“past” and the “present.” These figures take into account preferential rates applied between FTA partners.
Tariffs from the early phases of the Canada-US Free Trade Agreement are built into the “past” estimates.
NAFTA, Australia-US FTA, and Singapore-US FTA tariffs are built into the “present” estimates. Taking
these preferential agreements into account, the weighted average actual tariff faced by the United States in
the “past” was 9.4 percent; by contrast, the “present” rate is 3.9 percent, which is slightly more than half
the “present” MFN-only rate.
We present average Tokyo and Uruguay Round bound rates for the 17 major US partners in
columns V and VI of table 1. For Mexico and Venezuela, GATT accession bindings are used for “past”
rates because these two countries did not join the GATT until after the Tokyo Round. For China and
Taiwan, World Trade Organization (WTO) accession bindings are used for “present” rates because the
two did not join the GATT/WTO until after the Uruguay Round. For lack of a better alternative, we
use “past” MFN applied rates for China and Taiwan as stand-in values for the “past” bound rates of these
countries. The weighted average bound tariff faced by the United States in the “past” (i.e., the Tokyo
Round) was 17.9 percent; the “present” rate (i.e., the Uruguay Round) is 13.5 percent. With regard to
both the Tokyo and Uruguay Round scenarios (Scenarios 1 and 2) we are considering only the change
in tariff rates resulting from the negotiations. The negotiations covered several topics other than tariffs,
such as the removal of agricultural quotas and the creation of the WTO itself, which promoted trade;
however, progress on these subjects is nearly impossible to quantify. The estimates for Scenarios 1 and
2 should therefore be considered as low-end estimates of the impact of the Tokyo and Uruguay Round
negotiations.
Columns VII and VIII of table 1 show our estimates of NTB rates in the “past” and the “present.”
The present rates are taken from Kee, Nicita, and Olarreaga (2005). For the “past” rates we adopt a
patchwork approach, extrapolating NTB liberalization over a 15-year period from Kee, Nicita, and
Olarreaga (2005) and several country-specific sources. We estimate a large fall in the ad valorem
equivalent rate of NTB protection faced by the United States, with a “past” rate of 20.5 percent and a
“present” rate of 10.3 percent.7 Many scholars have commented on the increasing importance of NTBs
in the overall profile of trade protection. Despite our estimate of a substantial fall in the level of NTB
protection facing the United States, our figures are still consistent with the view that NTB protection
currently plays a more prominent role in the overall profile of protection, since the present average NTB
rate faced by the United States (10.3 percent) is more than twice the average actual tariff rate faced by the
United States (3.9 percent).
In table 2, we display the average ad valorem cost of transportation for US imports from the 17
7. We assume a 51.1 percent increase in the rate of NTB protection for all countries and sectors from “past” to “present”;
the method behind this figure is explained in appendix A.