Paying the Price: Final Goods Protection in OECD Countries

This paper presents new measures of final goods trade protection in eight developed countries. The analysis exploits detailed, comprehensive, and careful price comparisons to derive estimates that, it is argued, reliably capture all kinds of barriers. The results show extensive protection. Japan's average tariff equivalent is 57%, those of the European countries range from 48% to 55%, and that of the United States is lowest, at 12%. An applied general-equilibrium analysis of this protection is conducted. The results include the following: Japan's barriers impose large costs on itself; Japanese and U.S. barriers greatly burden poorer countries; the United States would benefit significantly from multilateral, but not unilateral, opening.