Simulating the Effects of Trade Liberalisation

While estimates of ad valorem equivalents for nontariff barriers have important independent uses, such as the provision of a standard for assessing concessions in multilateral trade negotiations, they also constitute a key input into empirical analyses that quantify their trade and other economic effects. In other words, once nominal equivalents of NTBs have been derived using the procedures discussed in Chapter 2 this information can be utilised in general or partial equilibrium trade models to empirically assess the likely effects of their modification on policy variables such as employment, welfare, balance of payment and exchange rates, imports and exports, or prices and incomes. Since many of the studies surveyed in Chapter 5 deal with the influence of NTBs on these policy variables, it is important to understand how these effects have been estimated.