Trade performance of the EU economies: Inter-country input-output tables (IOTs) as a necessary tool Conference of European Statistics Stakeholders, Budapest 20-21 October 2016 Lars Nilsson Deputy Head of Unit, Associate Professor Chief Economist and Trade Analysis Unit DG TRADE

Outline Studies conducted by DG Trade on the impact of trade agreements Methodology and data (IOTs) used Limitations of the analyses and alternative methodologies Summary and conclusions

Studies on the impact of trade agreements Impact Assessments (IAs), requirement for all major Commission initiatives Sustainability Impact Assessments (SIAs) complement IAs with additional sectoral- and qualitative analyses and stakeholder consultations Economic assessment of the negotiated outcome (EANO) once the negotiations are concluded Ex-post analysis of the agreement once an agreement has entered into force and sufficient time has passed

Computable general equilibrium (CGE) models Use actual economic data to estimate how an economy might react to changes in e.g. trade policy Reflects linkages between sectors and across countries. Can simulate reductions in tariff and non-tariff barriers Results to be interpreted as compared to the baseline, i.e., what it would have been in the absence of an agreement

Limitations and other methodologies Level of aggregation - sector details in goods and services are limited Certain elements are difficult to assess properly, irrespective of methodology Partial equilibrium models to be used when product level results are needed (but linkages lost) Econometrics used primarily for ex-post assessments

Underlying data – the IO tables Underlying data for most studies come from the Global Trade Analysis Project (GTAP) data base. Latest release features three reference years and consistent IO tables for 140 regions and 57 (GTAP) sectors. Contains bilateral trade patterns, tariffs, production, consumption and intermediate use of commodities and services, energy data, CO2 emissions, etc. For new IO tables, sources and procedures used to create them must be provided along with the data

Improving EU IO tables European Court of Auditors of EU preferential trade arrangements - recommended updating the EU IO tables available in the GTAP database Administrative Arrangement between DG TRADE and DG JRC. Purpose is to more accurately reflect technical coefficients and structures of commodities for final and intermediate use Data to match GTAP submission requirements. Deadline November 2016 In parallel, trying to improve the data in the area of services by further disaggregation and split by mode of supply

Summary and conclusions IO tables indispensable for assessing the impact of trade agreements Work undertaken to update EU IO tables and improve the underlying data Alternative methodologies available for analyses on a specific set of products or an industry