Market Analysis Section Market Access Map Workshop on Tools and Methods for Trade and Trade Policy Analysis Helen Lassen & Thierry Paulmier 11 th – 15 th September 2006, Geneva

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ MAcMap Homepage Type your username, password and click on ‘login’

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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 Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Market Access Map – a tool for trade policy analysis 1.Profile of key products, markets, competitors and tariffs 2.Compare market access conditions in key markets vs competitors: 2.1 Considering preferences 2.2 Considering specific duties using AVEs 3. Simulating tariff reductions on applied or bound tariffs to analyse: 3.1 Change in your access to export markets 3.2 Erosion of preferences 3.3 Impact on own tariffs 4. Bound tariffs 4.1 Simulating bindings on products that have not yet been bound 4.1 Simulating bindings for non WTO members 5. Aggregation analysis

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Profile of key products, markets, competitors and tariffs

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Click to see tariffs applied by Germany to Nepal relative to competitors

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ In the German market for “carpets” Nepal has a tariff advantage over the top 2 suppliers

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ In the US market for “men’s trousers” Nepal has a tariff disadvantage relative to Mexico

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Example: Costa Rica is world’s 2 nd largest exporter of – 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Currently only Mexico gets preferential treatment for this product

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Which other countries import the product? We can find this using the Trade Flows module.

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Of these markets, only the EU and Canada offer Costa Rica a preferential rate for this product

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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.

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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?

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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 Switzerland applies 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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?

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ The 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Some users will also be able to view the bound tariff data at the tariff line to see the cuts to each detailed product

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Open the “Detailed Analysis” module and then the sub module “Tariff Simulations” Choose to simulate reductions on “Bound”

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ We wish to compare the Linear, Swiss and ABI formulas

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ The Swiss formula cuts the high MFN tariff by more than the Linear formula but the ABI causes the biggest cut. Why?

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ We see that the results are the same for a Swiss formula with 3.9% coefficient and this ABI formula.

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Simulating a tariff reduction To 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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%

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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.

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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)

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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%

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Select the option to simulate a reduction on Applied tariffs (because there are no bound tariffs for Russia)

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Select all products and select any partner country with whom Russia has no trade agreement

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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%

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Notice 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%

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ First we need to create a country group of “all countries except Switzerland”, which we will call “World”.

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Next, we run a query selecting as exporters the 4 “groups” we created: the World; Australia; Brazil; and USA

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ 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

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ Online training course now available

Market Access Map Workshop on Tools & Methods for Trade & Trade Policy Analysis Geneva, 12 September /09/ For more information please contact