This blog is part of a series about WITS, the World Integrated Trade Solution, a collaborative trade data platform developed by the World Bank and other institutions. This is the fourth installment of the series—for further reading, here are the first, second and third installments.
Tariffs are everywhere. We read about them in newspapers and hear about them through our government officials. But they are also reflected in our everyday routines when we buy imported fruits, clothes or many other items crossing into our countries: Embedded in prices, tariffs are part of an inextricable net of trading, laws and regulations.
But what are tariffs? Simply put, tariffs represent customs duties levied on goods crossing a nation's borders. Ranging from Most Favored Nation (MFN) to Preferential Tariffs, and Bound Tariffs to Effectively Applied tariffs, these levies play a pivotal role in shaping global trade dynamics (to know more about this you can read the earlier blog on types of tariffs explained.)
In this installment, we delve into essential nuances crucial for Tariff data analysis via WITS, the World Bank's trade data platform. Serving as a cornerstone for comprehensive analysis, WITS draws from two primary sources of tariff data: the United Nations Conference on Trade and Development’s Trade Analysis and Information System (TRAINS), and the World Trade Organization’s Integrated Database (IDB) and Consolidated Tariff Schedule (CTS).
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What is HS Combined?
In our previous blog, "How is trade data collected," we delved into the complexities of product nomenclatures, including the Harmonized System (HS). In WITS, when you conduct a "Tariff and Trade Analysis" using the Advanced Query feature, you'll encounter a new term: HS Combined. But what does this combined nomenclature entail?
Essentially, the disparity between trade and tariff data lies in the version of the Harmonized System (HS) used by each country. The HS Combined nomenclature consolidates both the current and historical revisions of the HS, enabling users to navigate trade data seamlessly across different versions.
By amalgamating various HS revisions (HS88/92 (H0), HS96(H1), HS02(H2), HS07(H3), HS12(H4), HS17(H5), HS22(H6)), this feature empowers users to select products without concern for differing nomenclatures in specific years.
With six, four-, and two-digit levels, HS Combined facilitates extensive time series analysis within the Advanced Query tool. However, users must remain vigilant about changes in HS codes, which may vary from those used in their queries. When viewing results, a designated column specifies the reported nomenclature, providing valuable insight into the data's source nomenclature.
Understanding missing data in advanced queries
During an advanced query to search product tariffs, you may encounter instances where certain products lack tariff data, despite the country's data availability indicating otherwise for the specified year. What causes this discrepancy?
The explanation lies in how tariffs are calculated. If a product wasn't imported in a given year, it suggests no tariffs were levied on it, resulting in the absence of tariff data.
Essentially, average tariffs are determined solely based on traded products. However, for users interested in non-traded products, disaggregated data are accessible through Bulk Download (TRAINS) in WITS, ensuring comprehensive analysis.
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Uncover the methods used to collect, categorize, and analyze #tradedata for a deeper understanding of global commerce with WITS, the @worldbank's one-stop-shop for trade insights & #dataviz.
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Why is there a spike in applied tariffs in some years?
When you analyze bilateral applied tariffs across years, in some years you may see a spike in tariff during a particular year.
For example, the United States’ simple average tariff for imports from Argentina is a case that reflects this scenario, specifically in 2019.
Simply put, the Effectively Applied tariff is the lowest import duty a country applies to goods. Imagine it as the special price you get when shopping, combining all discounts available. In some years, if there are no special discounts (preferential tariffs), they use the regular discount (Most Favored Nation tariff), causing a spike in prices.
Why is there no spike in applied tariffs?
Why aren't there sudden jumps in applied tariffs? When governments raise tariffs for protection, like the U.S. did in 2018, these changes aren't immediately seen in applied tariffs.
These hikes are often temporary measures, known as para tariffs, not tracked in the UNCTAD tariff database. As a result, they don't affect Most Favored Nation or Preferential tariffs, nor are they factored into applied tariff calculations.
In conclusion, delving into the intricacies of tariffs provides us with a deeper understanding of the complexities woven into global trade dynamics. As we navigate the vast landscape of trade data with tools like WITS, it becomes clear that behind each statistic lies a narrative of economic policy, better navigate the ever-evolving landscape of tariffs, contributing to more informed decision-making and fostering a more inclusive and sustainable global economy.
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