Effective Rates Of Protection Research Articles

Impact of Trade Liberalisation and MSME Classification on Productivity of Indian Manufacturing Firms

This article examines the effects of tariff and non-tariff reductions on firm-level productivity of large as well as Micro, Small and Medium Enterprises (MSMEs) in India’s manufacturing sector for the 1999–2009 period. We calculate input and final goods tariffs, effective rates of protection and non-tariff barriers (NTBs) for broad product groups using information from India’s Exim Policy of 1997–2003 and 2004–2009 to examine this impact. We use a balanced as well as unbalanced firm-level panel data set, while accounting for firm, industry, state and time-specific factors. By using fixed effect models and Heckman’s two-step estimation procedure, we find that trade liberalisation is associated with improved firm-level productivity for large firms but not in the case of MSMEs. We posit that this might be due to the relative disadvantages that Indian MSMEs face which prevent them from benefiting from trade liberalisation. We also find that productivity gains arising from the sourcing of imported inputs have been greater than those arising from increased product competition and that NTB liberalisation has had a greater impact compared to tariff liberalisation on firm-level productivity. Changes in MSME legislation and the classification of firms are also found to have a bearing on firm performance. Our study contributes to the literature by confirming the need to focus specifically on constraints faced by MSMEs if they are to benefit from trade liberalisation. It highlights the importance of liberalising trade in intermediates as well as the role of MSME classification in enabling productivity gains. JEL Codes: L6, D24, L1, F13

Global dynamics of a non-smooth SIV system with uncertain effective vaccine protection rate

Global dynamics of a non-smooth SIV system with uncertain effective vaccine protection rate

Trade liberalisation and the wage premium: evidence from Thai manufacturing

This paper examines the impact of trade liberalisation on the wage premium using firm level data for Thai manufacturing as the case study. Tariff protection is applied here to represent trade liberalisation, in terms of both nominal and effective tariffs. Output and input tariffs are separately examined to assess nominal protection, while for effective rates of protection (ERP), both a traditional ERP measure and a measure incorporating possible water in tariffs and the effect of FTAs are applied. In addition to tariff protection, the impact of GVCs, considered through trade in parts and components (P&Cs), on the wage premium is investigated in the study. Our results show that firm‐specific factors are more crucial in affecting the wage premium than trade liberalisation and participation in global production networks. With trade liberalisation, only input tariffs matter in determining the wage premium while an insignificant relationship is observed when either output tariffs or ERPs are employed to reflect trade liberalisation. Participation in GVCs also has an insignificant impact on the wage premium. Wage‐skilled employment decoupling is evident in the study, that is, trade liberalisation and GVCs have a negligible influence on the wage premium but have a significant influence in the case of relatively skilled workers. Trade liberalisation tends to lower demand for skilled workers in response to cheaper imported products, while participation in global production networks encourages more skilled workers.

ПРОТЕКЦІОНІЗМ ЯК ДЕТЕРМІНАНТА РОЗВИТКУ АВТОМОБІЛЕБУДУВАННЯ ВЕЛИКОЇ БРИТАНІЇ

Розглянуто тарифну політику щодо імпорту, яку було запроваджено у Великій Британії з початком Першої світової війни і яка діяла протягом близько 60 років. Спираючись на історичні факти і цифри, обґрунтовано на прикладі автомобільної індустрії, що так звані мита Маккенна в довгостроковій перспективі вплинули на зростання виробництва, зайнятості, надходжень до бюджету; обумовили зниження цін на внутрішньому ринку, скорочення імпорту і збільшення експорту, сприяли іноземним інвестиціям і трансферу передових технологій, ширшому залученню до бізнес-процесів місцевого потенціалу. Унаочнено, що запущені нині урядом Індії захисні мита для регулювання імпорту товарів, випуск яких визначено її урядом пріоритетом (зокрема, ідеться про виробництво електромобілів), є віддзеркаленням заходів, що реалізовувала Велика Британія на початку ХХ ст. Наголошено, що захисні тарифи на ці товари в Україні є суттєво нижчими. Показано, що США в цілях національної безпеки також використовують імпортні мита.Беручи до уваги положення ГАТТ/СОТ і Угоди про асоціацію з ЄС, а також сучасні приклади їх застосування, цілком очевидно, що Україна в нинішніх умовах зовнішніх і внутрішніх викликів та інституційних обмежень може в період повоєнного відновлення скористатися перевагами політики протекціонізму для розвитку індустрії, базуючись на своєму праві визначати «найважливіші винятки з міркувань безпеки» задля забезпечення соціально-економічної та фінансової стабільності країни і добробуту нації. З огляду на це, необхідно переосмислити поточну політику України щодо автомобілебудування, зокрема в частині зовнішньоторговельного регулювання, і сформувати нову політику, яка спиратиметься на положення теорії ефективного протекціонізму і розрахунки ефективної ставки захисту, оцінки поточного стану і перспектив підприємств, результати фахової дискусії щодо пріоритетів галузі: чи вона має залишатися на стадії великовузлового складання, чи націлитися на повноциклове виробництво з високим рівнем локалізації.

The impact of import tariffs on GDP and consumer welfare: A production network approach

After decades of trade liberalization, a return to protectionism has been observed in some developed economies. Recent studies have examined the impact of protectionism on international networks. In contrast to these studies, which focus on the impact of import tariffs on the global economy, we develop a production network model with international trade to assess the repercussions of sector-specific import tariffs on the policy-imposing country. Our model shows how the direct impact of higher tariffs on imported intermediate goods is amplified through the domestic production network. We find that the resulting decline in GDP and consumer welfare depends on the affected industries: their network centrality, the elasticity of substitution between foreign and domestic varieties, and the ratio of net-of-tax prices of domestic and foreign varieties. Our work contributes to the current debate on tariff escalation by advancing the literature on the effective rate of protection in a networked economy.

Impact of carbon tariffs on price competitiveness in the era of global value chain

More and more countries are joining the discussion on climate mitigation through a range of emissions reduction policies such as carbon pricing. However, differences in carbon prices and policy intensity have led countries to worry about issues such as unilateral competitiveness loss and carbon leakage, and carbon border adjustment mechanisms have emerged. This paper analyzes the impact of carbon border adjustment on price competitiveness with the carbon tariff system to be implemented by the EU and the US. First, we obtain the cost pass-through rates of 14 regions-3 sectors through the panel regression of error correction model, and corrects the input–output price model for incomplete cost transmission. Combined with global inter-industry linkages, the impact of carbon tariff levy on the real effective exchange rate, the main indicator of price competitiveness of each region and industry, is examined for the EU CBAM and the US Clean Competition Act. On this basis, we use the effective rate of protection which is adjusted with global value chain, to analyze the positive effect of carbon tariff policy on domestic producers. Finally, the welfare effects of residential households are estimated, after quantity adjustment using the real effective exchange rate. The results show that when only direct carbon tariffs are analyzed, the impact of the US Clean Competition Act is greater than that of the EU CBAM for Australia and Canada, and for Japan and other regions, the sanctioning effect of the EU CBAM is more significant. When considering the impact of cumulative tariffs in the upstream, the output prices of countries further increase, and the cumulative carbon tariffs of the US under the two scenarios are as high as 0.61 % and 0.81 %. According to the results of the real effective exchange rate, the price competitiveness of the US and Russia decreases. The effective rate of carbon tariff protection is negative in all countries except for the implementers of carbon tariffs - the US and the EU, which means that the producers lose value added due to carbon tariffs. Finally, the welfare effects analysis shows that the two largest causes of welfare losses are the increase in domestic prices and the prices of imported goods from the US.

Trade Liberalisation and Industrial Productivity: Evidence from Manufacturing Industries in Pakistan

This study examines the impact of trade liberalisation on the industrial productivity for a panel of twenty seven 3-digit manufacturing industries in Pakistan over the period 1980-2006. Using a variant of the Cobb-Douglas production function for industrial sector, we estimated output elasticities. The results show positive output elasticities with respect to labour, capital and raw materials for the pre-trade liberalisation period (1981 –1995) as well as post-trade liberalisation period (1996-2006). For the pre-liberalisation period, we observe positive output elasticity with respect to energy, while it turns out to be negative in the post-liberalisation period probably due to energy crisis in Pakistan. In the second stage, we calculate total factor productivity (TFP) and examine the impact of trade liberalisation on TFP for pre-and post-trade liberalisation periods. The results reveal that trade liberalisation proxied by import duty has positive but negligible impact on the TFP in the pre-as well as post-liberalisation periods. On the other hand, effective rates of protection exert large negative impact on the TFP in the post-liberalisation than the pre-liberalisation period. JEL Classifications: F14, F13, O53, L60 Keywords: Trade Liberalisation, Total Factor Productivity, Manufacturing Sector of Pakistan

A Practical Narrative of Tariff Protection in Pakistan

This research work quantifies the changes in effective rates of protection in Pakistan during the last decade of 2011–20. Based on its results, it supports a more flexible trade policy in Pakistan. Further, it identifies the sectors with strong and weak long-run productive capacities and highlights the role of trade barriers in these industries. A key concern is the decreasing productive capacity of textile and leather sectors where the textile industry has the largest share in the total exports from Pakistan. Hence, there is a dire need to invest more in research and development activities in such industries. Finally, the country needs to increase its range of export items and export destinations with more favourable terms of trade, which can be achieved by reducing its historically high import tariff rates. Effective Rate of Protection, Input-Output Table, Industry, Trade, Pakistan JEL Classification: C67, D57, F6, L5, R15

Preventing Hepatitis B Virus Infection Among U.S. Military Personnel: Potential Impact of a 2-Dose Versus 3-Dose Vaccine on Medical Readiness.

Hepatitis B, a major public health issue worldwide, has been associated with serious clinical outcomes. Military personnel are at particular risk for hepatitis B, such that hepatitis B vaccination is part of the accession process for new recruits. Although lost time costs and medical cost avoidance have been used by the U.S. Military to guide their decision-making protocols, this has not been applied to hepatitis B vaccination costs. Herein, a decision-analytic model is used to compare the effective vaccine protection rates and vaccine and operational costs of 2-dose versus 3-dose hepatitis B vaccine regimens in a population of recruits from the U.S. Marine Corps Recruit Depot, Parris Island. A decision-analytic model was developed to assess the expected levels of adherence, seroprotection, and vaccination and operational costs of a cohort of recruits vaccinated with either a 2-dose (HepB-CpG) vaccine for those eligible (scenario 1) or a 3-dose (HepB-Alum) vaccine (scenario 2). De-identified data from 23,004 recruits at the Marine Corps Recruit Depot, Parris Island, in 2018 and 2019 were used to provide real-world data on age distribution and vaccination status. Other inputs included published data on adherence for hepatitis B vaccines and seroprotection rates for HepB-CpG and HepB-Alum in relation to the number of doses received. Costs included direct medical costs of the hepatitis B vaccination and operational costs such as missed training time. After receipt of two vaccine doses, 92% of recruits in scenario 1 (HepB-CpG group) were expected to be protected against hepatitis B within 1 month of receiving the second dose, compared with 24% of recruits in scenario 2 (HepB-Alum group), leaving 76% of Marine recruits unprotected if using HepB-Alum during the intervening 5-month period between doses 2 and 3. Over the study period, HepB-CpG was estimated to provide cost savings of $744,509 (17.3% cost reduction) compared with HepB-Alum, with the cost of missed training time being the most influential driver of the cost difference between the two vaccination schedules. Findings from this model suggest that vaccination with the 2-dose HepB-CpG vaccine may provide earlier and higher protection against hepatitis B compared with the 3-dose vaccine (HepB-Alum). A 2-dose vaccination strategy incorporated as part of individual medical readiness has the potential to not only increase protection but also confer economic savings among military recruits at risk for hepatitis B infection.

Cost-Benefit Analysis of Vaccination Strategies to Prevent Mother-to-Child Transmission of the Hepatitis B Virus Using a Markov Model Decision Tree.

ObjectivesCurrently, in China, several strategies exist to prevent mother-to-child transmission (MTCT) of the hepatitis B virus (HBV). These include providing Hepatitis B vaccination and hepatitis B immunoglobulin (HBIG) injection with different types of administration and dosages. The aim of this study is threefold: first, to evaluate the economic viability of current hepatitis B vaccination strategies for preventing MTCT from a public health policy perspective; second, to optimize the current immunization strategy for preventing perinatal transmission of the HBV; and third, to offer policy options to the National Health Commission in China.MethodsTo simulate the disease outcome for the entire life of newborns infected with HBV, a Markov model with eight possible health states was built by using TreeAge Pro 2011 software. In the present study, the model parameters were probability and cost, which were extracted from literature and calculated using Microsoft Excel 2013. The optimal immunization strategies were identified through cost-benefit analyses. A benefit-cost ratio (BCR) > 1 indicated that the strategy had positive benefits and vice versa. A one-way sensitivity analysis was used to investigate the stability of the results.ResultsFrom a public health care system perspective, we evaluated the economic viability of 11 strategies in China. For all 11 strategies, the BCR was > 1, which indicated that the benefits of all the strategies were greater than the costs. We recommended strategy number 9 as being optimal. In strategy number 9, babies born to hepatitis B surface antigen (HBsAg)-positive mothers were given an HBIG (200 IU) within 24 h of birth and three injections of hepatitis -B vaccine (20-μg each) at 0, 1, and 6 months, and the strategy had a BCR of 4.61. The one-way sensitivity analysis revealed that the full vaccination coverage and effective rates of protection were two factors that greatly influenced the BCR of the different prevention strategies; other factors had little effect.ConclusionThe benefits of all strategies were greater than the costs. For decision-making and application, the strategy should be based on local socio-economic conditions so that an appropriate immunization strategy can be selected.

Globally chained economies, unwitting victims of the US‐China trade war

The USA and China have been engaged in a trade war since 2018—an economic tussle that has had repercussions for not only the two countries directly involved but also for their trading partners participating in the industrial global value chains (GVC). To assess the gravity of the dispute, we measure the impacts of the US‐China bilateral tariff hikes on the participants, as well on their trading partners linked by global supply chains, whose structure is estimated using the OECD Inter‐Country Input–Output Model. Our assessment relies on two metrics: the effective rate of protection (ERP) and total factor productivity (TFP). We calculate ERPs following a methodology that reflects the globally fragmented production linkages. From our assessments, the tariff increases raised the ERPs of the warring countries but lowered those of their trading partners. Moreover, the bilateral tariff hikes significantly raised the input tariffs of many major trading partners through the transmission of GVCs. Consequently, the TFPs of the major trading countries are likely to fall by 0.16 to 0.41 per cent.

Considerations for estimating real-world outcomes and value in vaccination: A case study with adult hepatitis B virus vaccination

BackgroundIn the absence of field efficacy studies, estimating the real-world effectiveness of vaccines may consider immunogenicity from randomized controlled clinical trials and real-world adherence. Combining seroprotection rates (SPRs) with regimen completion rates gives an estimate of an effective vaccine protection rate (eVPR), which can be leveraged to evaluate real-world cost-effectiveness by linking it with vaccine costs to estimate the cost-per-protected patient (CPP). MethodsThis study evaluated eVPR and CPP as estimates of vaccine clinical- and cost-effectiveness of two-dose (HepB-CpG) and three-dose (HepB-Alum) hepatitis B virus (HBV) vaccines in the general adult population and a subpopulation with diabetes mellitus. eVPR was calculated from head-to-head SPR data from phase 3 clinical trials directly comparing HepB-CpG and HepB-Alum vaccine regimens and real-world head-to-head adherence data. CPP was calculated as the average cost of each regimen divided by eVPR. ResultsHigher eVPR in the adult population was achieved with HepB-CpG (68.0%) versus HepB-Alum (41.6%), reflecting the combination of higher SPR and vaccine regimen completion. The CPP for HepB-CpG ($331.31) was $45.67 (95% CI: $36.66, $55.19) less than HepB-Alum ($377.09). Greater savings were observed among persons with diabetes, with CPP $149.60 (95% CI: $80.29, $195.63) lower with HepB-CpG ($367.57) than HepB-Alum ($517.37). ConclusionsMetrics estimating vaccine real-world effectiveness and value may guide informed decisions in vaccine selection. For example, using eVPR and CPP, HepB-CpG represents a more effective, value-advantaged approach than HepB-Alum toward reducing HBV infection.

A Systematic Review of the Efficacy and Safety of Didroxyprogesterone Combined with Progesterone in the Treatment of Luteal Insufficiency-Induced Abortion

Objective: To systematically evaluate the efficacy and safety of didroxyprogesterone combined with progesterone in the treatment of luteal insufficiency abortion. Methods: We searched CNKI database, VIP database, Wanfang database, PubMed database, EMBASE database and Cochrane library database for literatures on the treatment of luteal insufficiency-induced abortion with didroxyprogesterone and progesterone. Meta-analysis was performed using Revman 5.3 software after literature extraction and further quality evaluation. Results: Ten randomized controlled trial-related articles that describe studies on a total of 1145 patients, 570 in the combination group and 575 in the control group, were included. The results of meta-analysis showed that combination therapy could improve the effective rate of fetal protection (OR = 0.14, 95% CI [0.07, 0.27], P < 0.00001). The safety of the combination group was significantly higher than that of the control group (OR = 3.09, 95% CI [1.13,8.48], P = 0.03). Conclusion: To sum up, compared with the control group, the combination of progesterone and progesterone is more effective and safer in the treatment of luteal insufficiency abortion. However, the sample size of the data is relatively small and the quality of the literature is low. This conclusion still needs to be further verified in high-quality randomized controlled trials that involve large samples.

Nominal and Effective Rates of Protection by Industry in Pakistan: A Tariff Based Analysis

The study calculates nominal and effective rates of protection and their association with major characteristics of industries—labour intensity, export orientation and revealed comparative advantage. The results indicate that nominal as well as effective rate of protection has declined between two benchmark years—1990 and 2002, but vegetable oil, motor vehicles, and a sector producing intermediate good ‘other manufacturing’ remains highly protected. Overall results reveal that manufacturing import competing sectors enjoy higher protection through trade policy—tariff while negative effective rate of protection for majority of agriculture and services sectors show their disadvantage position in the economy. The results clearly indicate government priority for manufacturing sector over agriculture and services sectors. The results also reveal that effective rate of protection is negatively associated with industrial characteristics such as labour intensity, export orientation, and revealed comparative advantage indicating that a sector needs less protection if it has comparative advantage—labour intensive and produce exportable commodity. The results of the study also indicate that trade policy in Pakistan shifts trade in favours of trade in intermediate inputs in 2002 from trade in final goods in 1990. There is a need to restructure tariff structure to remove bias against agriculture and services sectors. Agriculture where majority of unskilled labour engaged ask immediate action from government to improve the condition of poor.

Trade Protection, Stock-Market Returns, and Welfare

We show that the specific factors model can be used to derive a rigorous link between movements in stock prices and productivity, wages, employment, output, and welfare. We also prove that the commonly used measure of the effective rate of protection equals the dual measure of revenue TFP, providing a theoretical foundation for why many studies have found that trade liberalization significantly increases firm-level productivity. Our method enables us to trace a tariff announcement's effect on TFP through its impact on macro variables (e.g., exchange rates) and through its effect on the relative prices of imports. We apply this framework to understanding the implications of the U.S.-China trade war. Our results show that the trade-war announcements caused large declines in U.S. stock prices, expected TFP, and expected inflation largely by moving macro variables, but also by causing declines in the returns of firms trading with China. We find that markets expect the trade war to lower U.S. welfare by 7.8 percentage points, which is much larger than the predictions of static models but in line with those of dynamic models. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Effectiveness of industrial policy on firm productivity: evidence from Thai manufacturing

This paper examines the effects of industrial policy on firm productivity, using a three‐year panel data set of Thai manufacturing as a case study. A range of industrial policy tools is defined, including tariff measures, subsidies, and investment incentives through the Board of Investment (BOI), which represent the main industrial policy tools used in Thailand. The effect of ‘water in the tariffs’ and partial trade liberalisation undertaken through free trade agreements (FTAs) signed between Thailand and her trading partners is also examined. The key findings concern the role traditional tools, that is trade openness, R&D, and skills upgrading, play in fostering firm productivity. Promoting a conducive environment, especially within domestic competition, is crucial in encouraging firm productivity. Some industrial policy tools are effective in promoting firm productivity, that is providing investment incentives via the BOI and lowering tariff protection. Subsidies, by contrast, tend to degrade firm productivity. Among trade protection measures, the effective rate of protection, which includes water in the tariffs encountered by exporting firms, has the greatest effect on firm productivity. The FTA‐led trade liberalisation fails to add substantial competitive pressure and induce firms to improve productivity. Such statistical insignificance reflects the nature of FTA commitments that Thailand has made so far.

Estimating effective rates of protection in Nigeria's protected cement industry

Trade protection for selected products is a key element of smart industrial policy in many developing countries. Understanding quantitative measures of trade protection for industrial and consumer commodities is therefore a key requisite to determining the effectiveness of export-led growth in particular, and overall industrial policy. However, accurate estimates for trade policy incentives provided to industrial products are few and comparable datasets are sparse, with the most recent published country datasets dated as far back as 2012, yet with limited sector indices. This study estimates the effective rate of protection (ERP), a key index of trade protection and industrial policy, for the cement industry, one of the largest manufacturing industries in Nigeria. Time series data for 16 years, on the actual cost of trade protection, including tariff barriers and import prohibition bans, from 2000 to 2015 is used. With the ERP, the true cost of protection of domestic manufactures from imported goods, is computed using input shares and tariff data from the United Nations COMTRADE database. The data show the basis for computation and provides a re-useable template for central planners in the computation of effective rate of protection for similar manufacturing industries and other African countries. The computed ERP for the cement industry in Nigeria show a relatively high protection rate, and the overwhelming impact of trade prohibition on the ERP after the implementation of the Federal Government's incentive-led Backward Integration Programme. The evidence is compared with earlier data on Africa. Preliminary findings and trend analysis indicate a high correlation between the ERP and value added to gross domestic product (GDP).

Declining Protection for Vietnamese Agriculture under Trade Liberalization: Evidence from an Input–Output Analysis

This study aims to assess the protection for Vietnamese agriculture under trade liberalization based on the input–output approach. From a theoretical perspective, the authors develop a general framework to estimate the effective rate of protection using an input–output table, taking into account tariffs, subsidies and value-added tax. Based on the data of 2012 and 2016, with a projection to 2020, the empirical results reveal that agricultural production, which is considered as Vietnam’s comparative advantage, is insignificantly protected. From the year 2012 to 2016, the effective rate of protection declined for primary agriculture and its supporting sectors, and would become negative by 2020. This implies that Vietnamese farmers are at a disadvantage due to the effect of trade liberalization. Furthermore, it is empirically revealed that the primary agricultural sector has a high value-added multiplier, which means a significant contribution to the domestic economy, is not protected by the government’s tax and tariff policies. Based on the study results, the authors suggest some policy recommendations to improve the situation, which are focused on the reduction of the value-added tax rate on inputs, while making industries with a high spillover effect to the domestic economy a key priority.

Trade Liberalization and MSME Framework: Impact on Firm Productivity and Markups

This paper examines the effects of tariff and non-tariff reductions on firm-level productivity and markups of large as well as Micro, Small and Medium Enterprises (MSMEs) in India’s manufacturing sector for the 1999-2009 period. We calculate input and final goods tariffs, effective rates of protection (ERP) and non-tariff barriers (NTBs) for broad product groups using information from India’s Exim Policy of 1997-2003 and 2004-09 to examine this impact. We use a balanced as well as unbalanced firm-level panel data set, while taking into account firm, industry, state and time-specific factors. By using fixed effect models and Heckman’s two-step estimation procedure, we find that trade liberalization is associated with improved firm-level productivity for large firms whereas this is not the case for MSMEs. We posit that this might be due to the relative disadvantages that Indian MSMEs face which prevent them from benefiting from trade liberalization. We also find that productivity gains arising from the sourcing of imported inputs have been greater than those arising from increased product competition and that NTB liberalization has had a greater impact compared to tariff liberalization on firm-level productivity. Markups are found to have declined due to increased final goods competition. Changes in MSME legislation and classification of firms are also found to have a bearing on firm performance.

Inverted Duty Structures and the Paradox of Negative Effective Protection in India, 2000–2014

In recent years, sections of Indian industry have complained that they are being harmed by an inverted duty structure (IDS). That is, tariffs on their imported inputs are higher than that on their outputs. In this article, we argue that the concept of effective rate of protection (ERP), despite its limitations in the context of general equilibrium theory, provides an appropriate tool for analysing this issue. We outline the theory underlying the calculation of ERP and its relationship with IDS. We then offer new estimates of ERP for the period 2000–2014 using a data source that, unlike those used by earlier authors, enables us to construct a time series on ERP for each sector, using different tariff rates applied by India on imports from different countries. We find many instances of IDS but none of them results in negative ERP. Cases of negative ERP are found in a few sectors and years for which the counterfactual value added under free trade is negative. We discuss some possible explanations for this phenomenon. Finally, we show statistically and econometrically that, in line with theoretical expectations, ERPs are positively related to the degree of tariff escalation. JEL Codes: F13, F14, O24