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Methodology










1. Introduction


The objective of this methodology section is to give a concise explanation of which numbers are reported in Market Access Map and how these are calculated. Non-technical language has been used as much as possible to ensure maximum readability. For an exhaustive note on the technical calculations performed in Market Access Map, please refer to the World Tariff Profiles – 2006, Technical Annexes A-C, pp. 179-204. Should you have any further questions, please do not hesitate to contact us at marketanalysis@intracen.org.

In this document, we cover the methodological aspects behind the different types of data available in Market Access Map:
Finally, we cover two methodological aspects not related to a particular data type: Harmonized System (HS) revisions and reference groups.

2. Applied tariffs


2.1 Ad valorem equivalents


In Market Access Map, all non-ad valorem (NAV) applied tariffs are converted to ad valorem equivalents (AVEs) by dividing the specific element of the NAV tariff, expressed as an amount per unit, by the value of the product per unit. In order to achieve a percentage value, the result is multiplied by 100. Thus, the general formula to calculate AVEs is the following:

tAVE = tNAV/UV * 100

with
tAVE the ad valorem equivalent tariff per unit
tNAV the non-ad valorem equivalent tariff per unit
UV the value of the product per unit, or unit value (UV)

As shown in table 1 below, the final composition of the AVE varies depending on the type of NAV tariff.

Table I: Non-ad valorem tariffs and ad valorem equivalent composition
NAV tariff category
Example
Final AVE composition
Specific tariff $2 per kg AVE of the specific tariff
Compound tariff 10% plus $2 per kg Ad valorem component added (or subtracted) from the AVE of the specific component
Mixed tariff 30% or € 2 per kg, whichever is highest AVE of the specific component subject to the conditional choice expressed in the tariff
Technical tariff 9% on dairy spreads with a fat content between 39% and 60% Not calculated due to a lack of information on technical product specifications










 
In addition, Market Access Map also takes  applied tariff rate quotas (TRQs) into account when calculating AVEs (see section 4). An essential part of the AVE calculation is the way in which we calculate the UV for a specific product. In Market Access Map, there are two methodologies for calculating UVs:
  • World Tariff Profile (WTP) method
  • World Unit Value (WUV) method
 
NOTE
In Market Access Map, AVEs of applied tariffs are only available when ITC (MAcMap) is selected as the data source.

2.1.1 World Tariff Profile methodology

 
The World Tariff Profile (WTP) is a methodology that aims to calculate the most accurate UVs at the highest possible level of product detail, while accounting for data constraints. Based upon the available data for each product at the national tariff line (NTL) the WTP methodology will select one of 3 UV calculation approaches. In descending order of preference, these are:
  • Unit values based on country imports at the NTL
  • Unit values based on reference group imports at the HS6 level
  • Unit values on world imports at the HS6 level
Below, we discuss these calculation methods in more detail.
 
2.1.1.1 Unit values based on country imports
 
To calculate UVs based on country imports, for a product at the NTL, the import value (VA) from a specific trade partner A will be divided by the quantity imported from that partner (QA) to give a specific unit value (UVA). Thus, the formula to calculate the UV specific to a single NTL product for country A is:
 
UVA = VA/ QA
 
This process is repeated for all trade partners to result in a series of UVs for our NTL product: UVA , UVB , UVC , ...
 
Ensuring reliability
In order to increase the robustness of UV calculations, both missing values and extreme values are eliminated from the dataset. A missing value implies a lack of information on import value and/or quantity for a certain product and partner, making the calculation of the corresponding UV impossible. In addition, extreme values, defined as those values falling outside the 1st and 3rd quartiles of the UV series’ distribution, are eliminated. These outliers could be the result of niche products, measurement errors or reporting errors and may significantly affect the result of the UV calculation.
The WTP aims to calculate UVs at the highest possible detail and accuracy, subject to data constraints. As such, WTP will select the first method for which the corresponding UV series includes at least three observations. If there is insufficient data to use the first method, the WTP will automatically attempt to apply the next approach. This mechanism is displayed graphically in Figure I below.
 
Figure I: World Tariff Profile unit value calculation approach
 
As mentioned in the box above, if a minimum of three UVs remain at the end of the elimination process, the series as a whole is retained and the AVE is calculated by using the median UV of our series. If fewer than three values remain in the UV series, there is insufficient data to use the country imports method and the WTP methodology will apply the next approach.

2.1.1.2 Unit values based on reference group imports

In this case, UVs are calculated according to the import data for this product as reported by a reference group of countries to which the country applying the NAV tariff belongs (for more detail, see section 8 on reference groups below). Because product codes are only harmonized from the 6-digit level of the Harmonized System (HS), the UV series will be constructed at this level of aggregation (HS6). For each member of the reference group (X) and for the HS6 digit product, the import value (VX,A) for member X from a specific trade partner A will be divided by the quantity imported from that partner (Q X,A) to give a specific unit value (UVX,A). Thus, after the elimination process, we get a separate UV series for each of the countries in the reference group. Finally, these multiple UV series are added together in one basket to form a single series of UVs.

Note that both the reduction in the level of product detail and the expansion to a reference group results in a much larger combined UV series and thus relaxes the data constraints. However, this approach loses accuracy by combining import data from all countries in the reference group to approximate the UV for a product imported by a single country from that group.

Now, if the combined UV series is retained after the elimination process, the AVE is calculated by dividing the specific component of the non-ad valorem tariff the country applies to the NTL product by the median of the reference group combined UV series. Once again, if fewer than three values remain in the UV series, there is insufficient data to use the reference group method and the WTP methodology will apply the next approach.

2.1.1.3 Unit values based on world imports

The final UV calculation method follows largely the same process. However, in this approach the import data used to calculate the UVs is expanded from those countries in the reference group to the entire world. Instead of approximating the import values and quantities for a specific country, this method combines import data from all countries to serve as the UV for a product.
 

2.1.2 World Unit Value methodology

 
In the World Unit Value (WUV) method for calculating AVEs, the UVs are simply calculated using the world imports, regardless of data availability at more detailed levels. The WUV method addresses different analytical needs, as this method ensures cross-country consistency at the expense of a high level of detail.
When selecting products at the NTL, the WUV methodology will calculate AVEs using the UVs from the corresponding HS6 group.
 
NOTE
If you cannot select an AVE methodology in your query, Market Access Map uses the WTP approach by default.
 
 

2.2 Tariff aggregation

 
Tariff and trade data are recorded by governments at the national tariff line (NTL) level. However, in Market Access Map, many calculations and comparisons are conducted at higher product levels (HS6-HS4-HS2). In order to do this, Market Access Map aggregates applied tariffs using one of the following aggregation methods:
 
NTL to HS6 aggregation is done by calculating the simple average of all underlying NTL rates. Due to tariff preferences, there can be more than one applicable rate for a partner country. Therefore, this calculation can be done using either the lowest or the highest available NTL rates. You can choose the desired aggregation method by selecting either ‘minimum rates’ or ‘maximum rates’. If no tariff preference is applicable, the most favoured nation (MFN) tariff or general tariff is used.
 
NOTE
If you cannot select the tariff rate for aggregations, Market Access Map uses minimum rates by default.
 
HS6 to HS4 and/or HS2 aggregation can be done using either a simple average or an average weighted by import values. A weighted average ensures that products with a high share of total import value get a higher weight in the aggregation. Formally, a weighted average can be expressed as: 
 
 
where
i = 1 to n products at the HS6 level
THS4 is the applied tariff at HS4 level (identical for HS2)
wi is the weight for product i
 
In Market Access Map, you can choose between 3 different trade weighting methods: 
  • Bilateral imports weights tariffs according to the country’s trade pattern with its partners
  • Reference group imports weights tariffs according to the trade pattern of the reference group to which the country belongs;
  • World imports weights tariffs according to world imports data.
Therefore, calculating average tariffs applied to a product at either the HS4 or HS2 digit level is a two-step process. First, tariff rates are aggregated from the NTL to the HS6 digit level using a simple average of either minimum or maximum rates. Then, HS6 digit tariffs are aggregated to HS4 or HS2 digit level using either a simple average (as a second step) or one of the three trade weighting methods described below.
 

2.2.1 Trade weighting using bilateral imports

 
In order to accurately display the level of protection for a product group in a country, when using the bilateral imports method, the underlying tariff rates are weighted according to the country’s trade pattern with its partners. Therefore, products with high import values will get a higher weight in the aggregation. Formally, the calculation of bilateral weights can be expressed as:
 
 
where
 is the weight for product i
Vi is the value of product i imported from the world by the importing country
 reflects the value of the country’s total imports
 
It is important to note that this method suffers from an tariff or endogeneity bias, as the import values serving as weights depend on the tariffs themselves. That is, a high tariff rate for a certain product may reduce the import value for that product, lowering the tariff rate’s contribution to the average tariff that is supposed to reflect the overall protection level of the product group. A low tariff produces the opposite effect, contributing disproportionally more to the aggregate. As a result, using bilateral import values as weights may lead to a biased estimation of a country’s protection level. In Market Access Map, you can control for this endogeneity bias by trade weighting according to either reference group imports or world imports. 
 

2.2.2 Trade weighting using reference group imports

 
We can control for much of the endogeneity bias in our aggregation by weighting the underlying tariffs by the import values of a reference group rather than those of the country itself. The reference group’s weight of a product at the HS6 digit level is calculated as the value of the product as imported by the reference group divided by the value of total imports from the reference group.  Thus, the weights are identical for all countries within the same group. This can be expressed in the following formula: 
 
 
where
  is the weight for product i calculated using reference group imports
Mi is the value of product i imported from the world by the reference group to which the importing country belongs
 reflects the value of total imports of the reference group. 
 

2.2.3 Trade weighting using world imports

 
In this case, tariffs are aggregated using world imports. Thus, the weights are equal for any country. This approach is therefore recommendable for analyses involving cross-country comparison.
 
 
NOTE
If you cannot select a trade weighting methodology in your query, Market Access Map uses reference group imports by default.
 
As you can see in Table II below, depending on the selected product level, AVE methodology, tariff rate for aggregation and aggregation method, users of Market Access Map can select up to 22 different values for an applied tariff AVE (coloured green). The specific choice depends on the objective of your analysis.
 
Table II: Ad valorem equivalents of applied tariff rates
 
 

3. Final Bound rates

 

3.1 Ad valorem equivalents

In Market Access Map, all non-ad valorem (NAV) final bound tariffs are converted to ad valorem equivalents (AVEs) using the World Tariff Profile (WTP) methodology. For details on the WTP methodology see section 2.1.1 above.
 

3.2 Tariff aggregation

NTL to HS6 aggregation of final bound rates is based on a simple average of the underlying ad valorem equivalents (AVEs).
 
HS6 to HS4 and HS2 aggregation is done by calculating the simple average of the underlying HS6 products. As opposed to the case with applied tariffs, trade weighted averages are not calculated for final bound rates.
 
For final bound rates, depending on the selected product level, AVE methodology and aggregation method, Market Access Map may calculate one of 3 different values for an applied tariff AVE (coloured green in the Table III below). 

Table III: Ad valorem equivalents of bound rates

 

4. Applied tariff rate quotas



4.1 Ad valorem equivalents

In Market Access map, the calculation method for ad valorem equivalents (AVEs) of applied tariff rate quotas (TRQs) takes into account the inside quota tariff rate (IQTR), outside quota tariff rate (OQTR) and the quota volume.
 
The choice between the IQTR and the OQTR depends on the quota fill rate. If the quantity imported is smaller than 80% of the quota volume, the AVE is calculated based upon the IQTR. Once the import quantity exceeds 98% of the quota volume, the AVE is calculated based upon the OQTR. Finally, if bilateral imports in the preceding year fall between 80 and 98% of the quota volume, the AVE of the tariff rate quota is calculated as the simple average of the IQTR and OQTR AVEs. Fill rates are periodically calculated using the latest available ITC (Trade Map) yearly data. 

Table IV: Ad valorem equivalents of tariff rate quotas

4.2 Tariff aggregation

The aggregation of applied tariff rate quotas from national tariff line (NTL) to HS6, HS4 and HS2 levels follows the same procedure as for other applied tariffs. See section 2.2 above for more details.
 

5. Non-tariff measures


Market Access Map provides information on non-tariff measures (NTMs) by product at the most detailed national tariff line (NTL) level and by type of measure. Measure types and broad classes (so-called chapters) are based on the multi-agency classification of NTMs (as revised in 2012). An overview of this classification is given in Figure II below.  In Market Access Map, information on NTMs is compiled from official documents concerning regulations in force for those countries included in the database (see Data availability). The first version of the NTM classification was used in 2008 and, since then, it has been revised in 2009 and 2012. Users who want to know more about detailed definitions of the measures adopted in the different revision of the classification, can see the full documents using the following links:

Figure II: Chapters of the NTM classification (2012 revision)


NTM data is collected for chapters A through I, as well as O (rules of origin) and P (export related measures). 


6. Trade statistics


Calculations of UVs as well as tariff aggregations rely on trade statistics for trade values and quantities. In Market Access Map, trade statistics originate from one of the following databases:
 

6.1 UN Comtrade-ITC Trade Map database, as used in Market Access Map

This database contains yearly trade flows (export and import) in US dollars at the national tariff line (NTL). The database contains direct data in the native Harmonized System (HS) revisions. Unit value (UV) calculations rely on this database.
 

6.2 ITC Normalized Trade Matrix

This database provides yearly import flows in US dollars, containing direct data complemented by mirror data if direct data is not available. The most detailed product level is HS 6-digit; data aggregated to higher levels are also available. The database is converted to all HS revisions by summing up trade flows in case new codes contain several older codes or by equal repartitioning in case a product is split into several new products. 
 

6.3 Reference periods for trade data

  • Unit value calculations: The reference year of import data for the calculation of UVs is based on the three-year period starting 4 years prior to the year of tariff data collection, e.g. 2010, 2011 and 2012 are used for calculations related to 2014 tariff data. The UV reference period data is sourced from the UN Comtrade–ITC Trade Map database.
  • Trade weighting: the reference year used in trade weighting when aggregating tariffs from HS6 to HS4 and HS2 product level is currently based on yearly import data from 2009. The data for the trade weighting reference period is sourced from the ITC Normalized Trade Matrix. Users cannot change the data source or the reference year. The reference year is updated periodically.
  • Applied tariff rate quotas: AVEs are calculated using yearly bilateral import quantities at NTL sourced from the latest available records of the UN Comtrade–ITC Trade Map database, e.g. 2013 imports may be used for the calculation of the AVEs of TRQs applied in 2014.

7. Market Access Indicators

 
The application provides a set of indicators that can be used to analyze market access conditions applied to various product aggregates. These indicators and their calculation methodology are explained in the following table:
 
 
Indicators Description/Calculation methodology
Average of MFN tariffs
Weighted average of MFN tariffs at the National Tariff Line level using the Reference group imports trade weighting method.
 
This method uses maximum rates, see section 2.2 Tariff aggregation.
Average of preferential tariffs
Weighted average of preferential tariffs at the National Tariff Line level using the Reference group imports trade weighting method.
 
This method uses minimum rates, see section 2.2 Tariff aggregation.
Average of final bound rates (simple avg) Simple average of all underlying final bound rates at the National Tariff Line.
Share of tariff lines with quota rates
Share of NTL products lines subject to tariff-rate quotas.
 
Formula: 
 
Where:
  • Sap is the share of NTL products lines subject to tariff-rate quotas for country in the product sector p
  • Dis a dummy variable that equals 1 for each NTL product i subject to TRQs
  • Nap is the total number of NTL product lines for country a in the product sector p
Share of NTL that are non-ad valorem
Share of NTL products lines subject to non-ad valorem duties.
 
Formula: 
 
Where:
  • Sa is the share of NTL products lines subject to non-ad valorem duties for country a
  • Dis a dummy variable that equals 1 for each NTL product i subject to a non-ad valorem duty
  • Na is the total number of NTL product lines for country a
Share of NTL that are duty free
Share of NTL products lines that are duty free, i.e.  the duty rate is equal to 0%.
 
Formula: 
 
Where:
  • Sa is the share of NTL products lines that are duty free for country a
  • Dis a dummy variable that equals 1 for each NTL product i that is duty free
  • Na is the total number of NTL product lines for country a
Share of NTL that are international tariffs peaks
Share of international tariff peaks defined as those applied tariffs with an ad valorem equivalent above 15%.
 
Formula: 
 
Where:
  • Sa is the share of NTL products lines that are international tariff peaks for country a
  • Dis a dummy variable that equals 1 for each NTL product i classified as an international tariff peak
  • Na is the total number of NTL product lines for country a
Share of NTL that are national tariffs peaks
Share of national tariff peaks defined as those applied tariffs that are 3 times (or more) higher than the national tariff average.
 
Formula: 
 
Where:
  • Sa is the share of NTL products lines that are national tariff peaks for country a
  • Di is a dummy variable that equals 1 for each NTL product i classified as a national tariff peak
  • Na is the total number of NTL product lines for country a
 

8. Harmonized System revisions


Market Access Map uses the Harmonized System (HS) to classify goods. Depending on the query, Market Access Map can display data in two ways:
  • In the native HS revision (the HS revision in which the data was reported by a country in a given year)
  • In the combined HS (list of products containing codes from all HS revisions)
Native revisions are used when a single importing country and a single year is selected in the query definition. Here, users first specify the importing country and the year. This fixes the product selection menu on the native revision of the selected country in the selected year. The results will be displayed in the native revision which will be reported in the query overview above the results table. Specifically, in Market Access Map, native revisions are used in:
  • All sub-modules of the “Quick Search” (except Compare tariffs – Exporter view)
  • All sub-modules of “Raw data download”
The combined HS revision is used when several importing countries can be selected simultaneously, i.e. in all sub-modules of the “Advanced analysis” and in Compare tariffs – Exporter view. At the product selection stage users now select products using the combined HS nomenclature (thus different product codes referring to the same product can be selected). After the desired products have been selected, Market Access Map automatically converts the corresponding codes to a single revision, namely to the native revision of the selected country.
 
As Market Access Map automatically displays the corresponding native revision or a combination of revisions whenever necessary, users do not need to know which HS revision is used by what country. In case of interest, the HS revisions of all countries can be consulted in the Data availability sub-module.
 
Figure III: Data availability

 

9. Reference groups


A country reference group is a group of countries that share similar characteristics with the importing country in question. The 10 reference groups used in Market Access Map are based on a hierarchical clustering analysis that considers the following variables:
  • The Human Development Index (HDI)
  • Population
  • GDP (in terms of purchasing power parity)
  • GDP per capita (in terms of purchasing power parity)
  • Agricultural trade balance
  • Industrial trade balance
  • Share of agricultural products in imports
  • Share of industrial products in imports
  • Average of import tariffs for industrial products
  • Average of import tariffs for agricultural products
In general, using a reference groups in the calculation of unit values (UVs) or in the aggregation of tariffs reduces the endogeneity bias, e.g. by retaining prohibitively high tariffs in the calculations.
 


 
 
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Your present account does not give you access to Advanced analysis, Raw data download and Options modules.
To access the full version, please see the table below and consult the subscription options and fees.
 
Features Registered users
(free)
Registered users
(subscription)
Quick search: Data at the national tariff line level on tariffs applied by more than 190 importing countries and basic comparative statistics.
Non-tariff measures, such as technical regulations, SPS and custom formalities, trade remedies as well as rules and certificates of origin.
yes yes
Advanced analysis: Comparative analysis of multiple products, markets and suppliers as well as reduction simulations for applied tariffs and bound rates. no yes
Raw data download: Download of large datasets. no yes
Country analysis: Tariff averages for broad economic sectors; tariff&trade indicators; trade agreements over time. yes yes
Options: User- defined product and country groups, selectionof default setting such the AVE methodology. no yes
Support materials: User guide, glossary, video tutorials and useful links yes yes
   
For more information, please contact us by mail at marketanalysis@intracen.org

The Market Analysis and Research team.