Reports
Discussion Papers
No.595 Measuring the Usage of Preferential Tariffs in the World
by Kazunobu HAYAKAWA , Fukunari KIMURA, Nuttawut LAKSANAPANYAKUL
April 2016
ABSTRACT
The preference utilization ratio, i.e., the share of imports under preferential tariff schemes out of total imports, has been a popular indicator for measuring the usage of preferential tariffs vis-à-vis tariffs on a most-favored-nation basis. A crucial shortcoming of this measure is the data requirements, particularly for import value data classified by tariff schemes, which are not available in most countries. This study proposes an alternative measure for preferential tariff utilization, termed the “tariff exemption ratio.” This measure offers the unique advantage of needing only publicly available data, such as those provided by the World Development Indicators, for its computations. We can thus calculate this measure for most countries for an international comparison. Our finding is that tariff exemption ratios differ widely across countries, with a global average of approximately 50%.
Keywords: Preferential trade agreements; general system of preferences; utilization of preferential arrangements; tariff revenues
JEL classification: F15, F53
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