Measuring the Restrictiveness of Trade Policy

This article provides an introduction to the trade restrictiveness index (TRI), which equals the uniform tariff that is welfare equivalent to a given pattern of trade protection. Unlike standard measures of trade restrictiveness, the TRI has a solid theoretical basis, can incorporate both tariffs and quantitative restrictions, and can be adapted to construct the trade policy equivalent of domestic distortions. The article compares a number of applications and describes procedures for operationalizing the TRI on a personal computer. The authors conclude that the TRI has considerable potential in empirical work.