# **B.2**

## **B.2.1 Data Details**

As noted in Section 3.2, we draw our data from UNCTAD (TRAINS) and the WTO via the WITS website. We faced a number of challenges in transforming these raw data sources into a consistent set of tariff measures. Below we describe our procedure to clean and aggregate the data.

First, there are a handful of instances in which a country’s entire bilateral tariff schedule is missing in one of our four benchmark years. In most of these cases, when we can be confident that there were no major trade policy changes in that year, we take the tariff schedule from the closest available year for that country. In a few instances, we instead exclude the importer in that particular year. The following importing countries and years are excluded on these grounds: China (1995, 2000), South Korea (1995, 2000), Taiwan (1995, 2000), and Russia (2000). These countries are included as _exporters_ in all years.

Second, there are cases where tariffs are misreported, or entirely missing, for a subset of products or partners in a given year. In some instances, we are able to resolve these idiosyncratic problems through inspection. For example, a country’s data may omit a particular tariff preference program in a given year, even though that program exists in the country’s data in the years immediately before and after the missing year. While it is possible that these programs were temporarily suspended, our investigative efforts to validate such possible temporary suspensions typically uncovered no corroborating evidence consistent with a genuine change in policy. Therefore, we use information on preferences from surrounding years. In a handful of other cases in which we cannot resolve these problems, we instead record tariffs as missing.

Third, tariff lines (products) are not defined consistently across countries at the most disaggregated (HS-8+) level. Therefore, we take the unweighted mean across (HS-8+) tariff lines within each HS 6-digit Harmonized System category, which are standardized across countries. We then classify these HS 6-digit categories into final versus intermediate use using BEC classifications as described in the text.

Fourth, some HS 6-digit tariff lines have multiple preferences recorded in the data. For example, Canada may report two tariffs for imports from Mexico: one under NAFTA and another under GSP. When one of the reported tariffs derives from an Article XXIV free trade agreement or customs union, we treat that tariff as the applicable tariff. When two or more non-FTA/CU tariffs are present, we adopt the lower of the two rates as the applicable tariff. In the end, we have information on the preference scheme under which every bilateral preferential tariff is offered in the data.<sup>61</sup> Fifth, there are several technical issues that need to be addressed pertaining to exit/entry of HS 6-digit codes in the data (either over time or across countries at a given point in time) and non-ad valorem tariffs. We start with a data set that includes all available HS 6-digit tariffs. We then refine the data in two dimensions. First, we discard all HS 6-digit sectors (by importer) in which tariffs are applied exclusively as specific duties.<sup>62</sup> Second, we retain

> 61One hurdle to identifying preference programs is that program identifiers in the raw UNCTAD/TRAINS data are often difficult to parse. When necessary, we cross-reference various secondary sources to identify the relevant preference schemes.

> 62To clarify, some importers may apply ad valorem tariffs in a given HS 6-digit sector, while others apply

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