shown in table 14 are those recorded in traditional balance of payments statistics — predominantly exports delivered via cross-border trade and consumption abroad (eg sales of services to foreign tourists). The growth in the output of foreign-owned firms in Tunisia (table 13), and the corresponding increases in their sales to other firms in Tunisia, represents an increase in Tunisian imports of services delivered via commercial presence. But table 14 confirms that those same foreign-owned firms contribute significantly to increases in services exports delivered via other modes.

In summary, the services sector reforms examined here could provide small but useful benefits to the Tunisian economy. The economy is projected to be slightly bigger than otherwise, slightly more services intensive than otherwise, with a slightly bigger proportion of foreign ownership than otherwise, and with a greater export intensity than otherwise (table 15), providing a projected slight improvement in economic well-being.

Note that the representation of the Tunisian economy in the benchmark equilibrium in table 15 is after the injection into the FTAP model’s database of the estimated initial barriers to services trade in each region (carried out using the GTAP model’s ‘altertax’ procedure adapted to the FTAP model — see Malcolm 1998 for details), and after an increase in the relative size of the Tunisian communications industry, to better match national data (carried out via a taste shift in favour of communications). The benchmark equilibrium matches neither national data nor the GTAP model database exactly.

A further policy question is how the benefits from services sector reforms would compare to those from further reform of agriculture and manufacturing. This is the topic of the next section.

# **6. The economy-wide effects of further liberalizing agriculture and manufacturing**

In 2005, the tariff assistance provided to Tunisia’s agricultural and manufacturing sectors was both high and variable. Detailed data for 2005 (summarized in WTO 2005) show that tariffs on agricultural products were in the 20-90 percent range, while MFN tariffs on manufactures were mostly 20-30 percent (table 16). Thus the protection in agriculture was much higher than in manufacturing. Both were higher than the tax equivalents of the regulatory restrictions in the particular services sectors considered above. However, they would not necessarily be of less economic significance than cost-raising restrictions elsewhere in services.

Tunisia has been in the process of phasing out its tariffs on manufactured imports from the EU, so that in 2005 tariffs on manufactures from this source were less than 10 percent (table 16). This is an additional source of variability in Tunisia’s protection structure.

Once account is taken of tariff rate quotas and the _ad-valorem_ equivalent of specific tariffs, Tunisia’s protection structure may be even more variable. Such protection estimates are available from the GTAP model database for the year 2001, and are shown in table 17. The estimates for manufactures from this source are very roughly the same as those for 2005 from the WTO (note that the GTAP version 6 database incorporates tradeweighted applied preferential tariff rates). The estimates for agriculture are more variable 14