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Trade Restrictiveness Indices in Presence of Externalities: An Application to Non-Tariff Measures

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  • Beghin, John C.
  • Disdier, Anne-Celia
  • Marette, Stephan

Abstract

We extend the trade restrictiveness indices (TRIs) approach to the case of market failures and domestic regulations addressing them, in presence of arbitrary tariffs and other domestic price policy distortions. We focus on standard-like non-tariff measures (NTMs) affecting cost of production and potentially enhancing domestic demand by increasing product quality or reducing negative externalities. The impact of NTMs on trade is ambiguous depending on the relative strength of the supply cost and demand enhancing effects. We apply the framework to the NTM database of Kee, Nicita, and Olarreaga (2009) and derive ad valorem equivalents for NTMs and other policy distortions. These equivalents are then used to compute TRIs. 10% of the NTM ad valorem equivalents at the 6-digit level of the Harmonized System are negative indicating a net trade-enhancing effect of these NTMs in those sectors. Consequently, TRIs computed without a protectionist presumption are smaller than their constrained counterparts not allowing for trade enhancements effects of NTMs. Accounting for externalities and anti-protective effects significantly reduces the measure of trade policy restrictiveness for most countries.

Suggested Citation

  • Beghin, John C. & Disdier, Anne-Celia & Marette, Stephan, 2012. "Trade Restrictiveness Indices in Presence of Externalities: An Application to Non-Tariff Measures," Staff General Research Papers Archive 35578, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:35578
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    References listed on IDEAS

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    Cited by:

    1. Olivier Cadot & Julien Gourdon, 2016. "Non-tariff measures, preferential trade agreements, and prices: new evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 227-249, May.
    2. Mahdi Ghodsi & Julia Grübler & Oliver Reiter & Robert Stehrer, 2017. "The Evolution of Non-Tariff Measures and their Diverse Effects on Trade," wiiw Research Reports 419, The Vienna Institute for International Economic Studies, wiiw.
    3. Beghin, John C. & Bureau, Jean-Christophe & Gohin, Alex, 2014. "The Impact of an EU-US TTIP Agreement on Biofuel and Feedstock Markets," 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California 197153, International Agricultural Trade Research Consortium.
    4. Anne-Célia Disdier & Carl Gaigné & Cristina Herghelegiu, 2018. "Do Standards Improve the Quality of Traded Products?," Working Papers ECARES 2018-38, ULB -- Universite Libre de Bruxelles.
    5. Mahdi Ghodsi & Julia Grübler & Robert Stehrer, 2016. "Import Demand Elasticities Revisited," wiiw Working Papers 132, The Vienna Institute for International Economic Studies, wiiw.
    6. Giorgio Barba Navaretti & Giulia Felice & Emanuele Forlani & Paolo Garella, 2018. "Non-tariff measures and competitiveness," Development Working Papers 438, Centro Studi Luca d'Agliano, University of Milano.
    7. Bo Xiong & John Beghin, 2017. "Disentangling Demand-Enhancing And Trade-Cost Effects Of Maximum Residue Regulations," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 6, pages 105-108, World Scientific Publishing Co. Pte. Ltd..
    8. John C. Beghin & Bo Xiong, 2016. "Economic Effects of Standard-Like Nontariff Measures: Analytical and Methodological Dimensions," Center for Agricultural and Rural Development (CARD) Publications 16-wp569, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    9. John C. Beghin & Jean-Christophe Bureau & Alexandre Gohin, 2017. "The Impact of an EU–US Transatlantic Trade and Investment Partnership Agreement on Biofuel and Feedstock Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(2), pages 321-344, June.
    10. Bo Xiong & John Beghin, 2017. "Disentangling Demand-Enhancing And Trade-Cost Effects Of Maximum Residue Regulations," World Scientific Book Chapters,in: Nontariff Measures and International Trade, chapter 6, pages 105-108 World Scientific Publishing Co. Pte. Ltd..
    11. Beverelli, Cosimo & Boffa, Mauro & Keck, Alexander, 2014. "Trade policy substitution: Theory and evidence from Specific Trade Concerns," WTO Staff Working Papers ERSD-2014-18, World Trade Organization (WTO), Economic Research and Statistics Division.
    12. Maria Cipollina & David Laborde Debucquet & Luca Salvatici, 2017. "The tide that does not raise all boats: an assessment of EU preferential trade policies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(1), pages 199-231, February.
    13. John C. Beghin & Bo Xiong, 2016. "Economic Effects of Standard-Like Nontariff Measures: Analytical and Methodological Dimensions," Center for Agricultural and Rural Development (CARD) Publications 16-wp569, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    14. Cosimo Beverelli & Mauro Boffa & Alexander Keck, 2019. "Trade policy substitution: theory and evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(4), pages 755-783, November.
    15. Olper, Alessandro, 2017. "The political economy of trade-related regulatory policy: environment and global value chain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(3), February.
    16. Luca Salvatici & Silvia Nenci, 2017. "New features, forgotten costs and counterfactual gains of the international trading system," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 44(4), pages 592-633.
    17. Julien Gooris & Cristina Mitaritonna, 2015. "Which import restrictions matter for trade in services ?," Working Papers 2015-33, CEPII research center.
    18. Michael Bratt, 2017. "Estimating the bilateral impact of nontariff measures on trade," Review of International Economics, Wiley Blackwell, vol. 25(5), pages 1105-1129, November.
    19. Grant, Jason & Arita, Shawn, 2017. "Sanitary and Phyto-Sanitary Measures: Assessment, Measurement, and Impact," Commissioned Papers 259417, International Agricultural Trade Research Consortium.
    20. Olivier Cadot & Alan Asprilla & Julien Gourdon & Ralph Peters & Christian Knebel, 2015. "Deep Regional Integration And Non-Tariff Measures: A Methodology For Data Analysis," UNCTAD Blue Series Papers 69, United Nations Conference on Trade and Development.

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    Keywords

    Non-tariff measures; externalities; ad valorem equivalents; trade restrictiveness indices;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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