# **1 Introduction**

This chapter surveys the broad features of and developments in the use of trade policy across countries, within countries, and over time. Our goal is to describe and, whenever possible, quantify the extent of cross-sectional heterogeneity in applied commercial policy across countries, their economic sectors, and their trading partners, over time.<sup>1</sup> We construct a relatively comprehensive picture of trade policy for 31 economies that represented 83 percent of the world’s population and 91 percent of the world’s GDP in 2013. Our main conclusion is that substantial trade policy barriers remain as an important feature of the world economy today.

As a starting point, we must define what we mean by a trade policy ‘barrier.’ As we will illustrate, there is an ever-increasing set of policy instruments that both researchers and trade negotiators would like to better understand because they are perceived to have a trade-restricting effect. Until recently, researchers have had little information about border policy instruments. Indeed, as Anderson and van Wincoop noted: “[t]he grossly incomplete and inaccurate information on policy barriers available to researchers is a scandal and a puzzle” (Anderson and van Wincoop 2004, p. 693). The good news is that research no longer needs to operate behind a veil of ignorance created by the lack of information on border barriers; product-level data on many of the important trade policy instruments imposed at the border are now routinely being made available for most economies in the world.<sup>2</sup> The picture of the empirical landscape of trade policy that emerges is complex, with substantial variation along some dimensions and little variation along others. We frame our assessment of this trade policy variation by centering our analysis around five main questions:

1. Do some countries have more liberal trading regimes than others?

2. Within countries, which industries receive the most import protection?

3. How do trade policies change over time?

4. Do countries discriminate across their trading partners when setting trade policy?

5. How liberalized is world trade?

As we examine each question, we document heterogeneity in trade policy arising along important dimensions.<sup>3</sup> Whenever possible, we also comment on the factors that are understood as driving this variation. Here we offer five brief answers, with a promise to expand on them in the coming pages.

> 1This paper builds from a number of previous _Handbook_ chapters describing various elements of how trade policy is used in practice, and notably Feenstra (1995), Rodrik (1995), Staiger (1995), and Maggi (2014).

> 2Our survey is limited to policy barriers to goods trade only and thus does not address services.

> 3An alternative approach that we do not pursue is the theoretically-grounded Trade Restrictiveness Index (TRI) measures of Anderson and Neary (1992, 1996). The TRI collapses within-country, cross-sector variation into a single measure that can be compared across countries; it has been implemented empirically, for example, in Kee, Olarreaga and Nicita (2009). However, the TRI does not capture many of the aspects of the inter-temporal and cross-trading partners variation in trade policy that we describe throughout this chapter.

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