How Do Differing Standards Increase Trade Costs? The Case of Pallets

The pallet is a platform used for storing, handling and transporting products. There are hundreds of different pallet sizes around the world. The case of pallets is examined to illustrate the impact of multiplicity of standards on trade costs. We select this case because pallets are used all over the world, pallet standards are not too sophisticated, and data on pallet standards and costs are to some extent available. The paper examines why there are so many different pallet standards, the associated trade costs and the reasons why countries have not harmonised pallet sizes to eliminate such costs. It then presents options for exporters to mitigate the adverse effects of standards multiplicity while complying with destination markets’ standard requirements. The range of options is limited for exporters from less developed countries because of the lack of rental and exchange pallet markets. To mitigate the costs of this multiplicity of standards, the international community's strategy should focus on developing awareness of the cost of multiplicity of standards and actively supporting standardisation.