Integrated Tariff Analysis System (ITAS)

Glossary

Applied tariff rate - Estimate of the tariff rate paid by importers of a product. Estimated by dividing customs duty paid by import value. Applied tariff rates are estimated for each bilateral trade flow included in ITAS.

Average tariff rate - A simple (usually unweighted) average of the tariff rates on a group of items.

Base tariff rate - Tariff rate used as a basis for calculating a new rate.

Bound tariff rate - The maximum tariff on an import to which a member commits. This rate is legally binding under the WTO and applies on a most favoured nation (MFN) basis. WTO negotiations have been conducted on the basis of bound rates.

Compression - Reductions in tariffs where high tariffs are reduced by a greater proportion than low tariffs. Compression results in a decrease in tariff dispersion and the tariff average.

Consolidated Tariff Schedule (CTS) - Database maintained by the WTO Secretariat, which contains, among other things, members' commitments to reduce bound rates. Commitments negotiated under the Uruguay Round are expected to be largely implemented by 1 July 2005.

Developing economies - In ITAS, mostly middle income countries (as defined by the World Bank), and least-developed countries. Includes countries in Asia (excluding Japan); Central and Eastern Europe; the Middle East and Latin America and Africa. See table A.2 for those included as importing countries in ITAS.

Dispersion - The spread of tariffs in a tariff structure.

Estimated most-favoured-nation rate - In ITAS, estimated as the maximum rate applied across source countries at the HS6 level.

Final database - In the current implementation, a collection of 38 files (one for each country and set of formulas) containing initial and final tariffs on bilateral imports under each tariff reduction scenario. The final database forms the basis for the summaries and detailed analysis of the effects of formulas.

Final tariff rate - Tariff rate derived from an initial tariff by using a formula.

Formula - A mathematical relationship between initial and final tariffs. A formula frequently contains one or more parameters, each of which must be given a numerical value in order to use the formula.

Girard treatment for unbound items and missing bound rates - Under the Girard treatment of bound rates, unbound items are assigned a 'bound' tariff rate equivalent to twice the maximum applied rate. If a product is classified as bound, but the bound rate is missing, the bound rate is equivalent to the maximum applied rate. The maximum applied rate is calculated across all partners for that product. A product is regarded as being unbound if it exists in the IDB but not the CTS, whereas a product is regarded as being bound if it is present in both databases. (see Standard (non-Girard) treatment for unbound and missing bound rates)

Harmonisation - Term used to describe the reduction in levels and dispersion of tariffs (see compression). Also used in submissions by WTO members to refer to the convergence of tariffs to a low level within a sector.

Harmonised system (HS) - Harmonised Commodity Description and Coding System. A coded classification of traded products, managed by the World Customs Organisation.

High tariff items - In ITAS, items with initial applied rates greater than 15 per cent.

Industrial products - All products other than those classified as agricultural products in Annex 1 of the WTO Agriculture Agreement. Mostly classified in chapters 25 and above of the harmonised system (HS) of commodity classification. Industrial products include: manufactured products; mining products; timber and timber products; and fish and fish products. Excludes food processing (except fish processing). Also referred to as non-agricultural products.

Industrialised economies - WTO members that do not self-select their development status as a developing country. Typically they are economies with high per capita incomes, including most OECD countries. See table A.2 for the industrialised economies included as importers in ITAS.

Initial database - In the current implementation, a collection of 19 files (one for each country in the analysis) containing initial bound and applied ad valorem (or equivalent) tariffs on imports from each of their trading partners. For each country, tariffs are aggregated to the HS6 level and bindings are estimated for unbound items. The estimated tariffs in the initial database form the basis for the tariff reduction scenarios.

Initial tariff rate - The rate from which the new (final) rate is derived using a formula. Also called the base rate.

Integrated Database (IDB) - Database maintained by the WTO Secretariat detailing, among other things, tariffs applied by members and corresponding import volumes and values. The data are typically kept at a disaggregated commodity level and report bilateral flows.

Least-developed countries (LDCs) - Countries that the United Nations has identified as suffering from disadvantages that have hindered their economic development.

Members - Countries or customs territories that are members of the WTO.

Most-favoured nation (MFN) - WTO principle that a measure applied by a member affecting trade in a good (or service) should offer, and be applied in a way that offers, the same competitive opportunities to all other members.

MFN rate - The rate of duty for a product originating from an MFN supplier. A product originating from non-MFN suppliers may be subject to a different rate of duty from the MFN rate, depending on whether suppliers are from a territory outside of the WTO (may be higher), or covered by a GSP or GSTP scheme (often lower) or a customs union or free trade area (a final rate of zero for covered products). MFN rates are imposed at the line item level, which may be more disaggregated than the 6-digit level. In these cases, a corresponding rate for the 6-digit level is estimated. See estimated most-favoured-nation rate.

Prohibitive tariff - Tariff at a level that discourages the import of a product in any quantity.

Parameter - A component of a formula. The parameters in a formula must be given numerical values to derive a final tariff from an initial tariff.

Post-Uruguay Round bound rate - Final bound rate committed to by a WTO member either under the Uruguay Round agreements or under a more recent tariff concession in relation to the product concerned, whichever is later. Most commitments are binding by 1 July 2005, but some may be implemented as late as 2015.

Preferential rate - Tariff rate below the MFN rate. Under WTO rules, such preferential treatment can exist, for example, between countries that are part of a free-trade area or as part of the Generalised System of Preferences.

Power of the tariff - The power of the tariff is the direct effect of an applied tariff on the duty-paid price of a product. It is defined as one plus the applied tariff rate. For example, a product with a ten per cent applied tariff has a power of 1.10. The proportional change in the power of the tariff is equal to the proportional change in the duty-paid price before any market responses have occurred.

SAS - An integrated system of software products for data management, processing and analysis.

Standard (non-Girard) treatment for unbound items and missing bound rates - Under the standard (non-Girard) treatment of bound rates, unbound items and bound items with missing bound rates are assigned a 'bound' tariff rate equivalent to the maximum applied rate across all partners for that product (see Girard treatment for unbound and missing bound rates).

Unbound item - Item in relation to which a WTO member has not entered into a binding commitment.