these important trade costs are due to trade policy or to something else. Anderson and van Wincoop (2004), through a combination of direct observation and inferences from a gravity trade model, quantify the representative border-related trade costs for an industrialized country at 44 percent ad valorem and the representative transportation costs at 21 percent. In contrast, Hummels (2007, p. 136) suggests that the importance of policy barriers has been completely eclipsed by real transportation costs: “For the median individual shipment in U.S. imports in 2004, exporters paid $9 in transportation costs for every $1 they paid in tariff duties.” Although we are not be able to quantify the relative contributions of different forms of trade costs, we do hope to illustrate why many summary measures of trade policy are not appropriate for understanding the full economic importance of policy barriers to trade. Three simple examples help to illustrate the point. First, the real world consists of significant non-tariff policy instruments; these include a number of border policies that, while _technically_ applied as a tariff, are typically not captured in the reported data of ‘headline’ measures of tariffs. Second, trade policy is commonly applied in a non-uniform manner across trading partners. Third, applied trade policy can vary considerably over time, especially in response to the business cycle, movements in the real exchange rate, or due to trade volume shocks; nevertheless, these policy changes are not made through applied ad valorem import tariffs, but via some other, less transparent, policy tool.

In the coming sections, we document that policy barriers to trade still exist; they vary considerably across products, trading partners and time; they take many forms; and they arise under legal frameworks (established by international trade agreements) that can result in subtle differences in both the frequency of their use and of their trade-reducing potential.

Section 2 begins by analyzing the focal policy of the trading system - the import tariff. This section examines different dimensions of tariff data for our sample of 31 economies to provide an initial response to each of our chapter’s first four questions. We introduce the most-favored-nation (MFN) ad valorem import tariff - i.e., the ‘headline’ border policy instrument that countries impose under the WTO. While applied tariff levels are relatively low in historical terms, significant crosscountry heterogeneity remains; furthermore, the negative correlation between applied tariffs and income per capita is even more pronounced once we consider the countries’ ‘legal’ commitments that are the upper limits for their tariffs. Next, we characterize cross-sectional variation in applied tariffs across sectors and inter-temporal variation across countries over 1993-2013. We then introduce which countries and sectors apply _specific_ - or per unit - duties, and we describe what makes them distinct from ad valorem tariffs. Finally, we characterize the lower-than-MFN tariffs that countries apply under a variety of preferential trade arrangements. Because these allow countries to take on additional liberalization, we illustrate the extent to which countries apply tariffs so as to discriminate among trading partners.

In Section 3 we introduce the other major (non-tariff) border barriers, and we use them to further inform our chapter’s main themes.<sup>5</sup> Contemporary use of temporary trade barrier policies

> 5One set of border policies that we do not directly address are export policies, and in particular export taxes or export quotas. Some discussion of export subsidies will arise in Section 5 by implication of our discussion of domestic subsidies, especially where they impact two exporting countries competing in a third market. On subsidies more

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