. 11 -

**25.** As indicated by the last column of Table 5, two-thirds of non-exporters received actual nominal protection (NPR) in excess of the CNPR. This contrasts sharply with the exporters (marginal and significant), where a majority (twothirds to three-fourth%) receive nominal protection below CNPR, and particularly with Potential exporters which all receive actual NPR well below the CNPR which they would require. 'his pattern highlights the marked bias of the protection structure in favor import-substitution and against exports, as already noted in para. 19.

26. Overall, the discrepancy between actual and compensatory Nominal Protection is small, and within an acceptable error margin of ± 10 percentage points. IV However, as noted earlier in the case of eff3ctive protection, there are wide variations in the CNPR/NPR discrepancies from one subsector to the other. To this effect, the following Table indicates the subsectoral averages of compensatory and actual nominal protection rates (weighted by Output value in world prices): Tcbtsg 6: Connsoatory **and** Actual Nominal Protection by Subsector /I (in S of Output **Value at** InternatioaL prices)

|Subsector|Outputtu)<br>Share IS|Irsut Cost<br>Inct|VA/CEPR<br>/b<br>Imact|CP /I2|Actual<br>**jPP***|I Projects(X)in<br>**Excesahortall**|
|---|---|---|---|---|---|---|
|Heavy Chemicats|17|46.4|10.0-16.0|56.4-62.4|<br>58.8|**60/40**|
|Light Chemicals|2|19.2|14.4-21.8|33.6-41.0|<br>**15.5**|**0/100**|
|<br>Synthetic Yarns|12|46.0|17.0-20.5|63.0-66.5|64.9|50/50|
|**Basic Steel**<br>Product|s<br>10|49.7|10.4|60.1|61.8|S7/43|
|Electronics|15|32.4|3.3|29.1- 35.7|34.2|60/40|
|Other Enginoering|19|24.1|12.0-16.6|36.1-40.7|19.2|0/100|
|Food Industries|6|23.6|0-13.1|23.5-36.7|25.8|50/S0|
|Miscellaneous|19|31.1|6.1-6.7|37.2-37.8|46.2|80/20|
|OveraLl.|100|35.7|4.8-8.5|40.5-44.2|<br>43.7|42/58|

_/Ia_ - The two components of CNPRs **and** Actuat NPRs in this tabte **are verage"** weighted by Outnut in worid prices. /b The lower (resp. higher) vatue of the **range** corresponds to yl (resp. y2). Source: Annex **VII** 27. The concordance between actual and compensatory NPRs is higher than for eftective protection. The actual NPR falls within the CNPR range for Heavy Chemicals, Synthetic Yarns, Basic steel products, Electronics and Food industries. Excess of NPR over CNPR is negligible (about 9%) in the Miscellaneous industries ( dominated in the sample by Tyres). On the other hand, the shortfalls of NPR relative to CNPR are significant in engineering industries (17-22%) and in Light Chemicals (18-25%). Finally, the intra-sectoral discrepancies observed within each subsector for effective protection (cf. para. 21) are equally applicable to the nominal protection, as summarized in the last column of the table above. Except for light chemicals and engineering industries where all projects are subject to an NPR shortfall, the projects in each other subsector are distributed in approximately equal shares between excess and shortfall of nominal protection relative to the CNPR.

_IQ/_ Again, actual NPRs may appear reasonable in levels. However, they are most likely to be underestimates of the real NPRs which the projects will enjoy when operating.