New Price-based Bilateral Ad-valorem Equivalent Estimates of Non-tariff Measures

Abstract

As global applied tariffs continue to decline, and the stock of non-tariff measures continues to increase, applied international trade researchers increasingly seek to evaluate the effects of non-tariff measure (NTM) policies. This, however, requires their quantification – a non-trivial estimation task that needs to be undertaken at a disaggregated level. Estimation of ad-valorem-equivalents (AVEs) of NTMs is generally conducted using one of two approaches: price-based or quantity-based. This study uses a price-based approach to estimate AVEs at the Harmonised System (HS) six-digit level. Bilateral Global Trade Analysis Project (GTAP) sector-specific AVEs are obtained by aggregating the derived AVE estimates, using HS-GTAP sector concordance and HS six-digit level bilateral trade flows as weights. A key advantage of the price-based estimation method used in this study is that the AVEs can be directly used in the GTAP model, without the need to adjust them based on import-demand elasticities. Derived AVEs estimated in this study are also importer/partner-specific and rely on counts of NTMs rather than simply instances of NTMs. This paper provides GTAP-consistent estimates and aggregation code to facilitate custom GTAP aggregations of AVEs, as well as replicable, open source code that can be altered based on users' assumptions or particular research needs.