Measuring Nontariff Trade Policies

This paper surveys and critiques various methods of measuring nontariff trade measures (NTMs) for the purpose of determining which seem most promising for facilitating the process of reducing the trade-distorting effects of such policies through multilateral negotiations. Four measurement methods are analyzed: price-impact measures, quantity-impact measures, frequency-type measures, and welfare measures. The general conclusion is that, despite a host of difficulties, theoretical and empirical analysis has progressed sufficiently far to enable reasonable measures of nontariff policies to be made that are useful for assessing relative sectoral protection across countries and monitoring changes in protection and subsidization levels over time. Tariff and subsidy equivalents, preferably determined by directly comparing distorted and non-distorted prices, are the most useful forms of measurement, since they focus on the price-distorting effects of NTMs and are also concepts with which public and private officials are already familiar. However, the various other types of measures can be valuable in supplementing the information obtained from tariff and subsidy equivalents.