The Millennium Development Goals
Goal 8: Market Access Indicators by ITC, UNCTAD and WTO

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Indicator 8.7. Average tariffs imposed by developed countries on agricultural products and textiles and clothing from developing countries

Series:

  • Average tariffs imposed by developed countries on agricultural products from developing countries

  • Average tariffs imposed by developed countries on clothing from developing countries

  • Average tariffs imposed by developed countries on textiles from developing countries


Contact point in international agency

Chief Statistician, WTO (Hubert.Escaith@wto.org)


Definition

This indicator is one of two trade/market access indicators (8.6 and 8.7) that have been defined to reflect targets 8.A (Develop further an open, rule-based, predictable, non-discriminatory trading and financial system) and 8.B (Address the special needs of Least Developed Countries) of Goal 8 (Develop a global partnership for development). More specifically, indicator 8.7 is the average tariffs imposed by developed countries on subsets of selected items (agricultural products, textile and clothing exports) that are deemed to be of interest to developing countries.

Japan in Asia, Canada and the United States in North America, Australia and New Zealand in Oceania and EU are considered “developed” regions or areas. Developing countries are those not listed as developed or transition countries.

The list of least developed countries (LDCs) has been agreed by the General Assembly, on the recommendation of the Committee for Development Policy, Economic and Social Council. It includes the following 50 countries, classified by region: Africa: Angola, Benin, Burkina Faso, Burundi, Cape Verde, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Saõ Tomé and Principe, Senegal, Sierra Leone, Somalia, Sudan, Togo, Uganda, United Republic of Tanzania and Zambia; Asia and the Pacific: Afghanistan, Bangladesh, Bhutan, Cambodia, Kiribati, Lao People’s Democratic Republic, Maldives, Myanmar, Nepal, Samoa, Solomon Islands, Timor Leste, Tuvalu, Vanuatu and Yemen; Latin America and the Caribbean: Haiti.

Agricultural, clothing and textile groups follow the definition in WTO agreements based on the Harmonized System 1992, transposed to current versions by the WTO Secretariat. Agricultural products correspond to Harmonized System 1992, chapters 01 to 24 less fish and fish products (chap. 03); in addition to parts of chapters 29, 33, 35, 38, 41, 43, 50 to 53. Textile are mainly covered in chapters 50 to 60. The bulk of clothing products are found in chapters 61-63.


Methods of computation

Trade and tariff data at the national tariff line level are used for the EU, USA, Japan, Canada, Switzerland, and Australia. All relevant trade agreements and preferential schemes are used. This means that the applied rate at the tariff line level for an exporter is the most favourable tariff rate that any exporter from an eligible developing country deserves under the different Agreements.

In order to isolate the tariff policy component from other trends in international trade and reduce the endogeneity bias, a fixed trade structure has been used to compute the weighted average of tariffs.

This fixed weighting scheme, refereed to as " Standard Import Structure" is the same for all developed market imports originating from developing countries and least developed countries. This structure was calculated at the HS6-digit level by averaging total imports of OECD from Developing countries and least developed countries in the period 1999-2001.

All calculations are based on official data. However, in order to include all tariffs into the calculation, some rates which are not expressed in ad valorem form (e.g., specific duties) are converted in ad valorem equivalents (i.e. in per cent of the import value), The conversion is made at tariff line level for each importer and under each Agreement by using the unit value method. Import unit values are calculated from import values and quantities for each corresponding Agreement. Only a limited number of non ad valorem tariff rates for some technical duties cannot be calculated and are excluded from the calculation.

The applied tariff rates are first averaged at the HS6-digit level where the classification is common for all importers. Then the tariffs are aggregated by product groups for all importers and for developing and least developed countries, using the Standard Import Structure as weights.


Comments and limitations

There are a number of limitations in the ability of indicators 8.7 to fully reflect the level of openness of the trading system:

Tariffs are only part of the trade limitation factors, especially when looking at exports of developing or least developed countries under non-reciprocal preferential treatment, that set criteria for eligibility. Accurate estimates on non-tariff measures do not exist, thus the calculations on market access are limited to tariffs only (i.e., excluding non tariff barriers).

A full coverage of preferential schemes of developed countries has been used for the computation, but preferential treatment may not be fully used by developing countries' exporters for different reasons such as the inability of certain exporters to meet eligibility criteria (i.e., complying with rules of origin). As there is no accurate statistical information on the extent of the actual utilisation of each of these preferences, it is assumed that they are fully utilised.

Indicator 8.7 only covers market access to developed markets. The potential benefit of trade between developing countries, a growing share of world trade, is disregarded.

Indicator 8.7 only addresses the tariff situation facing developing countries' exports and not their own tariff profiles, despite the fact that trade openness, by itself, is conducive to export promotion.

Indicator 8.7 focuses on “traditional” products of interest to developing and least developed countries, defined as agricultural products, textiles and clothing. Developing countries also export other processed products. The potential benefits of trade diversification is not assessed by these indicators.


Sources of discrepancies between global and national figures

See Treatment of missing values section on the calculation of equivalent ad valorem for non ad valorem tariffs.


Process of obtaining data

Tariff and import data are based on an ITC, UNCTAD and WTO common data base. WTO data are received directly from WTO Members and are processed and verified. They are jointly validated by the members themselves. Data from ITC and UNCTAD are also taken from official sources and are subject to substantial verification procedures.


Treatment of missing values

All calculations are based on official data. There are very few occurrences of a missing value. When a specific tariff line is missing, the previous year value is used.

The calculation of tariff averages requires that all tariff rates are expressed in ad valorem terms, i.e. in per cent of the import value. When tariff rates, like specific duties, are not expressed in ad valorem form, they are estimated through a standard conversion into ad valorem equivalents (AVEs).

The conversion is made at the tariff line level using the unit value calculated from import values and quantities for each corresponding Agreement. If there is no import under a particular Agreement, imports from the world at that tariff line for the importer are used instead. If world imports at the tariff line level are available, imports in HS 6-digit level from all OECD countries are used.

For some technical duties, AVEs are estimated by ignoring the part based on technical factors. A limited number of non-ad valorem tariff rates for which the AVEs cannot be calculated are excluded from the calculation.


Data availability

The indicator is available starting in 1996. The reference is the calendar year January to December. Calculations could not be done for the years 1990 to 1995, because consistent tariff data were not available.

Import and tariff data used are for the EU, USA, Japan, Canada, Switzerland, Norway and Australia. The data include exports from all of their developing and least developed trading country partners. These markets cover at least 97% of developed countries' imports from developing or least developed countries.


Regional and global estimates

The website www.mdg-trade.org provides data at the national level, as well as several regional aggregates.


Expected time of release

Market access indicators 8.6 and 8.7 are generally compiled around March of each year. At that time (say year y), the indicator is compiled for (y-2), corresponding to the availability of detailed bi-lateral trade flows.