Chapter 4. Data Base Summary: Protection and Support. Betina V. Dimaranan and Robert A. McDougall. 4.1 Average Import Tariffs
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1 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, landbased 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 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
2 4-2 bilateral MFN applied rates mostly for the year 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.
3 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.
4 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 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.
5 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 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.
6 4-6 Table 4.1 Average Import Tariff Rates, by Commodity and Importing Region (Percent) AUS NZL CHN HKG JPN KOR TWN IDN MYS PHL SGP pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol for fsh col oil gas omn cmt omt vol mil pcr sgr ofd b_t tex wap lea lum ppp p_c crp nmm i_s nfm fmp mvh otn ele ome omf ely Contd
7 4-7 Table 4.1 Average Import Tariff Rates, by Commodity and Importing Region (Percent) (Continued) THA VNM BGD IND LKA XSA CAN USA MEX XCM COL pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol for fsh col oil gas omn cmt omt vol mil pcr sgr ofd b_t tex wap lea lum ppp p_c crp nmm i_s nfm fmp mvh otn ele ome omf ely Contd
8 4-8 Table 4.1 Average Import Tariff Rates, by Commodity and Importing Region (Percent) (Continued) PER VEN XAP ARG BRA CHL URY XSM AUT BEL DNK pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol for fsh col oil gas omn cmt omt vol mil pcr sgr ofd b_t tex wap lea lum ppp p_c crp nmm i_s nfm fmp mvh otn ele ome omf ely Contd
9 Table 4.1 Average Import Tariff Rates, by Commodity and Importing Region (Percent) (Continued) FIN FRA DEU GBR GRC IRL ITA LUX NLD PRT ESP pdr wht gro v_f osd c_b ocr ctl oap rmk wol for fsh col oil gas omn cmt omt vol mil pcr sgr ofd b_t tex wap lea lum ppp p_c crp nmm i_s nfm fmp mvh otn ele ome omf ely Contd 4-9
10 4-10 Table 4.1 Average Import Tariff Rates, by Commodity and Importing Region (Percent) (Continued) SWE CHE XEF HUN POL XCE XSU TUR XME MAR XNF pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol for fsh col oil gas omn cmt omt vol mil pcr sgr ofd b_t tex wap lea lum ppp p_c crp nmm i_s nfm fmp mvh otn ele ome omf ely Contd
11 Table 4.1 Average Import Tariff Rates, by Commodity and Importing Region (Percent) (Continued) BWA XSC MWI MOZ TZA ZMB ZWE XSF UGA XSS XRW pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol for fsh col oil gas omn cmt omt vol mil pcr sgr ofd b_t tex wap lea lum ppp p_c crp nmm i_s nfm fmp mvh otn ele ome omf ely
12 4-12 Table 4.2 Export Subsidies for Agriculture, Food Production, Textiles and Wearing Apparel (Percent Market Value) AUS NZL CHN HKG JPN KOR TWN IDN MYS PHL SGP pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol cmt omt vol mil pcr sgr ofd b_t tex wap THA VNM BGD IND LKA XSA CAN USA MEX XCM COL pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol cmt omt vol mil pcr sgr ofd b_t tex wap Contd
13 Table 4.2 Export Subsidies for Agriculture, Food Production, Textiles and Wearing Apparel (Percent Market Value) (Continued) PER VEN XAP ARG BRA CHL URY XSM AUT BEL DNK pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol cmt omt vol mil pcr sgr ofd b_t tex wap FIN FRA DEU GBR GRC IRL ITA LUX NLD PRT ESP pdr wht gro v_f osd c_b ocr ctl oap rmk wol cmt omt vol mil pcr sgr ofd b_t tex wap Contd 4-13
14 4-14 Table 4.2 Export Subsidies for Agriculture, Food Production, Textiles and Wearing Apparel (Percent Market Value) (Continued) SWE CHE XEF HUN POL XCE XSU TUR XME MAR XNF pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol cmt omt vol mil pcr sgr ofd b_t tex wap BWA XSC MWI MOZ TZA ZMB ZWE XSF UGA XSS XRW pdr wht gro v_f osd c_b ocr ctl oap rmk wol cmt omt vol mil pcr sgr ofd b_t tex wap
15 Table 4.3 Output Subsidies for Primary Agriculture (Percent Market Value) AUS NZL CHN HKG JPN KOR TWN IDN MYS PHL SGP pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol THA VNM BGD IND LKA XSA CAN USA MEX XCM COL pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol PER VEN XAP ARG BRA CHL URY XSM AUT BEL DNK pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol Contd 4-15
16 4-16 Table 4.3 Output Subsidies for Primary Agriculture (Percent Market Value) (Continued) FIN FRA DEU GBR GRC IRL ITA LUX NLD PRT ESP pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol SWE CHE XEF HUN POL XCE XSU TUR XME MAR XNF pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol BWA XSC MWI MOZ TZA ZMB ZWE XSF UGA XSS XRW pdr wht gro v_f osd c_b pfb ocr ctl oap rmk wol
17 Table 4.4 Input Subsidies for Primary Agriculture (Percent) AUS NZL CHN HKG JPN KOR TWN IDN MYS PHL SGP pdr wht gro osd c_b ctl oap rmk wol THA VNM BGD IND LKA XSA CAN USA MEX XCM COL pdr wht gro osd c_b ctl oap rmk wol PER VEN XAP ARG BRA CHL URY XSM AUT BEL DNK pdr wht gro osd c_b ctl oap rmk wol Contd 4-17
18 4-18 Table 4.4 Input Subsidies for Primary Agriculture (Percent) (Continued) FIN FRA DEU GBR GRC IRL ITA LUX NLD PRT ESP pdr wht gro osd c_b ctl oap rmk wol SWE CHE XEF HUN POL XCE XSU TUR XME MAR XNF pdr wht gro osd c_b ctl oap rmk wol BWA XSC MWI MOZ TZA ZMB ZWE XSF UGA XSS XRW pdr wht gro osd c_b ctl oap rmk wol
19 Table 4.5 Land-based Payments, Primary Agriculture (Percent) AUS NZL CHN HKG JPN KOR TWN IDN MYS PHL SGP pdr wht gro osd c_b ctl oap rmk wol THA VNM BGD IND LKA XSA CAN USA MEX XCM COL pdr wht gro osd c_b ctl oap rmk wol PER VEN XAP ARG BRA CHL URY XSM AUT BEL DNK pdr wht gro osd c_b ctl oap rmk wol Contd 4-19
20 4-20 Table 4.5 Land-based Payments, Primary Agriculture (Percent) (Continued) FIN FRA DEU GBR GRC IRL ITA LUX NLD PRT ESP pdr wht gro osd c_b ctl oap rmk wol SWE CHE XEF HUN POL XCE XSU TUR XME MAR XNF pdr wht gro osd c_b ctl oap rmk wol BWA XSC MWI MOZ TZA ZMB ZWE XSF UGA XSS XRW pdr wht gro osd c_b ctl oap rmk wol
21 Table 4.6 Capital-based Payments, Primary Agriculture (Percent) AUS NZL CHN HKG JPN KOR TWN IDN MYS PHL SGP pdr wht gro osd c_b ctl oap rmk wol THA VNM BGD IND LKA XSA CAN USA MEX XCM COL pdr wht gro osd c_b ctl oap rmk wol PER VEN XAP ARG BRA CHL URY XSM AUT BEL DNK pdr wht gro osd c_b ctl oap rmk wol Contd 4-21
22 4-22 Table 4.6 Capital-based Payments, Primary Agriculture (Percent) (Continued) FIN FRA DEU GBR GRC IRL ITA LUX NLD PRT ESP pdr wht gro osd c_b ctl oap rmk wol SWE CHE XEF HUN POL XCE XSU TUR XME MAR XNF pdr wht gro osd c_b ctl oap rmk wol BWA XSC MWI MOZ TZA ZMB ZWE XSF UGA XSS XRW pdr wht gro osd c_b ctl oap rmk wol
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