Tariff Equivalent

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Tariff Equivalent

A non-tariff barrier that has the same effect as a tariff. That is, a tariff equivalent discourages imports and promotes domestic industries and companies. Examples of tariff equivalents include import quotas or licensing restrictions. The GATT and the WTO have both tried to reduce tariff equivalents to promote more international trade.
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TABLE 4 Tariff-Equivalent Price Increases Due to NTBs (%) Sector EU NTBs US NTBs Merchandize average 21.5 25.4 Merchandize range 11.3-56.8 7.7-73.3 Service average 8.5 8.9 Service range 2.0-14.9 1.7-31.7 TABLE 5 Summary of Macroeconomic Annual Effect of TTIP Options (Millions of euros) Parameter Tariff Only Services Only Procurement Only Change in EU GDP 23,753 5,298 6,367 Change in US GDP 9,447 7,356 1,875 Parameter Less Ambitious Ambitious Comprehensive Comprehensive Change in EU GDP 68,274 119,212 Change in US GDP 49,543 94,904 Source: Ecorys (2009).
TABLE 4 TARIFF-EQUIVALENT PRICE INCREASES DUE TO NTBs (%) Sector EU NTBs US NTBs Merchandise average 21.5 25.4 Merchandise range 11.3-56.8 7.7-73.3 Service average 8.5 8.9 Service range 2.0-14.9 1.7-31.7 TABLE 5 SUMMARY OF MACROECONOMIC ANNUAL EFFECT OF TTIP OPTIONS (Millions of Euros) Parameter Tariff Only Services Only Procurement Only Change in EU GDP 23,753 5,298 6,367 Change in US GDP 9,447 7,356 1,875 Parameter Less Ambitious Ambitious Comprehensive Comprehensive Change in EU GDP 68,274 119,212 Change in US GDP 49,543 94,904 Source: Ecorys (2009).
The rate at which the "melting" is diminished is set according to the tariff-equivalent estimates of Francois (1999a) as discussed above.
Typically, authors use computable general equilibrium (CGE) models.(2) It is difficult to incorporate NTBs in these models, so researchers use so-called tariff-equivalent measures of NTBs in their quantitative analysis (that is, the level of tariff protection that yields the same levels of output and trade as the NTB).
I take the standard approach of imposing tariff-equivalent NTBs.
Second, NTBs are incorporated into the numerical analysis by way of tariff-equivalent NTBs.
Prices in the UK have been affected by import quota restrictions on non-ACP suppliers, and have, therefore, been relatively high, the tariff-equivalent of the pre-1993 quota restrictions being 34%.
Where an MFA quota is the binding restraint, the tariff-equivalent of the quota obviously will exceed the ordinary tariff, often by a sizeable amount.
This derivation can be used to evaluate the tariff-equivalent of the EC minimum import price.
The UK quantity restriction is clearly more restrictive than the tariff-equivalent level for a quota.
TABLE 4 Actual and optimal policy levels Actual UK quota 160,700 (tonnes) Tariff-equivalent quota 290,113 (tonnes) Actual EC minimum import price 93.00 ([pounds]/tonne) Price inclusive of optimal tariff 94.00 ([pounds]/tonne) Several points can be made about the results in Table 5.
Rubin equates transportation costs to tariff-equivalents. At $20 per barrel of oil, as seen in 2000, transportation costs were equivalent to a 3% U.S.