TN/MA/S/14
Page 13
Organization
TN/MA/S/14
25 January 2005
(05-0308)
Negotiating Group on Market Access
statistical indicators related to unbound tariff lines
Note by the Secretariat[1]
I. INTRODUCTION
1. Following the request of the Negotiating Group on Market Access concerning the issue of unbound tariff lines, the Secretariat did some analysis on the tariff profiles of unbound tariff lines and on the issue of partial bindings. The data are taken from the Consolidated Tariff Schedules (CTS) and the Integrated Database (IDB). As the data in the IDB does not cover all Members, applied rates from the IDB were supplemented with UNCTAD data for 20 Members.
2. The product coverage is limited to non-agricultural products, i.e. all products not included in the WTO Agreement on Agriculture. The definition of HS subheadings considered as non-agricultural is given in Table 1 for the HS 1992, HS 1996 and HS 2002 nomenclatures. This definition has been used regularly in applications and analysis using IDB or CTS data. HS Chapters 98 and 99, which are reserved for special uses of the Contracting Parties to the HS Convention were excluded in the analysis.
3. The document is structured in two parts. In the first part, the extent of the binding coverage and, in particular, the issue of partial binding at the level of HS 6-digit subheadings is analysed. In the second part, the tariff profile of MFN applied rates is analysed for all unbound HS subheadings and its importance in terms of import flows is shown.
II. Binding coverage
4. Members have made commitments at different levels of detail in their tariff schedules. At the most global level, there are commitments on ceiling bindings that specify a certain rate for all products, sometimes supplemented with exceptions for rates that may be higher or lower than the general ceiling binding. At the next level, there are bindings that are expressed in terms of HS Chapters (2-digits), headings (4-digits) or subheadings (6-digits). In all these cases, one can easily establish the binding coverage as the percentage of subheadings that are fully bound. This is done by dividing the number of bound subheadings by the total number of standard HS subheadings. This approach has been used in various documents and publications issued by the Secretariat since 2002, whenever those were based on the CTS database. Table 2 gives an overview of the binding coverage for all Members based on the CTS.[2]
5. When binding commitments are made by Members at the tariff line level, i.e. more disaggregated than the HS subheadings, the situation is more complicated. If one or several tariff lines, falling under one subheading, are listed in a schedule as bound, one cannot know a priori whether the whole subheading is bound or not, without having a close look at the tariff line descriptions. If the products covered in these tariff lines cover all the products falling under the subheading, then the subheading is fully bound. Otherwise, the subheading is only partially bound.
6. The CTS database was not designed to identify clearly and for all cases, whether subheadings are fully or only partially bound. Therefore, the Secretariat had to use the following approach for its calculation of the binding coverage. Any HS subheading is considered bound if at least one tariff line within that subheading is bound. Otherwise, the HS subheading is considered unbound The calculated binding coverage refers to the number of HS subheadings containing at least one bound tariff line divided by the respective total number of HS subheadings of the corresponding version of the HS nomenclature for non-agricultural products. Thus, there is a certain overestimation of the binding coverage for those Members with partially bound subheadings.
7. With the establishment of the link between the CTS final bound tariffs and the IDB MFN applied tariffs, which always cover the whole product spectrum, it has been possible to identify precisely the number of subheadings which are only partially bound. Table 2 shows the number and percentage of partially bound subheadings for those Members for which a link has been established and which are not fully bound.
8. As can be seen in Table 2 for the sample of Members for which data are available, the occurrence of partial binding is quite widespread but not very significant for most Members. In most cases, the percentage of partially bound subheadings is equal to or less than two per cent of all non- agricultural HS subheadings. In only four out of the 34 Members shown in the table does one find a higher share, going up to seven per cent in the case of one Member.
9. While this is not a complete picture of partially bound subheadings, this preliminary analysis shows that the share of those subheadings is very low for most Members. For some Members one may need to pay special attention if the binding coverage is used as an indicator that may have some implications for negotiating modalities. It would be important to establish clear technical guidelines to ensure transparency in the calculation and application of technical indicators.
Tariff profile of unbound tariff lines and corresponding import flows
10. For the tariff profile of unbound tariff lines, one has to first establish the tariff lines that should be considered as unbound. For those Members for which IDB/CTS linked files have already been established, all unbound tariff lines including those from partially bound subheadings have been taken into consideration. For the other Members, only tariff lines from fully unbound subheadings have been taken into account.
11. Table 3 shows for all Members, the binding coverage, the average bound duty, the average MFN applied duty for bound tariff lines and the average MFN applied duty for unbound tariff lines. The tariff averages are calculated on the basis of pre-aggregated HS 6-digit duty averages for bound and applied duties. For the calculation of HS 6-digit duty averages, only ad valorem duties, including AVEs if supplied by the Member, are used. Unbound tariff lines have not been included in the calculation of bound duty tariff averages. The number of non-ad valorem HS subheadings is shown in Table 4. It shows the incidence of non ad valorem duties in applied and unbound tariff lines.
12. Calculations referring to bound data are done on the actual nomenclature of the concession schedule database itself. However, for a few cases in which the nomenclature used between the applied and the bound duty differs, a "rough upward concordance" from the former nomenclature to the more recent nomenclature was done at the HS subheading level, using the concordance table for the two nomenclatures. Specifically, these cases refer to Ecuador and SACU Members, where the concession schedules are in HS 1992 while MFN applied data for 2001 are in HS 1996. Any subheading in HS 1996 is considered bound if in the HS 1992 to HS 1996 concordance table, at least one HS 1992 subheading in the concession corresponds to it. Otherwise, the subheading is considered as unbound. Subsequent calculations were carried out as described above.
13. Table 5 shows a frequency distribution of the unbound MFN applied rates for different tariff rate ranges. The distribution is shown for HS subheading averages and for the actual tariff line rates. In addition, for those Members for which import data are available, the imports falling under the respective duty ranges are shown as well. It has to be kept in mind that some imports enter under preferential rates and do not face the sometimes very high MFN duties.
Table 1 Definition of non-agricultural products in HS 1992, HS 1996 and HS 2002 nomenclatures
Chapter 03,
Headings
05.09, 15.04, 16.03-16.05,
Subheading 2301.20,
Chapter 25 to Chapter 97
except the following HS headings or subheadings:
2905.43
2905.44
33.01
35.01 to 35.05
3809.10
3823.60
41.01 to 41.03
43.01
50.01 to 50.03
51.01 to 51.03
52.01 to 52.03
53.01
53.02 / Chapter 03 and
Headings
05.09, 15.04, 16.03-16.05,
Subheading 2301.20,
Chapter 25 to Chapter 97
except the following HS headings or subheadings:
2905.43
2905.44
2905.45
33.01
35.01 to 35.05
3809.10
38.23
3824.60
41.01 to 41.03
43.01
50.01 to 50.03
51.01 to 51.03
52.01 to 52.03
53.01
53.02 / Chapter 03 and
Headings
05.09, 15.04, 16.03-16.05,
Subheading 2301.20,
Chapter 25 to Chapter 97
except the following HS headings or subheadings:
2905.43
2905.44
2905.45
33.01
35.01 to 35.05
3809.10
38.23
3824.60
41.01 to 41.03
43.01
50.01 to 50.03
51.01 to 51.03
52.01 to 52.03
53.01
53.02
Note: As a result of the HS 1996 changes, the subheading 3302.10 in the HS 1996 nomenclature contains both agriculture and non-agricultural products. Likewise, as a result of the HS 2002 changes, the subheadings 2939.11, 3822.00 and headings 41.01 to 41.03 in the HS 2002 nomenclature also contain both agricultural and non-agricultural products. As a working definition and for sake of simplicity only, in this document (and also in all IDB software applications), the subheadings 2939.11, 3302.10 and 3822.00 have been treated as non-agricultural products; on the other hand, headings 41.01 to 41.03 continue to be treated as agricultural products in the HS 2002 nomenclature.
Table 2 Full and partial binding of HS 6 digit subheadings for non-agricultural products
(Includes only Members for which schedules are not fully bound and for which a link with the IDB has been established)
Member / Full binding / Partial binding / Unbound / Full binding / Partial binding / UnboundNumber of subheadings / Per cent of all subheadings
Australia / 4240 / 41 / 154 / 95.6 / 0.9 / 3.5
Barbados / 4329 / 107 / 97.6 / 2.4
Brunei Darussalam / 4169 / 44 / 223 / 94.0 / 1.0 / 5.0
Cameroon / 4 / 4432 / 0.1 / 99.9
Canada / 4416 / 5 / 15 / 99.5 / 0.1 / 0.3
Cuba / 877 / 26 / 3532 / 19.8 / 0.6 / 79.6
Dominica / 4169 / 2 / 265 / 94.0 / 0.0 / 6.0
Georgia / 4429 / 7 / 99.8 / 0.2 / 0.0
Grenada / 4414 / 22 / 99.5 / 0.5 / 0.0
Hong Kong, China / 1537 / 125 / 2774 / 34.6 / 2.8 / 62.5
Iceland / 4167 / 12 / 257 / 93.9 / 0.3 / 5.8
India / 3073 / 24 / 1339 / 69.3 / 0.5 / 30.2
Japan / 4401 / 16 / 18 / 99.2 / 0.4 / 0.4
Jordan / 4434 / 1 / 99.95 / 0.0
Kenya / 70 / 1 / 4365 / 1.6 / 0.0 / 98.4
Korea, Republic of / 4077 / 87 / 272 / 91.9 / 2.0 / 6.1
Macao, China / 442 / 250 / 3744 / 10.0 / 5.6 / 84.4
Malawi / 911 / 8 / 3517 / 20.5 / 0.2 / 79.3
Malaysia / 3291 / 311 / 834 / 74.2 / 7.0 / 18.8
Mauritania / 1333 / 1 / 3102 / 30.0 / 0.0 / 69.9
Mauritius / 177 / 58 / 4200 / 4.0 / 1.3 / 94.7
Nepal + / 4500 / 1 / 32 / 99.3 / 0.0 / 0.7
Pakistan / 1638 / 2 / 2796 / 36.9 / 0.0 / 63.0
Philippines / 2662 / 80 / 1693 / 60.0 / 1.8 / 38.2
Saint Lucia / 4414 / 22 / 99.5 / 0.5
Singapore / 2791 / 70 / 1575 / 62.9 / 1.6 / 35.5
Sri Lanka / 1233 / 22 / 3181 / 27.8 / 0.5 / 71.7
Switzerland / 4380 / 44 / 12 / 98.7 / 1.0 / 0.3
Taipei, Chinese / 4430 / 6 / 99.9 / 0.1 / 0.0
Togo / 37 / 1 / 4398 / 0.8 / 0.0 / 99.1
Uganda / 128 / 4 / 4304 / 2.9 / 0.1 / 97.0
United States / 4435 / 1 / 99.98 / 0.0
Zambia / 177 / 3 / 4256 / 4.0 / 0.1 / 95.9
Zimbabwe / 190 / 209 / 4037 / 4.3 / 4.7 / 91.0
Note: HS heading 2716.00 - electrical energy is an optional heading of the HS nomenclature and is not used by all Members. For those cases, the total number of non-agricultural subheadings is 4435 rather than 4436.
+ Commitments are in HS 2002 nomenclature.
Table 3 Some comparative indicators for bound and unbound tariff lines
(MFN applied duties and imports refer to 2001 unless indicated otherwise)
/ Bound tariff lines / Unbound tariff lines /Member / Binding coverage / Final bound duties / MFN applied duties / Imports / MFN applied duties / Imports /
/ in % / Average / Mill US $ / Average / Mill US $ /
Albania / 100 / 6.6 / 7.2 / ... / - / -
Angola / 100 / 60.1 / ... / ... / - / -
Antigua and Barbuda / 97.6 / 51.4 / 8.6 / ... / 21.3 / ...
Argentina / 100 / 31.8 / 15.3 / 19,020 / - / -
Armenia / 100 / 7.5 / ... / ... / - / -
Australia / 96.5 / 11.0 / 4.5 / 57,2923 / 7.1 / 697
Bahrain / 71 / 35.1 / 8.1 / ... / 5.7 / ...
Bangladesh (1999) / 3 / 35.7 / 12.9 / ... / 22.0 / ...
Barbados / 97.6 / 73.0 / 9.2 / 878 / 31.2 / 12
Belize * / 97.7 / 51.5 / 9.0 / ... / 30.2 / ...
Benin * / 30.1 / 11.4 / 11.8 / ... / 11.7 / ...
Bolivia / 100 / 40.0 / 9.3 / ... / - / -
Botswana / 96 / 15.8 / 5.2 / ... / 8.2
Brazil / 100 / 30.8 / 15.0 / 54,245 / - / -
Brunei Darussalam / 95 / 24.5 / 2.5 / ... / 13.7 / ...
Bulgaria / 100 / 23.0 / 10.1 / 4,593 / - / -
Burkina Faso * / 29.9 / 13.2 / 11.9 / ... / 11.6 / ...
Burundi (2003) / 9.9 / 26.8 / 34.4 / ... / 20.6 / ...
Cameroon / 0.1 / 57.5 / 10.0 / ... / 17.5 / ...
Canada (2000) / 99.7 / 5.3 / 4.4 / 213,698 / 12.6 / 10,061
Central African Republic * / 56.8 / 37.9 / 14.7 / ... / 21.1 / ...
Chad * / 0.3 / 75.4 / 25.0 / ... / 17.4 / ...
Chile / 100 / 25.0 / 7.9 / 14,716 / - / -
China / 100 / 9.1 / 14.5 / 231,726 / - / -
Colombia / 100 / 35.4 / 11.8 / 11,110 / - / -
Congo * / 3.2 / 15.2 / 14.4 / ... / 17.6 / ...
Costa Rica / 100 / 42.9 / 4.6 / 6,065 / - / -
Cote d'Ivoire * / 22.9 / 8.6 / 11.2 / ... / 11.8
Croatia / 100 / 5.5 / 5.7 / 8,339 / - / -
Cuba / 20.4 / 9.5 / 8.1 / 1,762 / 11.6 / 2,246