Economic research and trade policy analysis
Executive Summary
The comparison of tariffs across time poses significant challenges when data are expressed in different versions of the Harmonized System (HS).
Conclusions
The study highlights that incorporating NLP techniques into HS transposition processes offers substantial potential to enhance the efficiency and accuracy of tariff analysis, making it an invaluable tool for trade statisticians.
Tariff Verification
Both the simple and complex tariff scenarios discussed above indicate that a level of human verification is still ultimately required to ensure the quality of results after the automated tariff transposition, depending on the quality of the original tariffs datasets.
Introduction
Tariff line level Harmonized System (HS) transposition beyond the harmonized 6-digit level has long been a labor-intensive process in trade statistics.
Motivation
The regular work of the Regional Trade Agreements (RTA) section in the Trade Policies Review Division (TPRD) of the World Trade Organization is one among several statistical work streams that regularly require tariff line HS transposition.
Literature Review
Natural Language Processing (NLP) is one among many sub-branches of artificial intelligence (AI) that specifically deals with text as data.
Results
After running both transposition methods, the final output is a transposed tariffs table ("TC" table, in WTO IDB parlance) providing the full set of correlated HS codes in two HS nomenclatures, with each preferential tariff line allocated a corresponding MFN duty code.
Beyond Six Digits: Automated Tariff Line HS Transposition Using Natural Language Processing
This paper explores the application of Natural Language Processing (NLP) techniques to automate Harmonized System (HS) tariff line transposition, employing a three-stage process: unique 1:1 tariff code matching (Round 1), exact description matching (Round 2), and “smart” description matching (Round 3) using Artificial Intelligence (AI) and lexical similarity methods paired with harmonized 6-digit concordance and cosine similarity. Similarity is calculated using either Term Frequency Inverse Document Frequency (TF-IDF) vectors or Sentence-BERT (SBERT) embeddings, comparing two scenarios: a straightforward case (Economy A) with standardized descriptions, and a complex case (Economy B), with more detailed technical descriptions.
Further Work
In future, further refinement and testing on diverse datasets is recommended to optimize these methods for broader application. For instance, other models such as OpenAI's Text Embedding model could be compared with SBERT to compare performance rates.
Abstract
This paper explores the application of Natural Language Processing (NLP) techniques to automate Harmonized System (HS) tariff line transposition, employing a three-stage process: unique 1:1 tariff code matching (Round 1), exact description matching (Round 2), and “smart” description matching (Round 3) using Artificial Intelligence (AI) and lexical similarity methods paired with harmonized 6-digit concordance and cosine similarity.
Trade for Peace Programme
Pathways to Sustainable Trade and Peace
Can the flow of goods, services, and ideas build bridges where conflict once prevailed? If so, under whatcircumstances? The World Trade Organization (WTO) stands for a predictable, rules-based system based on the principle of non-discrimination. When the predecessor to the WTO – the General Agreement on Tariffs and Trade – was established some 70 years ago, conflict among nations was at an historic low, following World War II. In the changed global political landscape of today, geopolitical tensions, disruptions to trade and increasing concerns about economic inequality have come to the fore, challenging the foundations of multilateral trade relationships, and trade cooperation more generally. Pathways to Sustainable Trade and Peace is the first WTO publication dedicated to an in-depth exploration of the complex relationship between trade and peace. The publication examines a number of critical questions. How do trade and peace interact? Can trade be leveraged to foster economic development and stability? What can governments and other stakeholders do to foster positive interaction between trade and peace? The volume focuses specifically but not exclusively on fragile and conflict-affected economies, including case studies and analyses from various policy angles.
Acknowledgements
The publication “Pathways to Sustainable Trade and Peace” was prepared under the general responsibility and guidance of Maika Oshikawa, Director of the Accessions Division.
Introduction
Throughout recorded human history, interactions among diverse nations, societies and communities have been shaped by complex combinations of economic, political and social forces. A topical and highly relevant component of these interactions in today’s world relates to linkages between trade and peace.
Foreword by the WTO Director-General
We live in troubled times. Beyond geopolitical tensions, uncertainty in the global economy, and stalling progress on collective challenges from poverty reduction and hunger to climate change, the world is witnessing the highest level of active conflicts since the end of the Second World War. According to the 2024 Global Peace Index compiled by the Institute of Economics and Peace, a think tank, fewer conflicts are being resolved, while they are becoming more internationalized.
Social
The emergent renewable hydrogen sector offers economic and sustainable development opportunities. Many developing economies see new possibilities in participating and profiting from the global energy market, as they have high renewable energy potential and could potentially produce renewable hydrogen and its derivatives at low cost.