Sorting It Out: Technical Barriers to Trade and Industry Productivity (original) (raw)
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Quantifying the Impact of Technical Barriers to Trade: A Framework for Analysis
Policy Research Working Papers, 1999
This paper provides an overview of the policy debate and methodological issues surrounding product standards and technical barriers to trade. There has been a rising use of technical regulations as instruments of commercial policy in unilateral, regional, and global trade contexts. These non-tariff barriers are of particular concern to developing countries, which may bear additional costs in meeting such mandatory standards. We begin with a review of the policy context driving demand for empirical analysis of standards in trade. We then provide an analytical overview of the role of standards and their relationship to trade. We review methodological approaches that have been used to analyze standards. The main interest lies in advancing techniques that are practical and may be fruitfully extended to the empirical analysis of regulations and trade. The contribution of the paper is to discuss a set of concrete steps that could be taken to move forward a policy-relevant and practical research program of empirical work. Such steps would include (1) administering firm-level surveys in developing countries, (2) devising methods for assessing the trade restrictiveness of standards, and (3) establishing econometric approaches that could be applied to survey and micro data for understanding the role of standards in exports.
How Do Technical Barriers to Trade Influence Trade?
Review of International Economics, 2012
This paper empirically estimates the trade effects of technical barriers to trade (TBT) based on all TBT notifications from 105 World Trade Organization (WTO) countries during 1995-2008. The paper adopts a modified two-stage gravity model to control for both sample selection bias and firm heterogeneity bias. It was found that a country's TBT notifications decrease other countries' probability of exporting, but increase their export volumes. The result can be explained by the TBT's differential effects on the fixed and variable cost of export, and consumer confidence. It was further found that (i) a developing country's TBT have significant effects on other developing countries' exports, but no significant effects on the developed countries' exports, (ii) a developed country's TBT have significant effects on the exports from both types of countries, and (iii) exports from developed countries are affected by a developed country's TBT more seriously than a developing country's TBT.
OECD Trade Policy Papers, 2008
Since the WTO Agreement on Technical Barriers to Trade (TBT) came into force, Members have invested considerable efforts in adopting and promoting the use of measures intended to reduce conformity assessment (CA) related barriers to trade. Our knowledge of the impact of specific trade facilitating programmes in the CA field is limited so far, making empirical studies of their trade impact desirable. This study investigates the impact of Supplier's Declaration of Conformity (SDOC) on trade flows. As under SDOC regimes suppliers themselves provide written assurance of conformity to applicable technical regulations of a market, the costs of compliance are assumed to be smaller than for CA regimes requiring certification by third parties. The study focuses on three cases of SDOC introduction in the European Union covering eligible products from the medical devices, telecommunications equipment and machinery sectors. The paper explains the rationale for using SDOC, expected benefits and design characteristics of SDOC regimes. The quantitative analysis uses a gravity model and finds compelling evidence that the introduction of SDOC in the EU was a factor that influenced the evolution of import flows into EU markets positively. Intra-EU trade flows and imports from extra-EU OECD countries increased for SDOC-eligible radio and telecommunications equipment and low-risk medical devices, whereas the results for machinery are ambiguous. The most striking increases, visible in all three sectors, are found for exports to EU markets from non-OECD (developing) countries included in the sample. Analysis of the effect of SDOC for selected individual EU members furthermore suggest that the magnitude of effect depends on the nature of the CA regime that SDOC replaced. Keywords: technical barriers to trade non-tariff barriers NTB NTM certification telecommunications equipment medical devices machinery supplier's declaration of conformity SDOC conformity assessment conformity assessment procedures European Union France Germany Italy United Kingdom developing countries OECD. ACKNOWLEDGEMENTS This study was carried out jointly by Barbara Fliess of the OECD Trade and Agriculture Directorate (TAD) and Frédéric Gonzales and Raymond Schonfeld, Consultants. We would like to acknowledge inputs, comments and practical assistance that we received from colleagues in-house and external TBT and statistical experts. In TAD special thanks are extended to Sébastien Miroudot, Frank van Tongeren, Linda Fulponi, Monika Tothova, Anthony Kleitz as well as Andreas Lindner and Grégory Legoff of the Statistics Directorate. Outside OECD, the authors would like to express their gratitude to Silja Baller, Christopher Johnson, Dr. Gert Schorn as well as staff of the European Commission DG Enterprise and DG Trade as well as Eurostat. The final report also benefited from discussion in the OECD Trade Committee Working Party, which has agreed to make the study more widely available through declassification on its responsibility.
Do Technical Barriers to Trade Promote or Restrict Trade? Evidence from China
Asia-Pacific Journal of Accounting & Economics, 2010
The use of technical barriers to trade (TBT) is widespread and has increasing impact on international trade. In contrast to most other trade measures, TBT have both trade promotion and trade restriction effects. Due to their theoretical complexity and their scarcity, TBT have been considered as one of the most difficult non-tariff barriers (NTBs) to quantify. In this paper, we construct a TBT database from 1998-2006 to examine the influence of TBT imposed by China on the country's imports. When using the frequency index, we find that TBT are trade restrictive: a one unit increase in TBT will decrease import value by about 0.8%. However, when the coverage ratio is used, we find that the negative effects of TBT are not statistically significant based on the entire period. However, if the focus is shifted to data from 1998-2001, we find that TBT have trade promotion effects. A one unit increase in TBT will increase import value by about 0.2%. Finally, China's TBT (measured by both frequency index and coverage ratio) are trade restricting for agriculture goods but trade promoting for manufacturing goods.
Quantifying the Trade Effects of Technical Barriers to Trade: Evidence from China
2009
Technical barriers to trade(TBT)are now widespread and have increasing impacts on international trade. Different from any other trade measures, TBT have both trade promotion and trade restriction effects. Due to their theoretical complexity and data scarcity, TBT have been considered as "one of the most difficult NTBs imaginable to quantify". In this paper, we construct a TBT database from 1998 to 2006 to examine how TBT imposed by China influence the country's bilateral trade. The empirical study is based on the gravity model. First, we calculate a series of frequency ratio at 4-digit-level of the Harmonized System and aggregate them into import coverage ratio at HS2. We show that TBT in China mainly appear in agriculture, agri-products and processing food sectors. Second, we find that those TBT-rocked industries have negative trade impacts while the results for the other industries are ambiguous. Third, we show that TBT are complementary to tariff now in China, wher...
Trade barriers and productivity growth: cross-industry evidence
XXVII Encontro Nacional de Economia, pp43-59, 1999
This article investigates the impact of trade protection on the evolution of labor productivity and total factor productivity (TFP) of the Brazilian manufacturing sector. An annual panel-dataset of 16 industries for the years 1985 through 1997, a period that includes a major trade liberalization, was used. The regressions reported here are robust to openness indicator (nominal tari®s and e®ective protection rate were used), control variables and time period and suggest that barriers to trade negatively a®ects productivity growth at industry level: those sectors with lower barriers experienced higher growth. We were also able to link the observed increase of industry productivity growth after 1991 to the widespread reduction on e®ective protection experienced in the country in the nineties.
Trade, Regulation and Firm-Level Productivity in the OECD
2011
Abstract This paper examines how trade and regulation affect firm-level productivity outcomes, acting through international and domestic channels to influence the intensity of competition. The analysis looks across a large number of OECD countries and, taking account of industry-level market structure, uses import penetration and de jure product market regulation measures as proxies for international and domestic competitive pressures.
On the Output Effects of Barriers to Trade
International Economic Review, 2006
We study the macroeconomic effects of international trade policy by integrating a Hecksher-Ohlin trade model into an optimal-growth framework. The model predicts that a more open economy will have higher factor productivity. Furthermore, there is a "selective development trap" to which countries may or may not converge, depending on policy. Income at the development trap falls as trade barriers increase. Hence, crosscountry differences in barriers to trade may help explain the dispersion of per capita income observed across countries. The effects are quantified, and we show that protectionism can explain a relevant fraction of TFP and long-run income differentials across countries.
Trade costs, firms and productivity
Journal of Monetary Economics, 2006
This paper examines the response of U.S. manufacturing industries and plants to changes in trade costs using a unique new dataset on industry-level tariff and transportation rates. Our results lend support to recent heterogeneous-firm models of international trade that predict a reallocation of economic activity towards high-productivity firms as trade costs fall. We find that industries experiencing relatively large declines in trade costs exhibit relatively strong productivity growth. We also find that low productivity plants in industries with falling trade costs are more likely to die; that relatively high productivity non-exporters are more likely to start exporting in response to falling trade costs; and that existing exporters increase their shipments abroad as trade costs fall. Finally, we provide evidence of productivity growth within firms in response to decreases in industry-level trade costs.
World Trade Review, 2012
In this article, we review the literature on the measurement of trade costs in international trade with a special emphasis on non-tariff measures and in particular on standards and technical regulations. We distinguish ‘direct’ from ‘indirect’ approaches. The direct approach collects observable data or proxy variables on trade cost components which are then typically used as regressors in a gravity equation of trade. Instead, the indirect approach infers the extent of trade impediments from trade flows. It compares actual trade flows to the trade flows predicted by a hypothetical frictionless benchmark scenario based on a micro-founded trade model, attributing the deviation of actual from predicted trade flows to trade frictions. We argue that economists and policy-makers can gain useful insights from both approaches.