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GOAL AND TARGET ADDRESSED

Goal 8. Develop a global partnership for development.
Target 8A. Develop further an open, rule-based, predictable, non-discriminatory trading and financial system. Includes a commitment to good governance, development and poverty reduction—both nationally and internationally.
Target 8B. Address the special needs of the least developed countries. Includes: tariff and quota-free access for least developed countries’ exports; enhanced programme of debt relief for HIPCs and cancellation of official bilateral debt; and more generous ODA for countries committed to poverty reduction.

DEFINITION AND METHOD OF COMPUTATION

Definition
The indicator is the ratio of developed countries duty-free imports from developing countries (or the least developed countries) to total imports made by developed countries from developing countries (or from the least developed countries).
The indicator is produced excluding arms and also excluding arms and oil.

Concepts
Imports include goods that add to the stock of material resources of a country by entering its economic territory. They do not include goods simply being transported through a country (goods in transit) or temporarily admitted (except for goods for inward processing). Imports are measured in value and in current US dollars. Duty free treatment considers the duty free access through preferential (both under unilateral or under reciprocal schemes) and through multilateral duty free treatment (Most Favoured Nation clause, MFN duty free). True Preferential duty-free-quota-free (DFQF) is the difference between the official indicator on DFQF and the share of imports entering DFQF under MFN conditions. There is no official definition of developed and developing countries. For the purpose of calculating this indicator developed countries include Japan in Asia, Canada and the United States in North America, Australia and New Zealand in Oceania and Iceland, Norway, Switzerland and the EU(25 countries included since 2004) in Europe, following the common accepted practice used for MDG monitoring. Developing countries are those not listed as developed or transition countries by the United Nations Department of Economic and Social Affairs (for details see http://www.un.org/esa/desa/). The list of least developed countries (LDCs) is designated by the United Nations General Assembly (see United Nations, 2008).

Tariffs are customs duties on merchandise imports.

A country’s economic territory typically largely coincides with its customs territory, which is the territory in which the customs laws of a country apply in full. The Harmonized Commodity Description and Coding System (the Harmonized System, or HS) is used by customs services around the world and is the basis for the definition of MDGs groups of products. Arms include products of HS chapter 93; oil is defined as the HS heading 2709.

Method of computation
The calculation of this indicator is a straightforward ratio of the value, in current US dollars, of developed countries duty free imports from developing countries(or least developed countries) and , the total value of imports from developing countries (or least developed countries). The calculation excludes arms. The indicator is also calculated excluding arms and oil. In order to help with the interpretation, the “True Preferential DFQF” is also produced, defined as the merchandises from least-developed and developing countries imported under duty free treatment, while the normal MFN treatment would have called for the payment of a tariff duty.

RATIONALE AND INTERPRETATION

This indicator monitors the results of the effort made by developed countries to reduce or remove tariff barriers to imports from developing countries in a global partnership for development Improved access includes increasing LDCs market access through duty-free and quota-free imports. The MDG target is to see this indicator move towards 100 per cent for LDCs. A value of 100 per cent indicates that all imports from least developed countries to developed countries are admitted duty-free, either under MFN or true preference. Changes in the value of the indicator reflect not only variations in tariffs, but also changes in trade composition over time: an increased use of existing DFQF preferences may trigger a spike in it, without necessarily any change in the importer's tariff policy.

SOURCES AND DATA COLLECTION

National statistical offices compile data for this indicator on the basis of administrative customs records. For some goods and services, data are collected through direct enterprise reporting to governments. This indicator measures imports by developed countries, in which data are collected annually and are relatively reliable for all countries.

DISAGGREGATION

Data on the proportion of duty-free imports can be disaggregated by geographical region of importers and exporters, economic sector and types of imported goods.

COMMENTS AND LIMITATIONS

There are a number of limitations in the ability of this indicator to fully reflect the level of openness of the trading system. First, tariffs are only one of the trade limitations faced by developing countries. Non-tariff measures, such as technical regulations and standards, or sanitary and phytosanitary regulations can also impose trade limitations but are not reflected in the indicator.
Second, the indicator does not include information on the extent of the utilization of preferential treatment schemes. Also, even when duty-free access to developed country markets is provided, such access may not be fully used by developing countries for different reasons such as the inability of some exporters to meet eligibility criteria (i.e. complying with rules of origin). Third, this indicator only assesses the extent of tariffs in developed country markets. Although trade between developing countries comprises a growing share of world trade, their openness to trade is not measured by the indicator.
Finally, duty free treatment is an indicator of market access, but is not always synonymous with preferential treatment for beneficiary countries, because a number of MFN tariffs are already at, or close to, zero, especially for fuels and minerals. International agreements on IT products also offer duty-free treatment for components and equipment used for production purpose. A supplementary indicator with duty free treatment provided to any country (it is, under MFN conditions) is also produced for comparative purposes.

GENDER EQUALITY ISSUES

Women and men may experience the results of changes in trade policies differently, whether through their roles as workers, consumers, entrepreneurs or care-providers. Additional data and indicators are needed in order to undertake gender analysis in this area and understand the impact of trade policies and the relation between trade rules and gender equality.

DATA FOR GLOBAL AND REGIONAL MONITORING

Tariffs, preferences and imports data are compiled by the International Trade Centre (ITC), United Nations Conference on Trade and Development (UNCTAD) and World Trade Organization (WTO), as reported annually by national governmental bodies WTO data are received directly from WTO members and processed and verified. by the before their validation. The reference period for annual data is the calendar year January to December. Reporting starts from 1996, since comprehensive detailed data on imports and preferences at the tariff line level are not available for earlier years.
The sample does not cover all developed countries. Trade and tariff information covers Australia, Canada, the European Union (EU), Japan, Norway (included in MDG exercise in 2007), Switzerland, and the US. Iceland and New Zealand have not yet been included because of problems in availability of data on preferences. Changes in the EU membership modify the size of this group: 15 countries were included in EU until 2004, 25 until 2007 and 27 from 2007 onwards. Also, changes occurred in the LDC group within the period of the calculation, modifying the size of this group. Therefore, growth calculations of trade and duty-free trade absolute numbers during this period are not accurate.
The website www.mdg-trade.org provides data at regional and sectoral level. Data at national level can be obtained by importer market or by beneficiary country.

SUPPLEMENTARY INFORMATION



EXAMPLES



REFERENCES

INTERNATIONAL TRADE CENTER, UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT, WORLD TRADE ORGANIZATION. Millennium Development Goals: Market Access Indicators. Geneva. Available from http://www.mdg-trade.org/.
UNITED NATIONS (2008). List of Least Developed Countries. New York. Available from http://www.un.org/esa/policy/devplan/profile/ldc_list08.pdf
UNITED NATIONS (1998). International Merchandise Trade Statistics – Concepts and Definitions. New York. Available from http://imts.wto.org/imts_rev2_e.pdf
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (2003). Trade Analysis and Information System (TRAINS). Geneva. Internet site www.unctad.org/Trains
UNITED NATIONS OFFICE OF THE HIGH REPRESENTATIVE FOR THE LEAST DEVELOPED COUNTRIES, LANDLOCKED DEVELOPING COUNTRIES AND SMALL ISLAND DEVELOPING STATES (annual). New York. Internet site http://www.un.org/ohrlls
UNITED NATIONS STATISTICS DIVISION (2009). Country or Area and Region Codes. New York. Internet site http://unstats.un.org/unsd/methods/m49/m49regin.htm
WORLD CUSTOMS ORGANIZATION (1996). Harmonized Commodity Description and Coding Systems. Brussels. Available from http://www.wcoomd.org/

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