


According to WTO tariff profiles[1], in 2017, the simple average MFN applied tariff for all goods in New Zealand (NZ) was just 2.0% weighted by 1.4% for agricultural products and 2.1% for non-agricultural products. As a matter of fact, New Zealand ranks as the third most-open economy, in terms of tariff levels, within the CPTPP bloc just behind Singapore and Brunei Darussalam[2].
Then what’s the deal in negotiating an FTA with such an open economy?
Here are a few reasons:
These are some basic features of New Zealand’s base-rate duty structure:
[1] https://fgsaenzfgs.blog/2018/11/14/how-was-new-zealands-trade-liberalization-in-the-cptpp-tariff-schedule-commitments-of-new-zealand-on-staging-categories-and-some-general-comments/
[2] http://stat.wto.org/TariffProfile/WSDBTariffPFView.aspx?Language=E&Country=AU%2cBN%2cCA%2cCL%2cMY%2cMX%2cNZ%2cPE%2cSG%2cVN
[3] https://fgsaenzfgs.blog/2018/11/16/simple-average-mfn-applied-tariffs-in-2017-a-cptpp-comparison/
[4] https://fgsaenzfgs.blog/2018/09/12/que-tan-complicado-es-diversificar-las-exportaciones-de-mexico-del-mercado-de-ee-uu-primera-parte/
En la entrada del Blog del 24 de enero de 2018[1] se abordó por primera ocasión el cambio metodológico en los flujos de IED recibidos por México en relación con el criterio anterior de registro de país inversor inmediato por el actual de país inversor final. En aquel momento se mencionó que se realizarían algunos ejercicios comparativos de dicho cambio metodológico, casi un año después se desentierra esta “entrada-reliquia” anecdótica de aquella promesa y que ahora está por cumplirse.
[1] https://fgsaenzfgs.blog/2018/01/24/principales-socios-inversores-de-mexico-en-el-acumulado-a-septiembre-de-2017-una-nueva-metodologia-para-el-registro-de-la-ied/
Some empirical studies have made clear the existence of a long-run relationship between tariff liberalization and trade growth, but this substantial and significant association has been gradually losing ground, because of the reduced level of tariffs, on average, over recent decades[1]. This may suggest that there is little room left for tariff liberalization to contribute to welfare gains through trade and income growth, except perhaps for some developing countries that continue to maintain high tariff levels. However, despite of this, evidence exists that when considering a more complex and realistic world-production setting with production linkages, supply chains and multiple sector models, the removal of even small tariffs could deliver significant welfare gains[2].
In the case of the CPTPP bloc, the simple average Most-Favoured-Nation (MFN) applied tariff in 2017 for all goods, according to WTO data[3], fluctuates from 0.0% in Singapore to 9.6% in Vietnam. For agricultural products, there are notorious tariff peaks in Canada, Vietnam, Mexico and Japan, and their simple average MFN tariff levels remain at the two-digit level. Although in the non-agricultural sector, customs duties, on average, are below the two-digit level for all CPTPP member countries, one can still find average tariff levels above 5.0% in Vietnam, Chile, Mexico and Malaysia. Therefore, much room exists in the sectorial and economy-wide spectrum for a comprehensive tariff liberalization process, even in wide-open and almost tariff-free economies such as Singapore, Brunei Darussalam, New Zealand, Peru and Australia where their simple average MFN applied tariffs are below or equal to 2.5%.
[1] Nenci, S. (2009) “Tariff liberalization and the growth of world trade: a comparative historical analysis for the evaluation of the multilateral trading system”, University of Roma Tre, accessed 27 April 2017, http://www.stat.unipg.it/aissec2009/Documents/papers/88_Nenci.pdf
[2] Caliendo, L, R C Feenstra, J Romalis and A M Taylor (2017). “Theory and evidence for the last two decades of tariff reductions”, 26 April 2017, VOX CEPR’s Policy Portal, accessed 27 April 2017, http://voxeu.org/article/theory-and-evidence-last-two-decades-tariff-reductions
[3] http://stat.wto.org/TariffProfile/WSDBTariffPFReporter.aspx?Language=E
In 2017, Australia imported 221,360 million dollars (MD) representing 1.2% of world imports and ranking it as the 24th largest import market in the world. Australia’s imports coming from Mexico stood at 2,134 MD, represented 0.96% of total imports, this figure made Mexico ranked as Australia’s 20th largest import supplier.
In terms of tariff lines, Australia imported from Mexico throughout 1,843 tariff lines at 10-digit level in 2017, according to Australian import data, while world imports were registered in 7,163 tariff lines; namely, Mexican imports entered into Australia using only 24.6% of the Australian Harmonized Tariff Schedule available, meaning that there are a lot of opportunities for Mexican exports to expand and wait to be tapped.
In order to assess partially the tariff liberalization made by Australia in the CPTPP for Mexican exports, it is proposed to carry out a simulation analysis using Australia’s Tariff Schedule in the CPTPP and apply this negotiating results to actual Mexican imports made by Australia for the calendar year of 2017.
For purposes of simplicity and representability, I will be analyzing only 300 tariff lines of Australia’s imports coming from Mexico in 2017 out of the 1,843 tariff lines abovementioned, descendingly-ordered in value terms, which in this case accounted for almost 94% of total importation.
Some important results and implications of this simulation exercise are: