Example Significant US Import Restraints

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Example Significant US Import Restraints

• Used by USTR at WTO TPRM to demonstrate
  transparency re US import restrictions
• Significant tariffs and TRQs on food and
  agricultural products including canned tuna,
  cotton, dairy products, peanuts, sugar and
  sugar-containing products, tobacco and tobacco
  products, beef, and ethyl alcohol
• Significant tariffs as well as quotas on certain
  textiles and apparel pursuant to the Uruguay
  Round Agreement on Textiles and Clothing (ATC)
  and bilateral textile agreements with non-WTO
  member countries
• Significant tariffs for a number of merchandise
  goods, including footwear and leather products
  glass and glass products watches, clocks, watch
  cases and parts ball and roller bearings
  ceramic wall and floor tile table and
  kitchenware costume jewelry pens, mechanical
  pencils, and parts and cutlery and hand tools.
• For 45 Input-Output industries we have calculated
  the percentage by which import restraints raise
  landed-duty-paid price.
• These percentages, which we refer to as wedges,
  are divided into two parts
• The first part is a tariff equivalent paid by
  importers, and
• The second part is the increase in the price
  received by foreign suppliers made possible by
  US-imposed quotas. This second part is often
  referred to as the export tax equivalent of the
  US quota regime .

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Estimated price gap
Price
US import tariff equivalent
SROW with export tax
DUSA with import tariff
DUSA
PD
SROW
PM
ROW export tax equivalent
Quantity of US imports
Q
0
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Significant US import restraintsPrice gaps, US
tariff equivalents, ROW export tax equivalent
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Removal of significant US import restraintsPrice
gaps and US output effects
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USAGE-ITC import effect

• For understanding the size of the import effect
  we begin with a version of the import-demand
  equation of a typical agent in USAGE-ITC
• xm z - ? ? Sd ? (1-Smarg) ? (pm - pd)
• where
• xm is the percentage change in the agents demand
  for the imported variety of a commodity
• pm and pd are the percentage changes in the
  basic prices of the imported and domestically
  produced varieties of the commodity (basic prices
  of imports are landed-duty-paid prices and those
  of domestic products are prices at the factory
  door or farm gate)
• z is the percentage change in the agents
  activity level
• ? is the agents substitution elasticity
  (Armington elasticity) between the imported and
  the domestically produced varieties
• Sd is the share of the agents expenditure on
  the commodity that is accounted for by the
  domestic variety and
• Smarg is the margin share in purchasers prices,
  i.e. the combined share of wholesale, retail and
  transport costs

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USAGE-ITC output effect

• For understanding the size of the output effect,
  we begin with a version of the import-demand
  equation of a typical agent in USAGE-ITC
• xd z - ? ? Sm ? (1-Smarg) ? (pd - pm)
• where
• xd is the percentage change in the agents demand
  for the domestic variety
• pm and pd are the percentage changes in the
  basic prices of the imported and domestically
  produced varieties of the commodity (basic prices
  of imports are landed-duty-paid prices and those
  of domestic products are prices at the factory
  door or farm gate)
• z is the percentage change in the agents
  activity level
• ? is the agents substitution elasticity
  (Armington elasticity) between the imported and
  the domestically produced varieties
• Sm is the share of the agents expenditure on the
  commodity that is accounted for by the imported
  variety and
• Smarg is the margin share in purchasers prices,
  i.e. the combined share of wholesale, retail and
  transport costs

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Removal of significant US import restraintsGross
State product effects, per cent
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Global CGE applications GTAP data and model

• Chinas WTO accession illustrates challenges of
  using static model to examine a dynamic
  relationship
• Australian FTA more standard application.
• Standard GTAP model though we update macro
  variables, trade data, and support data
  particularly for target countries.
• We sometimes link GTAP with USAGE, so that we can
  get more detailed US results.
• Planning to develop linkage between dynamic USAGE
  and dynamic GTAP.
• Many technical and data challenges.

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Chinas WTO Accessionnote marginal impact
above trend of tariff cuts
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Impact for China much bigger than for US
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What are some of the dangers of using a static
model in a dynamic setting?
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The marginal effects of the experiment are
swamped by dynamic trends.
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Australia FTA

• A more traditional setting for GTAP type model.
• Interesting to compare ITC assessment to CIE
  assessment
• CIE pushed edges of the analytical envelope.

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Estimated Bilateral US-Aus. Trade Flows
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Estimated US-World Trade Flows
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Range of possible net impacts
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Changes in US output and employment distribution.
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