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EU Trade Policies: Benchmarking Protection in a General Equilibrium Framework

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  • Antimiani, Alessandro
  • Salvatici, Luca

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Abstract

This paper deals with the EU’s trade policy with two objectives: on the one hand, we study the performance of EU's preferential agreements in granting their partners improved market access; on the other hand, we assess the extent to which domestic sectors are effectively protected. As far as the first objective is concerned, we construct bilateral indicators of protection based on the applied tariffs faced by each exporter. In order to do this, an index of trade policy restrictiveness is computed, using the Mercantilistic Trade Restrictiveness Index as the tariff aggregator. We also analyze the protection granted to each sector by the existing tariff structure. In this respect, we compute effective rates of protection that overcome the well-known theoretical shortcomings of the traditional definition (Output Effective Rate of Protection). The analysis is based on a comparative static applied general equilibrium model (Global Trade Analysis Project) and on the most recent version (release 6) of the related database. Results are obtained with reference to the situation existing in 2001, but the assessment of protection is carried out for the enlarged EU. Overall, it appears that notwithstanding the rhetoric about preferential access, several developing countries are the ones facing the highest hurdles in getting into the EU markets. Both bilateral protection and effective protection rates are broadly consistent with the evolution of the WTO negotiations: the strongest demands from developing countries in terms of market access in the EU have less to do with the overall applied MFN tariffs on industrial products than the reduction of distortions affecting trade in agriculture.

Suggested Citation

  • Antimiani, Alessandro & Salvatici, Luca, 2007. "EU Trade Policies: Benchmarking Protection in a General Equilibrium Framework," Economics & Statistics Discussion Papers esdp07034, University of Molise, Dept. EGSeI.
  • Handle: RePEc:mol:ecsdps:esdp07034
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    References listed on IDEAS

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    1. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    2. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 107-125.
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    6. Davis, Graham A, 1998. "The Substitution Problem in the Theory of Effective Protection," Review of International Economics, Wiley Blackwell, vol. 6(2), pages 307-320, May.
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    9. James E. Anderson & J. Peter Neary, 2003. "The Mercantilist Index of Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 627-649, May.
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    16. Bureau, Jean-Christophe & Jean, S Bastien & Matthews, Alan, 2006. "The consequences of agricultural trade liberalization for developing countries: distinguishing between genuine benefits and false hopes," World Trade Review, Cambridge University Press, vol. 5(02), pages 225-249, July.
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    Cited by:

    1. Antimiani, Alessandro & Conforti, Piero & Salvatici, Luca, 2006. "Assessing Market Access: Do Developing Countries Really Get a Preferential Treatment?," Working Papers 18870, TRADEAG - Agricultural Trade Agreements.
    2. Joelle Latina & Roberta Piermartini & Michele Ruta, 2011. "Natural resources and non-cooperative trade policy," International Economics and Economic Policy, Springer, vol. 8(2), pages 177-196, June.
    3. Alessandro Antimiani & Piero Conforti & Luca Salvatici, 2008. "Measuring Restrictiveness of Bilateral Trade Policies: A Comparison between Developed and Developing Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(2), pages 207-224, July.
    4. Cipollina, Maria & Salvatici, Luca, 2007. "EU and developing countries: an analysis of preferential margins on agricultural trade flows," Working Papers 7219, TRADEAG - Agricultural Trade Agreements.
    5. Janine Pelikan & Martina Brockmeier, 2008. "Tariff Aggregation and Market Access: An Empirical Assessment for Canada and the EU," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(4), pages 413-427, December.

    More about this item

    Keywords

    Protection; Commercial policy; GTAP model; International trade.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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