Trade barriers and export potential: Gravity estimates for Norway’s exports

Using trade and tariff data for around 150 countries, we estimate the impact of tariffs on Norway’s exports to these countries in 2007. Remaining tariffs have a significant and measurable impact on exports: on average a one percent tariff reduces exports by around 4 percent. Using these estimates to assess the trade potential from tariff elimination, we find that trade may increase by 4.2-12.9 billion NOK, equivalent to 1.2-3.7 % of Norway’s non-oil exports in 2007. The trade potential is largest for the BRICs and the USA, and for the sectors minerals, fish, machinery and chemicals. Some countries also have high non-tariff barriers; in some cases even higher than their tariff barriers. 1 Non-technical summary The paper uses a gravity model to assess the impact of tariff barriers on Norway’s exports, and thereafter uses these estimates in order to predict ho