# Box 1: Advantages of TRIST

- **Accuracy** : Projections are based on customs data on revenues (from tariffs, VAT, excise and other taxes applied at the border) actually collected at the tariff line level, broken down by user defined trading partner groups and selected products. This improves the accuracy of tariff reform simulations by taking into account tariff exemptions and trading partner specific collection rates.

- **Transparency** : The whole tool is set up in Excel and formulas and calculation steps are visible for the user. It is open-source in the sense that users are free to change, extend or improve according to their needs.

- **Simplicity** : TRIST incorporates a simple partial equilibrium model of importing. The underlying modeling is intuitive and simulations can be made by anyone within minutes once the appropriate tariff scenarios have been entered.

- **Policy Relevance** : TRIST allows projecting the impact of tariff reform on total fiscal revenue (including VAT and excise) and results are broken down to the product level so sensitive products or sectors can be identified.

- **Flexibility** : TRIST can incorporate tariff liberalization towards any group of trading partners. User defined tariff scenarios can be added, for example to incorporate a sensitive product list into the liberalization schedule. It is also possible to enter multiple successive liberalization steps and project both their individual and cumulative impact.

inclusive value of imports. Either way, the percentage change in overall trade tax revenue will be smaller than the impact on tariff revenue and studies that focus solely on changes in customs duties will only provide a partial picture.

3. A third major motivation for the development of TRIST is the limitations that arise from using aggregated and unwieldy models in a dynamic policy environment. New options and proposals for trade policy emerge frequently and require adjustments to the scenarios used for projections. Further, trade policy discussions typically concern detailed products, such as identifying lists of sensitive products that are excluded from liberalization scenarios. Thus, disaggregated results that break down the revenue impact by detailed product and trading partner are a crucial input to trade policy formulation. An important aim of TRIST is therefore to provide a simple and flexible tool that can be easily and quickly used and adapted to reflect specific country circumstances as well as to allow the user to define relevant reform scenarios, exclusion lists etc.

The EC Commission interpreted the GATT requirement that preferential trade agreements such as EPAs lead to the gradual removal of tariffs and non-tariff barriers on ‘substantially all trade’ as allowing ACP countries to exempt up to 20% of their imports from tariff reduction under an EPA.<sup>7</sup> The detailed tariff line level data available in TRIST allows policymakers to thoroughly analyze the implications of choosing different lists of exempted products. In particular, countries may want to exclude products from liberalization for which the policy reform will generate the largest reduction in revenue or protection. To give a few examples, the projected tariff revenue loss from an EPA with the EU falls from 14.4% to 2.1% in Tanzania, from 19.4% to 5.1% in Kenya and from 17.1% to 5.4% in Ethiopia when the sensitive product list is chosen according to the revenue sensitivity of the products imported from the EU (see table 3). At the other extreme, it is interesting to analyze the revenue impact of the reduction of very high tariffs only since reducing such tariff peaks will remove an important distortion in the

> 7 The EC Commission interprets substantially all trade as covering 90% of mutual trade. Since the EU countries will liberalize 100% of their imports from ACP countries under an EPA, the EC Commission has deemed that the ACP countries must liberalize at least 80% of their imports from the EU.

6