Binding Overhang and Tariff-Cutting Formulas
CEPII Working Paper No. 2005-18
33 Pages Posted: 2 Dec 2005
Date Written: October 2005
Trade negotiations deal with possible cuts in bound duties, which differ substantially from applied preferential duties, and even from MFN applied duties. Based on WTO's Consolidated Tariff Schedules (CTS) database and on national sources, this paper proposes a systematic assessment of ad valorem-equivalent bound duties at the detailed product level, for almost all WTO members. Fully consistent with the assessment of applied protection provided in the MAcMap-HS6 database (Bouet et al., 2004), this work allows the full structure of protection-bound, MFN applied, preferential applied duties - to be accurately assessed. We are thus able to provide with the first ever worldwide assessment of the binding overhang, i.e. the gap between bound and applied MFN tariffs. We also assess the likely applied-protection impact of an agreement in the Doha Round, based on the Harbinson Proposal for agricultural products, and on the Girard Proposal for nonagricultural products. In all cases, we show the difference between bound and applied protection to be key in understanding both the structure of protection worldwide, and the possible impact of liberalisation scenario cutting bound duties, as uses to be the case in multilateral liberalisations.
Keywords: Bound tariffs, Applied tariffs, Ad valorem equivalent, WTO, Trade Liberalisation
JEL Classification: F13
Suggested Citation: Suggested Citation