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Market Analysis Section

Join the Market Access Map workshop to learn about tools and methods for trade policy analysis, including tariff analysis, market access conditions, and simulation analysis.

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Market Analysis Section

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  1. 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

  2. MAcMap Homepage Type your username, password and click on ‘login’ http://www.macmap.org Geneva, 12 September 2006

  3. 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 Geneva, 12 September 2006

  4. Market Access Map – a tool for trade policy analysis • Profile of key products, markets, competitors and tariffs • 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 Geneva, 12 September 2006

  5. 1. Profile of key products, markets, competitors and tariffs Geneva, 12 September 2006

  6. Click to see tariffs applied by Germany to Nepal relative to competitors Geneva, 12 September 2006

  7. In the German market for “carpets” Nepal has a tariff advantage over the top 2 suppliers Geneva, 12 September 2006

  8. In the US market for “men’s trousers” Nepal has a tariff disadvantage relative to Mexico Geneva, 12 September 2006

  9. 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 Geneva, 12 September 2006

  10. 2. Compare market access conditions in key markets vs competitors:2.1 Considering preferences 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? Geneva, 12 September 2006

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  12. Currently only Mexico gets preferential treatment for this product Geneva, 12 September 2006

  13. Which other countries import the product? We can find this using the Trade Flows module. Geneva, 12 September 2006

  14. Of these markets, only the EU and Canada offer Costa Rica a preferential rate for this product Geneva, 12 September 2006

  15. 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 Geneva, 12 September 2006

  16. 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. Geneva, 12 September 2006

  17. 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? Geneva, 12 September 2006

  18. Ad Valorem Equivalents • Ad valorem equivalents of specific tariffs are calculated as AVE = Specific tariff per unit Unit Value • AVEs allow us to compare the protection levels of different countries • AVEs allow us to aggregate tariffs at the sector or regional level; and Geneva, 12 September 2006

  19. Imagine Switzerland applies a tariff of$100 per ton to imports of fish fillets from Ghana&SouthAfrica Why AVEs sometimes differ even if specific tariff faced is the same If Ghana’sexported fish fillets were worth $100 per ton the equivalent tariff would be100% If South Africa’sexported fish fillets were worth $200 per ton theequivalent tariff faced would be only50% ! Geneva, 12 September 2006

  20. 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 Geneva, 12 September 2006

  21. 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 Geneva, 12 September 2006

  22. 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? Geneva, 12 September 2006

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  26. 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 Geneva, 12 September 2006

  27. Some users will also be able to view the bound tariff data at the tariff line to see the cuts to each detailed product Geneva, 12 September 2006

  28. 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 Geneva, 12 September 2006

  29. Open the “Detailed Analysis” module and then the sub module “Tariff Simulations” Choose to simulate reductions on “Bound” Geneva, 12 September 2006

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  31. We wish to compare the Linear, Swiss and ABI formulas Geneva, 12 September 2006

  32. The Swiss formula cuts the high MFN tariff by more than the Linear formula but the ABI causes the biggest cut. Why? Geneva, 12 September 2006

  33. 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 Geneva, 12 September 2006

  34. 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 Geneva, 12 September 2006

  35. We see that the results are the same for a Swiss formula with 3.9% coefficient and this ABI formula. Geneva, 12 September 2006

  36. 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 Geneva, 12 September 2006

  37. 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 Geneva, 12 September 2006

  38. 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 Geneva, 12 September 2006

  39. 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% Geneva, 12 September 2006

  40. In the “less than formula cut scenario”, the final tariff is only sometimes below the applied MFN rate 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. Geneva, 12 September 2006

  41. 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. Geneva, 12 September 2006

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  44. 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 Geneva, 12 September 2006

  45. 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) Geneva, 12 September 2006

  46. 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% Geneva, 12 September 2006

  47. 4.2 Simulating bindings and applying a cut for non WTO member 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 Geneva, 12 September 2006

  48. Select the option to simulate a reduction on Applied tariffs (because there are no bound tariffs for Russia) Geneva, 12 September 2006

  49. Select all products and select any partner country with whom Russia has no trade agreement Geneva, 12 September 2006

  50. 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% Geneva, 12 September 2006

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