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Harmonization and mutual recognition: What are the effects on trade?

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  • Orefice, Gianluca
  • Piermartini, Roberta
  • Rocha, Nadia

Abstract

This paper analyses the effect of harmonization and mutual recognition of standards on trade flows. Although harmonization and mutual recognition are commonly believed to reduce trade costs towards freer trade, their impact on trade is more complex, and little is known about their actual effects. In order to assess which approach has the greatest impact on trade, this paper looks at the evidence stemming from regional trade agreements. Not all regional trade agreements cover TBT area and among those that do, some favour harmonization, others favour mutual recognition. Using a gravity model, we estimate the effects on trade of harmonization and mutual recognition on the patterns of trade. Results show that standards harmonization and mutual recognition enhance trade. Moreover, mutual recognition has a higher positive effect on trade than harmonization, and this is due to mutual recognition of conformity assessment. These results are robust to endogeneity.

Suggested Citation

  • Orefice, Gianluca & Piermartini, Roberta & Rocha, Nadia, 2012. "Harmonization and mutual recognition: What are the effects on trade?," Conference papers 332285, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332285
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    References listed on IDEAS

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    3. Reyes, Jose-Daniel, 2011. "International harmonization of product standards and firm heterogeneity in international trade," Policy Research Working Paper Series 5677, The World Bank.
    4. Michal Grajek, 2004. "Diffusion of ISO 9000 Standards and International Trade," CIG Working Papers SP II 2004-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    5. Nuno Limão & Patricia Tovar, 2018. "Policy choice: Theory and evidence from commitment via international trade agreements," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 6, pages 179-198, World Scientific Publishing Co. Pte. Ltd..
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