Estimations of Tariff Equivalents for the Services Sectors

Methodological issues arising with the estimation of tari_x001b_ equivalents of barriers to services trade are of high policy relevance. These equivalents are extensively used to compute welfare gains and resource reallocation associated with the partial liberalization of the sector and any measurement error will strongly a_x001b_ect the estimated gains. Using the most recent release of the GTAP (2004), we rely on the so-called quantity based methods to derive tari_x001b_ equivalents from a gravity equation estimated at the sectoral level, based on the importer _x001c_xed e_x001b_ects coe_x001e_cients, for nine services sectors and a large set of countries. Beyond providing these tari_x001b_ equivalents, the objective of the paper is threefold. Firstly, we estimate trade equations in cross section and improve on the methodology of Park (2002) to compute ad valorem equivalents of barriers to services trade. Secondly we ask whether relying on a cross section rather than on panel data leads to di_x001b_erences in estimated equivalents. Lastly, we confront estimations performed with reconstructed data and actual data. We conclude that while utilizing reconstructed data (such as GTAP) a_x001b_ects the results, the equivalents obtained characterize properly the magnitude of protection in services in the various countries, though with larger deviations for developing economies.