Definition
Average tariffs are the simple average of all applied ad valorem tariffs (tariffs based on the value of the import) applicable to the bilateral imports of developed countries. Agricultural products comprise plant and animal products, including tree crops but excluding timber and fish products. Clothing and textiles include natural and synthetic fibers and fabrics and articles of clothing made from them.
Goal/targets addressed
Goal 8. Develop a global partnership for development.
Target 12. Develop further an open, rule-based, predictable, non-discriminatory trading and financial system. Includes a commitment to good governance, development and poverty reduction—both nationally and internationally.
Target 13. Address the special needs of the least developed countries. Includes: tariff and quota-free access for least developed countries’ exports; enhanced programme of debt relief for HIPCs and cancellation of official bilateral debt; and more generous ODA for countries committed to poverty reduction.
Target 14. Address the special needs of landlocked countries and small island developing States (through the Programme of Action for the Sustainable Development of Small Island Developing States and the outcome of the twenty-second special session of the General Assembly).
Target 15. Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term.
Rationale
The indicator monitors the international effort made to remove barriers to trade for developing countries, to encourage the achievement of the Millennium Development Goals. Poor people in developing countries work primarily in agriculture and labor-intensive manufactures, sectors that confront the greatest trade barriers. Removing barriers to merchandise trade, therefore, could increase growth in these countries by a significant amount.
Method of computation
To calculate average tariffs, each Harmonized System six-digit bilateral trade flow is given the same weight. The results for each developed country are then aggregated using the standard import pattern as the weighting scheme for all importers. The standard weighting scheme would be the average import structure of all developed markets for imports from least developed countries and from developing countries. The tariff rates used are the available ad valorem rates, including most-favored-nation and non-most-favored-nation (largely preferential) rates. As it is not possible to convert non-ad valorem rates to ad valorem equivalents, all tariff lines with non-ad valorem rates are excluded from the calculation. This affects, in particular, agricultural products, where almost 25 percent of the Harmonized System six-digit product categories contain at least one non-ad valorem tariff line. Therefore the agricultural part of the indicator is excluded from the initial data set until an appropriate methodology for treating non-ad valorem tariffs is developed. (Note provided by World Trade Organization to the United Nations Statistics Division, 9 October 2002.)
Data collection and source
The indicator is calculated by the United Nations Conference on Trade and Development and the World Trade Organization in consultation with the World Bank from the Trade Analysis and Information System (TRAINS) CD-ROM, version 8 (2002).
Organisation for Economic Co-operation and Development database, www.oecd.org.
Agricultural Market Access Database, www.amad.org.
References
World Trade Organization, www.wto.org, for average tariffs.
Harmonized Commodity Description and Coding Systems, second edition (HS), 1996, World Customs Organization, for textiles and clothing.
International data comparisons
Data discrepancies across countries limit international comparison.
Comments and limitations
There are two types of average tariffs—simple average tariffs, which are used for goals monitoring, and the weighted average. Simple averages are frequently a better indicator of tariff protection than weighted averages, which are biased downward because higher tariffs discourage trade and reduce the weights applied to these tariffs.
Agency
World Trade Organization.