Detailed Trade Policy Simulations Using a Global General Equilibrium Model

For the majority of studies using global general equilibrium models, the sectoral detail pro-vided by the GTAP Data Base would be sufficient. However, analyses aimed at supportingtrade negotiations or detailed trade policy regulations often require modeling at the tariff lineor Harmonized System (HS) level. We bridge this gap by providing an automated data andmodel workflow that allows GTAP-based analyses at the HS level. In this paper, we illustrateand explain the use of this workflow by first carrying out a data procedure where we re-defineGTAP sectors related to the auto industry—though the workflow is flexible enough to re-defineor disaggregate any GTAP sector into its HS associated components. Then, we use an extendedstandard GTAP version 7 (GTAP-HS) model to carry out explicit modeling of the additionalHS-level detail. Both data and model workflow that accompany this paper are available assupplementary materials. This new framework facilitates simulations of trade policy at the HSlevel, thereby allowing researchers to capture more nuances on the trade side. This is especiallyimportant when tariffs are highly differentiated across the HS components, which is the casefor the automotive sector—tariffs may be relatively low on auto parts (intermediate goods), buthigher on assembled vehicles (final goods)