A Practical Guide to Trade Policy Analysis.
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1 A Practical Guide to Trade Policy Analysis A joint UNCTAD WTO publication
2 Table of contents 1. Analyzing trade flows 2. Quantifying trade policy 3. Analyzing bilateral trade using the gravity equation 4. Partial equilibrium trade policy simulation 5. General equilibrium 6. Analyzing the distributional effects of trade policies
3 Diversity of approaches Chapters 1 and 2 present methodologies for the descriptive analysis of a country s trade performance and its trade policy Chapter 3 presents the work horse approach for ex post analysis of trade and trade policies Chapters 4 to 6 discuss three different ex ante approaches that can be used to assess various effects of trade policies
4 If you want to assess a country s trade performance Chapter 1 (Analyzing trade flows) will: Help with key measurement issues (reliability, missing values, etc.) List the main indices used to assess the structural, sectoral and geographical composition of trade flows Suggest how to display trade data graphically in a clear and appealing way
5 If you want an analytical description of a country s trade policy Chapter 2 (Quantifying trade policy) will: Show how to present a tariff profile Explain how to calculate import coverage ratios and ad valorem tariff equivalents of NTMs Suggest how to assess the overall trade restrictiveness of a trade policy stance
6 If you are interested in the effect of NTMs on trade (ex post) Chapter 3 (Analyzing bilateral trade using the gravity equation) will: Explain the logic of the gravity equation Instruct on how to build a gravity database Present various estimation methods of the gravity equation Explain how to handle zero trade flows
7 If you wish to assess (ex ante) the effect of a sectoral tariff reform Chapter 4 (Partial equilibrium trade policy simulation) will: Explain how and when to use four readymade PE models: SMART (single market analysis tool) Global Simulation Analysis of Industry Level Trade Policy (GSIM) Tariff Reform Impact Simulation Tool (TRIST) Agricultural Trade Policy Simulation Model (ATPS)
8 If you want to estimate (ex ante) the potential effects of the Doha round Chapter 5 (General equilibrium) will: Explain how GE models work and why you may wish to use one to simulate the effect of Doha proposals But not provide the tools and the techniques to actually run an economically meaningful GE model
9 If you want to estimate (ex ante) the distributional effects of a trade reform Chapter 6 (Analyzing the distributional effects of trade policies) will: Explain how to think about the transmission of trade shocks to individual households in simple terms List the data you will need Introduce the statistical techniques used to deal with household survey data
10 Into the Practical Guide
11 Where is the data? Detailed instructions on what kind of data each database has and how to access it: WTO IDB CTS UNCTAD TRAINS World Bank WITS ITC MACMAP World Bank Trade, Production and Protection Many other databases
12 Concepts / Constructions / Examples Tariffs Applied, MFN, bound Specific duties, ad valorem Show how to compute tariff profiles Simple / weighed Peaks / dispersion Effective protection
13 Illustration of basic concepts
14 Simple, graphical intuitions
15 Trade related indices Trade over GDP Import content of exports and external orientation Trade in intermediate goods Offshoring Vertical specialization Intra industry trade Export diversification Regional Trade
16 Step by step approach
17 Step by step approach (ct d) Plots / interpretation STATA commands
18 Advanced topics: gravity How to set up a gravity database and estimate the model Step by Step approach with examples: Where to get the data Basic theoretical foundations Setting up the model Running the model in STATA Understanding the results Translating the results into policy
19 Advanced topics: distribution
20 How to illustrate the results
21 A user friendly website and DVD STATA do files for all applications, exercises and Figures / Tables of Chapters 1, 2, 3 and 6 are provided Solutions to applications and exercises of Chapter 4 are also provided Datasets are also provided All the material is easy to download (with a little help from the friendly user guide)
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