Trade Barrier Index
The International Trade Barrier Index (TBI) follows on the success of its sister index the International Property Rights Index used by think tanks, governments, private industry, and academics from around the world to assess their property rights environment.
After observing rising trade tensions across the world, the need was made clear for a tool that could reveal trade barriers, in all their various forms, as the barriers to economic and individual freedoms they are. The problem: too often the trade debate is distracted by political spin or bureaucratic standard setting that treat individuals, and their freedoms, as bystanders.
The Trade Barrier Index is the response to that need. The first edition was released in 2019, providing data on tariffs, non-tariff measures, services restrictions, and the trade facilitation environment for 86 countries in an easily comparative format.
The TBI is designed to be used as tool for policymakers, business communities, and civic activists to highlight the harms cause by trade barriers and the net befits to be gained from reducing them. More than the sum of its parts, free trade, unhampered by artificial restraints, allows individuals to exchange ideas, social customs, goods, and services on mutually beneficial terms they determine. It rewards the most efficient allocation of resources and celebrates specialization. The next iterations of the TBI will be able to reflect changes over time and deliver more tools to aide in the research of trade barriers.
Freedom-loving people everywhere should thank Americans for Tax Reform and their global partners for this useful and comprehensive 2021 edition of the Trade Barrier Index (TBI). The index lights the path toward policies that are more likely to promote freedom and prosperity for people around the world.
The TBI measures not just tariffs but behind-the-border regulations that can stifle trade and competition. The index is also up-to-date, capturing the impact of the global COVID-19 pandemic as well as government policy choices such as the US-China trade war. The overall message of the index is that hard-won gains in the freedom to trade are at risk, and the stakes are high for billions of people in rich and developing countries alike.
The 2021 TBI results confirm once again that Adam Smith was on to something: nations tend to become more prosperous as they shed barriers to trade, whether tariffs or non-tariff barriers. It is no random matter that the nations with the lowest barriers according to the 2021 TBI—Singapore, New Zealand, the Netherlands, the United Kingdom, Sweden, and Canada--are also among the most free and prosperous in the world.
One of the most newsworthy insights of the 2021 TBI is the remarkable progress of the United Kingdom in lowering its own trade barriers after Brexit. Once the UK exited the EU’s common external tariff at the beginning of 2020, it embarked on one of the world’s most ambitious efforts at unilateral trade liberalization. With its new UK Global Tariff, the nation slashed hundreds of tariff lines to zero and signed 60 liberalizing trade agreements. As a result, the UK jumped from 8th to 4th in the TBI rankings. In a wonderful replay of history, the United Kingdom is re-asserting its global leadership in trade 175 years after repeal of the Corn Laws in 1846. (Meanwhile, the United States languishes far down the TBI rankings, challenging the myth that it is one of the most open economies in the world.)
Another noteworthy insight of the 2021 TBI is that openness to trade and other freedoms are by nature a package deal. The same fresh winds that bring more trade in goods and services also promote other freedoms. The TBI authors find a strong positive correlation between low barriers to trade and broader measures of civil and political freedom. More open economies also tend to be less corrupt. In the latest example of how freedoms are intertwined, the recent crackdown on civil liberties in Hong Kong has been accompanied by a measurable decline in its ranking in the TBI.
The latest TBI report captures a world in flux. Global trade has rebounded strongly from the pandemic shutdowns, but worrying trends threaten economic progress. On the positive side, the 2021 TBI confirms that global tariffs have not been rising. In fact, in response to COVID-19, a number of countries lowered or eliminated tariffs on related medical supplies and equipment. Many countries also relaxed restrictions on digital trade. On the negative side, COVID-19 also prompted countries to raise regulatory barriers to trade. On digital trade, the EU tightened its rules with its misguided General Data Protection Regulation while less developed countries such as India, Indonesia, and China imposed new rules on content, encryption, and data localization for servers. The United States contributed to the backsliding with administrative tariffs on steel and aluminum and imports from China.
Like athletes in the recently concluded Tokyo Olympics, nations are engaged in an institutional competition with one another. The difference is that in the Olympics there can only be a limited number of medal winners in each competition, but in the Trade Barrier Index rankings, every nation that embraces more openness can be a winner. And, of course, the stakes with trade policy are much higher—the freedom and prosperity of hundreds of millions of people.
Senior affiliated scholar at the Mercatus Center at George Mason University and author of Mad about Trade: Why Main Street America Should Embrace Globalization.
Lorenzo Montanari, is Executive Director of the Property Rights Alliance (PRA), an advocacy group/think tank based in Washington, DC USA, affiliated to Americans for Tax Reform, committed to the protection of physical, legal and intellectual property rights around the world. At Property Rights Alliance, Lorenzo is in charge of publishing and editing the International Property Rights Index, an international comparative study focus on intellectual and physical property rights. He is currently, Private Chair at the American Legislative Exchange Council’s Federalism & International Relations Task Force. Previously, he worked for a public affairs firm and at the international department of the GSPM/George Washington University in Washington, DC and as a political analyst and electoral observer in Latin America. Lorenzo holds a BA in Political Science and in International Relations from the University of Bologna and MA in Political Management from the George Washington University. He collaborates with The Daily Caller and Forbes.
Philip Thompson is a Policy Analyst at ATRF specializing in international intellectual property legislation and trade policy. Philip is the author of the International Trade Barrier Index and holds an MA from George Mason University in International Commerce and Policy and a BA in International Conflict and Resolution from George Mason as well. Philip’s writings have been published in a number of outlets including The Hill, the Washington Examiner, Morning Consult, and Townhall. In addition, Philip supports the production of the International Property Rights Index at ATRF’s sister organization the Property Rights Alliance. Before joining ATRF Philip worked at the American Legislative Exchange Council’s foreign affairs task force and at the Cato Institute’s trade policy center.