP Specific Component 1 AVE (Calculated)GSP_specific_dummy TA-OBS: Pref.GSP Specific Tariff IndicatorGSP_quota_dummy_all TA-OBS: Pref.GSP Quota IndicatorGSP_pref_cond_dummy TA-OBS: Pref.GSP Specific Component 1 UnitsGSP_pref_agricultural_dummy TA-OBS: Pref.GSP Conditional Tariff IndicatorGSP_pref_complex_dummy TA-OBS: Pref.GSP Agricultural Tariff IndicatorGSPL_pref_adv_tot TA-OBS: Pref.GSPL Ad-Valorem Component (some in parts)GSPL_pref_ave_1 TA-OBS: Pref.GSPL Specific Component 1 AVE (Calculated)GSPL_specific_dummy TA-OBS: Pref.GSPL Specific Tariff IndicatorGSPL_quota_dummy_all TA-OBS: Pref.GSPL Quota indicatorGSPL_pref_cond_dummy TA-OBS: Pref.GSPL Specific Component 1 UnitsGSPL_pref_agricultural_dummy TA-OBS: Pref.GSPL Conditional Tariff IndicatorGSPL_pref_complex_dummy TA-OBS: Pref.GSPL Agricultural Tariff Indicator

Notes: TA and TR refer to tariff and trade data, respectively. ACP is Africa, Caribbean and Pacific initiative, GSP is generalized system of preferences, EBA is everything but arms initiative, GSPL is GSP plus countries.

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B.11 Summary statistics based on the final EU databaseTable 4 shows the numbers of observations, countries, and products per country included in the EU database each year, with separate columns showing those numbers for African countries.15

Table 4. EU Database - Summary StatisticsNumber of

Observations Number of Countries

Exporting to EU15

Number of CN 8-digit Products

of which number in Africa Mean Mean for Africa Median Median for Africa

1997 181,221 185 46 10,251 980 364 240 1891998 185,781 185 46 10,217 1,004 374 254 2011999 189,777 185 46 10,058 1,026 383 267 2012000 194,725 186 46 9,952 1,047 396 271 2172001 197,090 201 46 9,911 981 401 256 2262002 199,516 201 46 10,020 993 413 274 2172003 202,198 202 46 9,986 1,001 411 275 2272004 207,619 202 46 9,783 1,028 408 278 2312005 210,657 202 46 9,739 1,043 406 277 2262006 210,690 202 46 9,417 1,043 408 282 2242007 211,892 203 46 9,252 1,044 408 292 2122008 211,583 203 46 9,237 1,042 405 282 2092009 211,141 203 46 9,097 1,040 403 288 2072010 209,053 202 46 8,998 1,035 416 294 2182011 209,652 203 46 8,862 1,033 426 282 2562012 217,328 203 46 8,906 1,071 453 332 2712013 220,393 208 46 8,867 1,060 468 327 2932014 225,126 207 46 8,876 1,088 480 342 2872015 226,013 208 46 8,859 1,087 497 362 2882016 229,613 208 46 8,912 1,104 512 372 299Total 4,151,068

Number of CN 8-digit Products Exported per Country to EU15 Countries

Tables 5 and 6-7 show some basic summary statistics related to MFN tariffs and to preferential tariffs, respectively, based on the EU database. While Table 6 focuses on GSP preferential tariffs, Table 7 focuses on GSP for LDCs preferential tariffs.

15 All summary statistics in Tables 4-7 can be obtained by a user of the EU database by running the STATA program EBA_SumStat_Trade_and_Tariff.do that is available from the authors and is provided jointly with the database.

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Table 5. EU Database - MFN (Geo code 1011) Tariffs

Number of CN 8-digit Products

Avg. MFN Ad

valorem Tariff (%)

Max MFN Ad

valorem Tariff (%)

Share of Observations

with MFN Zero (%)

Share of Observations

with MFN Complex Tariff (%)

Share of Observations

with Quota (%)

Share of Observations

with MFN Specific Tariff

(%)

1997 10,251 5.18 95.90 26.42 1.41 9.73 1.971998 10,217 4.64 88.90 28.55 1.35 10.34 1.681999 10,058 4.27 81.90 33.45 1.54 9.56 1.632000 9,952 4.10 74.90 36.00 1.50 9.39 1.572001 9,911 3.99 74.90 36.14 1.50 9.24 1.682002 10,020 4.12 74.90 34.05 1.53 5.41 1.632003 9,986 4.00 74.90 34.22 1.51 5.28 1.652004 9,783 3.94 74.90 38.58 1.57 5.11 1.652005 9,739 3.82 74.90 39.22 1.54 5.24 1.662006 9,417 3.77 74.90 38.87 1.88 5.28 1.702007 9,252 4.06 74.90 33.29 1.59 4.71 1.722008 9,237 4.02 74.90 33.64 1.57 4.55 1.752009 9,097 4.07 74.90 32.44 1.54 4.64 1.922010 8,998 4.04 74.90 32.81 1.57 4.73 1.992011 8,862 4.02 74.90 33.59 1.59 4.67 1.972012 8,906 4.03 74.90 34.00 1.57 4.74 1.992013 8,867 3.99 74.90 34.85 1.58 4.82 1.952014 8,876 3.98 74.90 34.99 1.57 4.99 2.072015 8,859 3.96 74.90 35.44 1.54 5.12 2.122016 8,912 3.91 74.90 38.56 2.81 5.21 2.12

Table 6. EU Database - Standard GSP (Geo codes 2015 and 2020) Preferential Tariffs

Number of CN 8-digit Products

GSP

Avg. GSP Ad

valorem Tariff (%)

Max GSP Ad

valorem Tariff (%)

Share of Observations

with GSP Zero (%)

Share of Observations

with GSP Complex (%)

Share of Observations

GSP Quota (%)

Share of Observations

with GSP Specific Tariff

(%)

1997 7584 3.09 67.10 45.29 0.00 0.00 0.191998 7546 2.88 62.20 47.70 0.00 0.00 0.141999 7949 2.54 57.30 59.48 0.00 0.00 0.172000 7903 2.43 52.40 60.25 0.00 0.00 0.162001 7889 2.75 52.40 54.40 0.00 0.00 0.172002 7755 2.31 52.40 64.95 0.00 0.00 0.192003 7816 2.27 52.40 64.87 0.00 0.00 0.192004 7311 2.34 52.40 63.36 0.00 0.00 0.212005 7262 2.27 52.40 64.23 0.00 0.00 0.212006 6593 2.61 52.40 60.17 0.00 0.00 0.272007 6471 2.59 52.40 60.30 0.00 0.00 0.282008 6478 2.55 52.40 60.76 0.00 0.00 0.282009 6253 2.59 52.40 60.25 0.00 0.00 0.282010 6178 2.58 52.40 60.09 0.00 0.00 0.312011 6045 2.64 52.40 59.55 0.00 0.00 0.302012 6063 2.63 52.40 59.58 0.00 0.00 0.292013 6059 2.62 52.40 59.75 0.00 0.00 0.282014 5880 2.78 52.40 56.48 0.00 0.00 0.122015 5414 2.83 52.40 57.47 0.00 0.00 0.092016 5369 2.76 52.40 57.94 0.00 0.00 0.09

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Table 7. EU Database - GSP for LDCs (Geo codes 2005 and 2010) Preferential Tariffs

Number of CN 8-digit Products GSP for

LDCs

Avg. GSP Ad

valorem Tariff (%)

Max GSP Ad

valorem Tariff (%)

Share of Observations

with GSP Zero (%)

Share of Observations

with GSP Complex (%)

Share of Observations

GSP Quota (%)

Share of Observations

with GSP Specific Tariff

(%)

1997 2,893 0.00 0.00 99.21 0.00 0.00 0.011998 2,982 0.07 16.20 97.48 0.00 0.00 0.011999 3,141 0.06 9.80 98.16 0.00 0.00 0.012000 3,245 0.03 8.90 97.78 0.00 0.00 0.012001 3,200 0.00 0.00 100.00 0.00 0.00 0.002002 3,444 0.00 0.00 99.97 0.00 0.00 0.002003 3,435 0.00 0.00 99.97 0.00 0.00 0.002004 3,491 0.00 0.00 99.97 0.00 0.00 0.002005 3,420 0.00 0.00 99.95 0.00 0.00 0.002006 3,382 0.00 0.00 99.79 0.00 0.00 0.012007 3,367 0.00 0.00 99.62 0.00 0.00 0.022008 3,400 0.00 0.00 99.64 0.00 0.00 0.022009 3,339 0.00 0.00 99.64 0.00 0.00 0.022010 3,397 0.00 0.00 100.00 0.00 0.00 0.002011 3,522 0.00 0.00 100.00 0.00 0.00 0.002012 3,564 0.00 0.00 100.00 0.00 0.00 0.002013 3,695 0.00 0.00 100.00 0.00 0.00 0.002014 3,776 0.00 0.00 100.00 0.00 0.00 0.002015 3,868 0.00 0.00 100.00 0.00 0.00 0.002016 4,012 0.00 0.00 100.00 0.00 0.00 0.00

Table 8 shows the distribution of EU total import value over the 2000-2016 period across eligibility categories and preference use categories based on the final dataset on the EU preferential trade database. About 60% of EU imports from extra-EU partner countries enter under MFN Zero (U10).

Table 8. Preference Eligibility and Use (weighted by import value)

Preference Use Eligibility U10 U11 U20 U21 U30 U31 UZZ TotalE1 73.31 26.36 0 0 0 0 0.33 100E2 0.37 23.77 44.25 31.43 0 0 0.18 100E3 0.14 14.52 0 0 81.2 3.54 0.59 100E5 0.07 14.49 5.85 0.9 76.75 1.9 0.03 100EZ 0 0 0 0 0 0 100 100Total 58.59 24.42 3.06 2.1 9.95 0.4 1.48 100

NB: EU 15 imports from all trading partners for the period 2000-2016.

B.12 Preference utilization rate calculationPreference utilization can be calculated by comparing the actual imports entering under preferential regime to dutiable (MFN positive) imports eligible to each

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program. The preference utilization rate can be calculated by taking the ratio of “imports under preferential regime” to the “eligible imports”, i.e. D/(C+D). 16

Figure 2. Calculation of preference utilization rates

Source: Keck, A. and Lendle, A., 2012. New evidence on preference utilization.

PART 2. UNITED STATES DATABASE

This section describes the data sources and data cleaning procedures used to prepare the import and tariff data for the US.

C. US Import DataThe source for the US import data is the US Census Bureau. The data contains the following information: partner country, product (HTS 8-digits), date, district of entry and of unlading, import value, quantity in two units of measurement defined in the HTS Schedule for each product, rate provision code, preferential tariff programs (country subcode), dutiable import value, calculated duty. 17 Import values are reported separately as “general imports” and as “imports for consumption.”

16 The EU data only reports the used preferences for GSP and classifies all non-GSP preferences as others. Therefore, the database only allows to calculate preference utilization under GSP. 17 Data for 1989-2015 was downloaded from http://faculty.som.yale.edu/peterschott/sub_international.htm. Data for 2016-2017 was directly obtained from the US Census Bureau. A description of the layout is available at https://www.census.gov/foreign-trade/reference/products/layouts/imdb.html#imp_detl.

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“General imports” measures the total physical arrivals of merchandise from foreign countries, whether such merchandise enters the US customs territory immediately or is entered into bonded warehouses or free trade zones (FTZs) under Customs custody.

“Imports for consumption” measures the total merchandise that has physically cleared through Customs immediately or after withdrawal for consumption from bonded warehouses or FTZs under Customs custody.

We select “Imports for consumption” as our measure of import value (measured in USD), which excludes FTZs. The sample period covered is 1989-2016.

C.1 Trade under special regimesThe variable “Rate Provision Code” identifies the tariff regime used, whether duty-free or dutiable provisions. Additionally, the variable “Country Subcode” identifies the specific preferential program used, for example AGOA, GSP or any free trade agreement (FTA). We use these two variables to identify US imports under each special preferential program and to calculate utilization rates of each preferential program. 18

D. US Tariff DataTariff data defined at the HTS 8-digit level was downloaded from the USITC webpage.19 This database reports the MFN (Normal Trade Relations--NTR) tariff, as well as tariffs for special programs (e.g. GSP, AGOA), and free trade agreements (FTAs) (e.g. NAFTA, CAFTA, Korea FTA, Colombia FTA). We use data for the 1997-2017 period.

D.1 Introducing a time dimensionThe USITC tariff database is available yearly since 1997, but each year file may contain multiple tariffs per product, since tariffs can be changed during the year. For each year, we keep only the tariff that was in force during the longest period.

D.2 Ad valorem tariffs and equivalentsThe raw USITC tariff database contains duty variables that are either ad valorem, specific, or combined with an ad valorem component and a specific component. The specific components are expressed either in tons or in a supplementary unit, which is also used in the records of import quantities. The variable “Rate Type code” indicates the combination of ad valorem and specific components, and its linkage to the units of measurement in the import data. This variable is used to calculate the 18 Description available at https://www.census.gov/foreign-trade/reference/codes/csc.html and https://www.census.gov/foreign-trade/reference/codes/rp.html19 The data can be downloaded from https://www.usitc.gov/tariff_affairs/tariff_databases.htm. The tariff schedule includes a further 10-digit disaggregation used only for statistical purposes that does not affect the tariff definition. In a few special cases, the tariff is defined at the 8-digit but applied at the 10-digit level because it has specific components that rely on the unit of quantity, these tariffs (around 90) are ignored in our analysis.

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total duty AVE (Ad-valorem plus the AVE of specific components) of each combined tariff.20

To transform specific tariffs or combined tariffs onto AVEs, we use the formula below that divides the specific tariff by the import unit price:

τ npta =

100∗τnpts

Pn pt❑

where τ npts is the specific tariff on product n (HTS8) from trading partner p in year t. The price used to make the conversion (Pnpt❑ ) is the median of the unit values of all US imports of a given HTS 8-digit product in a given year across partner countries, from the US Census trade data described above.21 This calculation is done for each specific component (up to a maximum of two).

Problematic tariffsThe variable “Rate Type code” also indicates certain complex duties that are hard to calculate (code 9, K X or T) because they depend on other tariffs, or on the content of certain substances that are not observable in the import data. Since it is not feasible to construct AVEs for such products, we generate an indicator variable to identify the products subject to these complex duties in the usable tariff database.

D.3 Aggregation of tariffsThe duties are set and available at the 8-digit HTS level, the same level of disaggregation as the import data, so no further aggregation is needed.

D.4 Tariff regimes and preferential programsThe US has two types of tariff regimes named Column 1 and Column 2. Column 1 includes Normal Trade Relationship (or MFN) and preferential tariffs. Column 2 is only for non-market economies and currently includes only Cuba and North Korea, but in the past included countries such as Vietnam and Afghanistan. We only use information from Column 1.Column 1 provides the MFN tariff as well as preferential tariffs and eligibility. Eligibility of each product for preferential regimes like NAFTA, and special unilateral programs including AGOA, GSP, and CAFTA, is expressed in a special program indicator (SPI) codified in letters (e.g. D for AGOA). The only exception is for AGOA textile and apparel products, which do not have a special program indicator, as we 20 Duty equation codes available at https://pubapps2.usitc.gov/tariff/readme_hts.jsp . Note that the USITC tariff database includes an ad-valorem equivalent variable, but we do not use it since it is missing for most observations.21 The unit values for most of the HTS 8-digit products exhibit substantial variability and are thus sensitive to the treatment of outliers. Following UNSD (2006), we define acceptance thresholds for anomalous values by adding to or subtracting from quartile 1 or quartile 3, respectively, a symmetric step equal to one and a half times the inter-quartile range, before computing the median. This results in dropping 3.9% of the observations.

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discuss further below.22 Programs that are duty-free for all eligible products (like AGOA) only have the SPI variable and not the tariff. Preferential programs that are not always duty-free include preferential tariff variables (with specific components where applicable). We calculate AVEs for those preferential specific tariffs following the same methodology used for MFN specific tariffs.Textile and apparel eligibility under AGOA

Textile and apparel articles eligible for AGOA do not have Special Program Indicator. Instead, they are described in the tariff schedule heading HTS 98, and eligibility is conditional on “apparel provisions”, which require special approval of the visa system by the USITC. Under this approval, all Apparel (HS headings 61-62) is eligible for duty-free treatment.23 Similarly, Textile and Textile Articles (HS headings 50-60 and 63) are eligible for duty-free treatment for selected Lesser Developed Countries (LDC) that are also eligible for the apparel provision. But there is an exception and a few textile and apparel articles have a Special Program Indicator for AGOA, which means that they are eligible for duty-free entry in the US for all AGOA countries regardless of apparel provision eligibility or LDC status. 24

D.5 Bilateralizing the tariff dataWe bilateralize the tariff schedule by merging it with the bilateral US import data, and the eligibility list of each partner country for US special programs and FTAs.25 Exclusions

Some countries that are otherwise eligible for the US GSP preference program may be excluded for a specific product. The database includes an exclusion variable that we use to account for this.Countries with multiple preferential tariffs

A given country may benefit simultaneously from different preferential trade regimes in its exports to the US. For countries that are eligible for multiple preferential regimes, we choose the minimum preferential rate they can benefit from in their exports to the US as our measure of best preferential tariff rate for the country for each product and year.26 We determine the best program in two alternative ways: one based only on the ad-valorem component of the tariff and one 22 This same exception could apply to other programs like CAFTA that we do not focus on.23 The apparel provision is explained in http://web.ita.doc.gov/tacgi/eamain.nsf/d511529a12d016de852573930057380b/1e85488eb01fd2fd852573940049047d?OpenDocument24 There are 15 Apparel products that are eligible for AGOA regardless of eligibility for apparel provision. These are mostly accessories like gloves designed for use in sports, silk products, headbands, ponytail holders, etc. The HTS 8-digit codes for these products are: 61161008, 61169208, 61169308, 61169935, 61171040, 61178085, 62043960, 62044910, 62101020, 62139005, 62141010, 62160008, 62160035, 62160046, and 62171085.25 Information on country eligibility for special programs was obtained from the USITC webpage and directly from USITC.

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based on the total AVE of the tariff. Corresponding to these two ways we create two variables indicating the best preferential tariffs and two variables indicating the name of the programs that such tariffs correspond to.

D.6 Harmonization of product codes across yearsHTS 8-digit codes undergo several revisions over the sample period 1988-2017. To harmonize the product codes over time, we obtained from the US Census Bureau the full list of HTS 8-digit codes in each year as well as the changes over time. Then, we used the algorithms developed by Pierce and Schott (2012) to generate a single set of HTS 8-digit codes that is consistent over time for 1997-2017. D.7 List of variables in the US databaseThe final US database that merges across the import and the tariff data for the EU includes the variables listed in Table 3.

Table 9. US database: variable list and description

26 The complete list of preferential regimes includes: AGOA, GSP, ATPDEA (ATPA), Caribbean Basin Trade Partnership Act (CBTPA and CBI), DR_CAFTA, preferences for Nepal, FTA with Australia, FTA with Bahrain, FTA with Chile, FTA with Colombia, FTA with Israel, FTA with Jordan, FTA with South Korea, NAFTA (Mexico and Canada), FTA with Morocco, FTA with Oman, FTA with Panama, FTA with Peru, FTA with Singapore, Civil Aircraft Agreement, Pharmaceutical Products Agreement.

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Variable name DescriptionISO3 PARTNER CTY: ISO3ISO2 PARTNER CTY: ISO2year Yearhts8 PROD: HTS 8-digitsetyr PROD: Time-Consistent HTS 8-digitcon_val_yr_total TR-OBS: Total Value of Imports for Consumptiondut_val_yr_total TR-OBS: Total Dutiable Value of Imports for Consumption cal_dut_yr_total TR-OBS: Total Duty Value of Imports for Consumptioncon_qy1_yr_total TR-OBS: Total Quantity of Imports for Consumption Quant1con_qy2_yr_total TR-OBS: Total Quantity of Imports for Consumption Quant2quantity_1_code TA-PROD: Quantity code 1quantity_2_code TA-PROD: Quantity code 2median_uv1 TR-PR-YR: Median Unit Value 1 (Calculated)median_uv2 TR-PR-YR: Median Unit Value 2 (Calculated)mfn_ad_val_rate TA-OBS: MFN ad-valorem ratemfn_total_ave TA-OBS: MFN AVE (Calculated)mfn_rate_type_code TA-OBS: MFN RATE TYPE CODEmfn_complex_dummy TA-OBS: MFN Complex Tariff Indicatorcon_val_yrAGOA TR-OBS: AGOA imports for Consumption Valuedut_val_yrAGOA TR-OBS: AGOA Dutiable import Valuecal_dut_yrAGOA TR-OBS: AGOA Duty Valuecon_qy1_yrAGOA TR-OBS: AGOA imports for Consumption Quant1 con_qy2_yrAGOA TR-OBS: AGOA imports for Consumption Quant2con_val_yrGSP TR-OBS: GSP imports for Consumption Valuedut_val_yrGSP TR-OBS: GSP Dutiable import Valuecal_dut_yrGSP TR-OBS: GSP Duty Valuecon_qy1_yrGSP TR-OBS: GSP imports for Consumption Quant1con_qy2_yrGSP TR-OBS: GSP imports for Consumption Quant2agoa_cty_eligible_dummy TA-CTY-YR: AGOA Eligible Indicatoragoa_cty_app_eligible_dummy TA-CTY-YR: AGOA Apparel Eligible Indicatoragoa_cty_ldc_eligible_dummy TA-CTY-YR: AGOA Apparel Special Rule Eligible Indicatorcty_gsp_dummy TA-CTY-YR: GSP eligible Indicatorcty_gsp_ldc_dummy TA-CTY-YR: GSP LDC eligible Indicatoragoa_prod_everin_dummy TA-PROD: Ever AGOA Eligible Indicatoragoa_prod_apparel_dummy TA-PROD: AGOA Apparel eligible Indicator (no year)agoa_prod_textile_ldc_dummy TA-PROD: AGOA Textile LDC eligible Indicator (no year)gsp_product_dummy TA-PROD-YR: Product GSP indicatorpharmaceutical_product_dummy TA-PROD-YR: Agreement on Trade in Pharmaceutical Products (duty-free)

indicatoragoa_product_dummy TA-PROD-YR: Product AGOA indicatorapta_product_dummy TA-PROD-YR: Product APTA indicatorcivil_air_product_dummy TA-PROD-YR: Agreement on Trade in Civil Aircraft (duty-free) indicatordyes_product_dummy TA-PROD-YR: Uruguay Round Concessions on Intermediate Chemicals for Dyes

(duty-free treatment) indicatorgsp_excluded TA-OBS: Country-product excluded from GSP indicatornumber_pref_programs TA-OBS: Number of preferential programsbest_pref_tariff_adval TA-OBS: Best Preferential Tariff Ad-Valorem (Calculated)best_pref_program_adval TA-OBS: Best Preferential Program Ad-Valorem (Calculated)best_pref_tariff_totave TA-OBS: Best Preferential Tariff Total AVE (Calculated)best_pref_program_totave TA-OBS: Best Preferential Program Total AVE (Calculated)

D.8 Summary statistics based on the final US database20

Table 10 shows the numbers of observations, countries, and products per country included in the US database each year, with separate columns showing those numbers for African countries.27

Table 10. US Database - Summary StatisticsNumber of

Observations Number of Countries

Number of HTS 8-digit Products

of which number in Africa Mean Mean for Africa Median Median for Africa

1997 172,208 202 46 9,975 853 105 144 431998 172,471 202 46 9,872 854 105 151 371999 174,028 204 46 9,842 853 105 149 322000 182,144 205 46 9,878 889 116 144 442001 182,409 205 46 9,884 890 116 165 412002 188,979 205 46 10,127 922 122 169 442003 192,183 205 46 10,153 937 124 172 442004 195,817 204 46 10,128 960 129 185 492005 199,641 204 46 10,136 979 130 174 462006 202,339 203 46 10,147 997 136 179 522007 200,916 203 46 10,073 990 135 181 512008 195,938 203 46 10,055 965 129 171 502009 186,769 204 46 10,003 916 120 156 452010 192,609 204 46 10,014 944 128 165 582011 197,229 204 46 10,061 967 130 171 532012 200,101 204 46 10,260 981 134 186 502013 196,268 204 46 10,250 962 129 167 542014 199,899 203 46 10,264 985 132 193 552015 206,372 204 46 10,273 1,012 140 198 582016 216,455 204 46 10,545 1,061 152 209 682017 217,872 204 46 10,582 1,068 160 226 67Total 4,072,647

Number of HTS 8-digit Products Exported per Country to US

Tables 11-12 show some basic summary statistics related to MFN tariffs and to preferential tariffs, respectively, based on the US database.

27 All summary statistics in Tables 10-12 can be obtained by a user of the US database by running the Stata program AGOA_ANALYSIS_merged_summary_statistics.do that is available from the authors and is provided jointly with the database.

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Table 11. US Database - MFN Tariffs

Number of HTS 8-digit Products

Avg. MFN Ad

valorem Tariff (%)

Max MFN Ad

valorem Tariff (%)

Share of Observations

with MFN Zero (%)

Share of Observations

with MFN Complex Tariff (%)

Share of Observations

with MFN Specific Tariff

(%)

1997 9,975 5.24 350 16.83 0.98 7.751998 9,872 4.99 350 16.95 1.00 7.661999 9,842 4.73 350 29.87 0.85 6.472000 9,878 4.64 350 32.10 0.86 6.242001 9,884 4.55 350 32.09 0.82 6.312002 10,127 4.48 350 31.88 0.88 6.302003 10,153 4.39 350 32.15 0.82 6.282004 10,128 4.25 350 37.56 0.81 5.312005 10,136 4.24 350 37.46 0.79 5.232006 10,147 4.21 350 37.46 0.78 5.242007 10,073 4.26 350 36.49 0.77 5.322008 10,055 4.24 350 36.37 0.71 5.352009 10,003 4.20 350 36.56 0.69 5.382010 10,014 4.19 350 36.72 0.58 5.322011 10,061 4.22 350 36.68 0.61 5.292012 10,260 4.18 350 36.80 0.63 5.362013 10,250 4.12 350 37.16 0.64 5.392014 10,264 4.13 350 37.12 0.64 5.412015 10,273 4.12 350 37.13 0.66 5.482016 10,545 3.97 350 37.52 0.64 5.452017 10,582 3.89 350 38.09 0.65 5.42

Table 12. US Database - MFN TariffsNumber of HTS 8-digit Products

GSP

Number of HTS 8-digit ProductsGSP LDC

Number of HTS 8-digit Products

AGOA

Number of HTS 8-digit Products

AGOA Apparel

Share of Observations with GSP (%)

Share of Observations with GSP LDC

(%)

Share of Observations

with AGOA (%)

Share of Observations

with AGOA Apparel (%)

1997 4,694 1,662 0 0 16.23 0.00 0.00 0.001998 4,603 1,652 0 0 15.92 0.00 0.00 0.001999 3,603 1,558 0 0 12.17 0.05 0.00 0.002000 3,450 1,539 0 0 11.99 0.05 0.00 0.002001 3,454 1,549 1,710 554 12.31 0.05 0.20 0.312002 3,585 1,584 1,751 556 11.94 0.05 0.22 0.392003 3,589 1,581 1,755 558 12.29 0.04 0.22 0.442004 3,326 1,284 1,513 552 11.73 0.05 0.18 0.462005 3,339 1,281 1,509 557 10.58 0.05 0.18 0.442006 3,348 1,282 1,510 555 10.81 0.13 0.20 0.422007 3,387 1,302 1,540 560 10.53 0.14 0.20 0.422008 3,371 1,287 1,529 559 10.28 0.13 0.20 0.402009 3,370 1,260 1,503 554 9.93 0.13 0.19 0.402010 3,369 1,269 1,514 557 9.59 0.13 0.18 0.352011 3,367 1,278 1,552 557 9.45 0.13 0.21 0.362012 3,432 1,296 1,558 553 9.61 0.16 0.23 0.342013 3,420 1,292 1,556 562 8.74 0.15 0.21 0.332014 3,419 1,302 1,565 556 8.36 0.13 0.24 0.332015 3,421 1,301 1,564 556 8.45 0.14 0.24 0.292016 3,402 1,310 4,881 698 8.35 0.20 1.18 0.342017 3,439 1,294 4,923 620 8.57 0.14 1.23 0.34

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D.9 Preference utilization rate calculationPreference utilization can be calculated by comparing the actual imports entering under preferential regimes with all dutiable (MFN positive) imports that are eligible to each program. The preference utilization rate can be calculated by taking the ratio of “imports under preferential regime” to the “eligible imports”, i.e. D/(C+D), with each component described in Figure 2. The US data reports the imports under each of the preference programs.

ReferencesNilsson, L., 2011. “Principles of EU Imports, Tariffs, and Tariff Regimes,” Journal of World Trade, 45(4), pp.821-835.Pierce, J. and P. Schott, 2012. “Concording U.S. Harmonized System Codes Over Time,” Journal of Official Statistics 28: 53-68.UN Statistics Division (UNSD), 2006. Trade Volumes and Unit Values. Note. Room Document ITS(06)2. Van Beveren, I., Bernard, A. and H. Vandenbussche, 2012. “Concording EU trade and production data over time,” National Bureau of Economic Research Working Paper 18604.Keck, A. and A. Lendle, 2012. “New evidence on preference utilization,” World Trade Organization Staff Working Paper ERSD-2012-12.

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