Third, Melo and Vijil (2014) report the difference between consolidated tariffs and applied MFN tariffs or “binding overhang”, a margin of flexibility (“policy space”) for governments. This flexibility is greatest for middle income countries, and practically non-existent for HICs. So if there were a standstill compromise, whereby tariffs would be bound at applied rather than bound rates, the UMIC and LMIC groups would lose the most leeway as the current gap of 16 and 14 percentage points would have to be closed (using the WTO list). For the LIC group, the gap is 3 percentage points, so average applied tariffs would have to be reduced from their current level of 15% to 12% (HIC would only have to reduce their average tariffs by 2 percentage points to 2%).

Fourth, an examination of the profile of tariffs for EGs vs. non-EGs over the Doha negotiation period (Melo and Vijil, 2014; figure 1) shows no acceleration in the reduction of tariffs on EGs (or on non-EGs) and the trends were almost the same for EGs and for other products suggesting no evidence that the environment was taken on board at the country-level during the negotiations.<sup>9</sup> Finally, the right-hand side of table 1 gives average estimates of overall ‘protection’ taking into account non-tariff barriers. These are, at best, indicative. First, unlike tariffs, not all NTBs are welfare-reducing as some are correcting for market failures. Second, estimates are for a smaller group of 70 countries at the HS-6 commodity level for 2010-11. Third, the AdValorem Equivalents (AVEs) of NTBs are obtained from NTBs represented by binary variables for 2003-4 with a small number of AVEs for some countries. Adding these AVEs to the tariff estimates for 2010-11 gives the estimate of the combined measures of protection in columns 7 to 10.<sup>10</sup> Except for the HIC, the resulting overall ‘protection’ estimates for the APEC list reported in col. 7 are high or very high. The estimates preserve the rank-ordering for tariffs: highest for the LIC, followed by LMIC, UMIC and HIC.

# **3.2 Tariff and non-tariff barriers protection of the Davos group of countries**

We now compare the protection indicators for the Davos group of 14 countries (there are only 13 here as trade data for Chinese Taipei are missing) with the averages by income group. Several patterns stand out. Among those who pledged to reduce tariffs, six countries have zero tariffs (see also table 3 for simple average tariffs). Unless NTBs are included in the negotiations—or the list is expanded in the case of Costa Rica— these countries will have nothing to ‘offer’ at the table of negotiations.

> 9 Using a slightly different data set over the period 1996-2010, Balineau and Melo (2011) examined cases of ‘substantial tariff reductions’ in EGs defined as tariff reductions of 5 percentage points or more. They found that two thirds of the countries had at least one substantial tariff reduction or ‘event’ during 1996-2010 defined as a tariff reduction of at least 5 percentage points. Each product in the core list of 26 products accounted for about 4%-5% of the total number of events.

> 10 The NTB measures exclude price support measures. For reasons discussed in Melo and Vijil, the average estimates in Table 1 could represent lower bound estimates of the actual level of protection. However, unlike tariffs, not all NTBs are welfare-reducing since some provide regulations to correct market failures.

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