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Is there a dirty little secret? Non-tariff barriers and the gains from trade

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  • Niven Winchester

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    (Department of Economics, University of Otago)

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    Abstract

    We estimate tariff equivalents (TEs) of non-tariff barriers (NTBs) using a series of gravity equations. Our analysis focuses on New Zealand, a nation that has a comprehensive free trade agreement (with Australia) that can be used to benchmark other trade negotiations. We estimate reductions in TEs following trade negotiations as differences between New Zealand-Australia TEs and those applying to trade between New Zealand and other nations. Simulating reductions in tariffs and NTBs in a computable general equilibrium (CGE) model indicates that gains from trade liberalisation are much larger when tariffs and NTBs are consider than when only tariffs are reduced.

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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0801.pdf
    File Function: First version, 2008
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    Bibliographic Info

    Paper provided by University of Otago, Department of Economics in its series Working Papers with number 0801.

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    Length: 38 pages
    Date of creation: Jan 2008
    Date of revision: Jan 2008
    Handle: RePEc:otg:wpaper:0801

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    Related research

    Keywords: trade liberalisation; non-tariff barriers; computable general equilibrium modelling;

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    1. Arjan Lejour & Ruud de Mooij & Richard Nahuis, 2001. "EU enlargement: economic implications for countries and industries," CPB Document 11, CPB Netherlands Bureau for Economic Policy Analysis.
    2. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    3. James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
    4. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
    5. Robert Scollay & John P. Gilbert, 2001. "New Regional Trading Arrangements in the Asia Pacific?," Peterson Institute Press: Policy Analyses in International Economics, Peterson Institute for International Economics, number pa63, November.
    6. G. Philippidis & A. I. Sanjuán, 2007. "An Analysis of Mercosur's Regional Trading Arrangements," The World Economy, Wiley Blackwell, vol. 30(3), pages 504-531, 03.
    7. Brown, Drusilla K., 1987. "Tariffs, the terms of trade, and national product differentiation," Journal of Policy Modeling, Elsevier, vol. 9(3), pages 503-526.
    8. G. Philippidis & A.I. Sanjuán, 2007. "An Examination of Morocco's Trade Options with the EU," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(2), pages 259-300, March.
    9. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
    10. Philippidis, G. & Carrington, A., 2005. "European Enlargement and Single Market Accession: A Mistreated Issue," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 543-566.
    11. Michael Ferrantino, 2006. "Quantifying the Trade and Economic Effects of Non-Tariff Measures," OECD Trade Policy Papers 28, OECD Publishing.
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