This paper presents new measures of final goods trade protection in eight developed countries. The analysis exploits detailed, comprehensive, and careful price comparisons to derive estimates that, it is argued, reliably capture all kinds of barriers. The results show extensive protection. Japan's average tariff equivalent is 57%, those of the European countries range from 48% to 55%, and that of the United States is lowest, at 12%. An applied general-equilibrium analysis of this protection is conducted. The results include the following: Japan's barriers impose large costs on itself; Japanese and U.S. barriers greatly burden poorer countries; the United States would benefit significantly from multilateral, but not unilateral, opening.

The Heckscher-Ohlin-Vanek (HOV) model of factor service trade is a mainstay of international economics. Empirically, though, it is a flop. This warrants a new approach. We test the HOV model with international and Japanese regional data. The strict HOV model performs poorly because it cannot explain the international location of production. Restricting the sample to Japanese regions provides no help, inter alia giving rise to what Daniel Trefler calls the "mystery of the missing trade." However, when we relax the assumption of universal factor price equalization, results improve dramatically. In sum, the HOV model performs remarkably well.