Chapter 4 Data Base Summary: Protection and Support Betina V. Dimaranan and Robert A. McDougall This chapter provides a summary of the protection data in the GTAP 5 data base. Specifically, the chapter provides summary tables on average import tariff rates, average export subsidy rates, and on agricultural domestic support in the form of output subsidies, intermediate input subsidies, land- based payments, and capital-based payments. The detailed description of the data sources and procedures involved in the preparation of the protection data can be found in chapter 16. 4.1 Average Import Tariffs The tariff data in the GTAP 5 data base combines merchandise tariffs from the World Integrated Trade Solutions (WITS) system of the World Bank and UNCTAD and tariffs on food and agriculture from the Agricultural Trade Policy Database of the USDA/ERS. The latter database is based largely on the Agricultural Market Access Database (AMAD). The third source of tariff data is the regional input-output tables. Tariff data extracted from the I-O tables are applied to empty cells or missing data in the combined merchandise and agricultural tariff data set. Details about the preparation of the protection data set, including the tariff data, is given in chapter 16.A. Compared to GTAP 4, the GTAP 5 data base has benefitted from the more comprehensive country coverage of the WITS system. The merchandise tariff data obtained from WITS generated
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Chapter 4 Data Base Summary: Protection and Support
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Chapter 4
Data Base Summary:Protection and Support
Betina V. Dimaranan and Robert A.McDougall
This chapter provides a summary of the protection data in the GTAP 5 data base. Specifically, the
chapter provides summary tables on average import tariff rates, average export subsidy rates, and
on agricultural domestic support in the form of output subsidies, intermediate input subsidies, land-
based payments, and capital-based payments. The detailed description of the data sources and
procedures involved in the preparation of the protection data can be found in chapter 16.
4.1 Average Import Tariffs
The tariff data in the GTAP 5 data base combines merchandise tariffs from the World Integrated
Trade Solutions (WITS) system of the World Bank and UNCTAD and tariffs on food and agriculture
from the Agricultural Trade Policy Database of the USDA/ERS. The latter database is based largely
on the Agricultural Market Access Database (AMAD). The third source of tariff data is the regional
input-output tables. Tariff data extracted from the I-O tables are applied to empty cells or missing
data in the combined merchandise and agricultural tariff data set. Details about the preparation of
the protection data set, including the tariff data, is given in chapter 16.A.
Compared to GTAP 4, the GTAP 5 data base has benefitted from the more comprehensive
country coverage of the WITS system. The merchandise tariff data obtained from WITS generated
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bilateral MFN applied rates mostly for the year 1997. Further details about the WITS system and the
merchandise tariff data provided to GTAP are available in chapter 16.B.
In the case of agricultural tariffs, the Agricultural Trade Policy Database of the ERS, USDA
provided significant improvement over the agricultural tariff data used in the GTAP 4 data base
which were simply calculated from the market price support data in the PSE tables for OECD
countries. Non-bilateral tariff data in the form of applied rates for 1998 or for the closest available
year or MFN bound rates were obtained from the Agricultural Trade Policy Database.
Documentation about the data base is available in chapter 16.C.
Table 4.1 presents average import tariffs by commodity and importing region. Although
obtained at the tariff line level, the data contributors aggregate the tariff data and provide them at
the aggregated GTAP sectoral concordance. The table presents the import tariff rates for each GTAP
importing region, by commodity, averaged over all source regions. Trade between free trade areas
have been excluded in the calculation of these averages.
As shown in table 4.1, the GTAP 5 regional aggregation captures some of the very large
distortions in agricultural trade. Grains, in general, are most highly protected in regions like Japan,
Korea, Switzerland, and the Rest of EFTA. The European Union and EFTA member countries have
very high tariff rates (MFN bound) on unrefined sugar while processed sugar is most heavily
protected in Poland, Switzerland, and Japan. Meat products enjoy high protection rates in EFTA,
Turkey, the Rest of the Middle East, and Morocco. Tariff rates on dairy products are highest in
Japan, Canada, EFTA, Poland, and the Rest of the Middle East. Beverages and tobacco, a highly
heterogeneous commodity group, is very highly taxed in the Rest of North Africa, and also enjoys
high tariffs in India and Sri Lanka. Outside agriculture, food processing tends to be the most highly
protected among the manufacturing sectors.
On the non-food side, protection in the wearing apparel and textiles sector, tend to be higher
than that for the other manufacturing sectors. Across countries, the South Asian countries, Thailand,
Vietnam, and the some Southern African countries have relatively higher tariffs on these sectors. The
motor vehicles and parts sector is also relatively highly protected among the manufacturing sectors.
Some caveats regarding the tariff data are in order. Zero tariffs are imposed between regions
belonging to a free trade area for the commodities covered in the respective agreements. The FTAs
covered in the GTAP 5 data base are limited to ANZCERTA, NAFTA, EU, EU-EFTA and SACU
(see chapter 16.A). More recently concluded regional agreements have not been taken into account.
It should also be emphasized that the tariff data does not take into account the preferential tariff rates
extended by some importers to selected trading partners.
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4.2 Average Export Subsidies/Taxes
Data on agricultural export subsidies in the GTAP 5 data base are based on information from country
submissions to the World Trade Organization on export subsidy expenditures. This is a significant
departure from the data sourcing in GTAP 4 where agricultural export subsidies were computed from
the price gap between the market price and world price of each commodity, based on the values of
market price support in the OECD PSE database. Further details about the agricultural export
subsidy data is available in chapter 16.D.
The agricultural export subsidy data cover primary agriculture and processed food
commodities. Export subsidy/tax data are also extracted from the I-O tables and are applied to empty
cells or missing data in the contributed subsidy data set. Table 4.2 reports the average export subsidy
rates for food and agriculture as well as the average export tax equivalent rates of the quotas under
the Agreement on Textiles and Clothing (ATC).Trade between free trade areas have been excluded
in the calculation of these averages.
Export subsidies are prevalent and sizeable for cattle/sheep meat, other meat, dairy products,
and refined sugar. The agricultural export subsidy rates are generally highest in the European Union
and EFTA. The Rest of the Central European Associates (XCE), due largely to Slovakia, also
provides a large export subsidy on cattle/sheep meat.
The average export tax equivalent rates of the ATC quotas are highest in the South Asian
countries. Note that large average export subsidy rates for textiles and wearing apparel are reported
for Uruguay, Rest of South America, and Rest of the Middle East. Since the averages were
calculated from the comprehensive export-side measure, these large export subsidies are due to data
extracted from the I-O tables which more than offset the export tax equivalents of the ATC quotas
in these countries.
It should also be pointed out that a bug was introduced in the agricultural export subsidy data
set when all zeroes, whether actual zero export subsidy rates or missing data, in the contributed data
set were inadvertently replaced by export subsidy/tax information from the regional input-output
tables. This problem mostly affects Brazil, Uruguay, Australia, Hungary and Canada, since the I-O
tables of these countries report some agricultural export taxes/subsidies. Finally, it should also be
noted that the average export tax data reported for Japan reflects data from the Japanese I-O tables
which are erroneous.
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4.3 Domestic Support in Agriculture
The treatment of domestic support in agriculture has seen significant improvement since the GTAP
4 data base. In GTAP 4, all PSE components, excluding market price support, were included in the
calculation of domestic support and classified under output subsidies. In GTAP 5, all the PSE
components, excluding market price support, were sorted out into four domestic support categories,
namely: output subsidies, intermediate input subsidies, land-based payments and capital-based
payments. A standard formula for assigning the PSE components into the four support categories
was adapted for all countries. With this distinction, data for domestic support distortions other than
output subsidies are introduced for the first time in the GTAP data base.
The estimates of domestic support were based on 1998 PSE data for the OECD countries. In
addition, the domestic support data for wheat, cereal grains, oilseeds, and cattle/sheep in the
European Union was disaggregated among the member countries. The sources and procedures
involved in the calculation of domestic support are documented in chapter 16.E.
4.3.1 Output Subsidies
What are classified as output subsidies in the GTAP 5 data base are a considerably small component
of total payments in the PSE data. Thus the output subsidy rates reported in table 4.3 are relatively
smaller and far different from those in the GTAP 4 data base. Where available, output subsidy data
was also extracted from the input-output tables and applied to missing data, i.e. for the non-OECD
countries.
The output subsidy rates are especially significant in the Rest of EFTA, due to output subsidies
in Norway and Iceland. They are also quite significant for some agricultural commodities in the other
OECD countries including Japan, Canada, USA, the European Union, and Switzerland. Output of
wheat and cereal grains are subsidized in the OECD countries. Raw milk output is significantly
subsidized in Japan, Canada, Switzerland and the Rest of EFTA. Wool output in the Rest of EFTA
is subsidized at the rate of 225 percent!
Some of the output subsidies and output taxes extracted from the I-O tables for the non-OECD
countries are non-trivial. This is especially true for some countries in Southeast Asia, South Asia,
Latin America, and Southern Africa.
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4.3.2 Average Intermediate Input Subsidies
The rates of intermediate input subsidies reported in Table 4.4 are average rates for all intermediate
inputs, domestic and foreign, excluding energy inputs, used in the production of primary agricultural
commodities. The input subsidies are based on the value of payments on input use for variable inputs
and on-farm services in the PSE tables for OECD countries.
Average subsidy rates on intermediate inputs for wheat, cereal grain, and oilseeds production
are quite significant in the Rest of EFTA, Turkey and the European Union. The Rest of EFTA also
has large intermediate input subsidies for cattle/sheep, raw milk, and wool production. For the other
OECD countries, average input subsidy rates are also greater than 10 percent for grains in Japan,
oilseeds in Japan and Poland, and cattle/sheep in Turkey. Intermediate input subsidy rates for
primary agriculture are all lower than 10 percent in Australia, New Zealand, Korea, Canada, USA,
Mexico, and Hungary.
4.3.3 Factor-based Payments
Factor-based payments represent the gap between the payments made by firms for factors at agents’
prices and at market prices. Factor-based payments cover more than 50 percent of the all domestic
support payments from the PSE data for most commodities in countries like Hungary, Japan, Korea,
Mexico, Switzerland, USA , and the European Union.
Table 4.5 shows the rates of land-based payments. These are particularly large, mostly greater
than 85 percent, for wheat, cereal grains, and oilseeds in the European Union. In the other OECD
countries, land-based payment rates are also quite significant, more than 65 percent, for oilseeds in
Japan, wheat and wool in the USA, cereal grains in Switzerland, and wool in the Rest of EFTA.
The rates of capital-based payments are reported in table 4.6. These are large, ranging from
35 to 98 percent, for cattle/sheep, oilseeds, cereal grains, and wheat in the European Union. The rates
are also greater than 65 percent for cattle/sheep and animal products in Korea, wool in USA, animal
products in Switzerland, and raw milk in Hungary.
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Table 4.1 Average Import Tariff Rates, by Commodity and Importing Region (Percent)