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NTMs, Preferential Trade Agreements, and Prices: New evidence

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  • Cadot, Olivier
  • Gourdon, Julien

Abstract

This paper combines price data from the CEPII bilateral Unit Values with a new database on non-tariff measures (NTMs) to estimate their effect on consumer prices for selected 4500 products in 60 countries. Results based on panel regressions on 270,000 country-product pairs suggest that, after controlling for tariffs, systematic cross-country cost-of-living and factor endowment differences, origin country-specific and product-specific unobservables, NTMs increase trade unit values in two thirds of the product lines. However, we also find that, in Preferential Trade Agreements (PTA) with deep-integration clauses, harmonization and mutual recognition of standards or conformity assessment substantially reduce the this price-raising effect, suggesting that the compliance-cost component of the price rise is reduced by “deep integration” clauses in PTAs.

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  • Cadot, Olivier & Gourdon, Julien, 2015. "NTMs, Preferential Trade Agreements, and Prices: New evidence," CEPR Discussion Papers 10798, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10798
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    More about this item

    Keywords

    ad-valorem equivalents; economic integration agreement; free-trade agreements; harmonization; non-tariff measures; regionalism; trade;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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