implications and permit the government, rather than foreign or domestic monopolists, to obtain the windfall gain associated with quotas.

4. Inter-country comparisons of actual price levels for tradable goods, along the lines of the recent NBER study, should be the object of intensified research to clarify empirically the recent developments in the theory of protection.

This study applies to the specific case of the United States the analytical framework described in the previous paper.

Tariffs, non-tariff barriers, export subsidies, and other protective measures including those which may be "negatively protective"-are considered primarily in their relative-price dimension and from the domestic U.S. point of view.

Consideration is given first to "nominal" protection, the most easily identified elements of which-conventional tariffs-are displayed in the tariff profile. The various categories of tradable products are then passed in review in order to estimate the approximate extent to which the tariff profile should be corrected by taking account of the principal U.S. non-tariff barriers, export subsidies, etc., as well as the apparent redundancy of some of the tariffs. Section III briefly surveys empirical data on the "effective" protection embodied in the U.S. protective system. (It is recalled that the "effective"-protection concept measures the degree to which value added in an industry is lowered or raised, relative to what it would be in a free-trade situation, as a result of "nominal" protection of the industry's material inputs and outputs.) The special significance of protection of certain industries producing mainly intermediate goods, which are inputs for other industries, is explored with the help of input-output information. Finally, some statistical evidence is assembled on the role of high levels of protection, especially those resulting from quantitative restrictions, with respect. to the problems of international competitiveness, inflation, and equity among producing industries in the U.S.

Harry H. Bell is head of Harry H. Bell Studies and Services, an economic consulting firm.

II. NOMINAL PROTECTION

Tariff Rates and their Implicit Price Ratios

There are approximately 10,000 classifications distinguished in the Tariff Schedules of the United States (TSUS). Even allowing for the fact that a number of these are subject to free entry, there are a tremendous number of differentiated rates of duty. Despite all the statistical pitfalls of tariff averaging, it is therefore indispensable to compute tariff averages according to relatively broad but economically meaningful categories, aggregated according to some logically defensible weighting system, if one is to generalize at all about the structure of the U.S. tariff. Specific and mixed duties, often of great complexity or expressed in terms of esoteric physical units, must somehow be converted into comparable ad valorem terms.

Chart 1, drawn from the numerical averages summarized in Table 1, provides a visual picture of the estimated U.S. tariff profile before and after the Kennedy Round.1 It was originally prepared by the Secretariat of the U.N. Conference on Trade and Development (UNCTAD) shortly after conclusion of the Kennedy negotiations. Divisions along the hori zontal axis show, in numerical sequence, the 1-digit sections and/or the major 2-digit chapters of the Standard International Trade Classification (SITC), sections 0 through 8. Relative importance of the commodity classifications is indicated by the horizontal spacing on the chart in proportion to total imports of OECD countries in 1965 (used as a proxy for "world trade"). The profile of the diagram shows estimated average levels of tariffs, including zero duties. Specific and mixed duties are converted into f.o.b. ad valorem equivalents, mainly by using 1964 unit-value data obtained from the U.S. Delegation to the Kennedy Round. The average for each classification is the arithmetic mean of a stratified randomized sample of individual items, weighted in approximate proportion to total OECD imports in 1965. The particular sampling technique and weighting pattern were chosen because they facilitated international comparisons of tariff schedules based on disparate nomenclatures and for countries having divergent domestic economic structures. Subsequent information from independent sources indicates that except for probably over-estimation of the U.S. tariff average in SITC 84-the sample was in fact sufficiently representative and, at the levels of aggregation shown here, yielded estimates very close to similarly weighted averages computed from a full count of all the tariff rates.

Attention is called to the fact that no tariff averages are shown for that part of the "foodstuffs" section (SITC 0) consisting of those products that are subject to the Common Agricultural Policy in EEC and

1 UNCTAD: The Kennedy Round: Estimated Effects on Tariff Barriers (TD/6/rev., UN Sales No. E. 68. II. D.12, 1968), pp. 49-50, 62-63. The same charts and data were used in the U.S. Tariff Commission's report, Operation of the Trade Agreements Program, with a Special Chapter of the Kennedy Round (19th Report, 1967, TC Publication 287), pp. 244-63.

CHAIT 1.-Tariff Profile, U.S. Tariff (TSUS), Pre- and Post-Kennedy Round (F.O.B.

basis)

to price-support or income-support measures in the U.S. and U.K. It is also noted that the pre-Kennedy tariff average for SITC 5"Chemicals"-includes a small but reasonably representative sample of ASP terms shown at estimated ad valorem equivalents taken from a U.S. Tariff Commission study. The corresponding post-Kennedy average assumes implementation of the "ASP package" negotiated at the end of the Kennedy Round. As is well known, the fate of the "ASP package" is still undecided. In the event these additional tariff reductions do not in fact occur, the corrected averages are those shown in parentheses in Table 1 for SITC classifications 5, 86, and "Other 8". Another contingency was provided for in the Kennedy Round with respect to cotton textiles, the duty reductions on which were dependent on renewal of the Long-Term Cotton Textile Arrangement. The LTA was in fact renewed. If it had not been renewed, the corrected averages would have been those shown in parentheses in Table 1 for SITC Chapters 65 and 84.

In order to make the profile of U.S. tariff averages comparable with the c.i.f.-based averages for other countries, it is necessary to convert them from f.o.b. to c.i.f. terms. This has the effect of lowering the U.S. tariff averages in accordance with the estimated freight-plus-insurance coefficients for the different commodity categories. The results of this adjustment are shown graphically in Chart 2, drawn from the