IDEAS home Printed from https://ideas.repec.org/p/jet/dpaper/dpaper526.html
   My bibliography  Save this paper

Effects of RoHs and REACH regulations on firm-level production and export, and the role of global value chains : the cases of Malaysia and Vietnam

Author

Listed:
  • Otsuki, Tsunehiro
  • Honda, Keiichiro
  • Michida, Etsuyo
  • Nabeshima, Kaoru
  • Ueki, Yasushi

Abstract

This paper uses firm-level data to examine the impact of foreign chemical safety regulations such as RoHS and REACH on the production costs and export performance of firms in Malaysia and Vietnam. This paper also investigates the role of global value chains in enhancing the likelihood that a firm complies with RoHS and REACH. We find that in addition to the initial setup costs for compliance, EU RoHS (REACH) implementation imposes on firms additional variable production costs by requiring additional labor and capital expenditures of around 57% (73%) of variable costs. We also find that compliance with RoHS and REACH significantly increases the probability of export and that compliance with EU RoHS and REACH helps firms enter a greater variety of countries. Furthermore, firms participating in global value chains have higher compliance with RoHS and REACH regulations, regardless of whether the firm is directly exporting, when the firm operates in upstream or downstream industries of the countries' supply chain.

Suggested Citation

  • Otsuki, Tsunehiro & Honda, Keiichiro & Michida, Etsuyo & Nabeshima, Kaoru & Ueki, Yasushi, 2015. "Effects of RoHs and REACH regulations on firm-level production and export, and the role of global value chains : the cases of Malaysia and Vietnam," IDE Discussion Papers 526, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper526
    as

    Download full text from publisher

    File URL: https://ir.ide.go.jp/?action=repository_action_common_download&item_id=37652&item_no=1&attribute_id=22&file_no=1
    File Function: First version, 2015
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Keith E. Maskus & Tsunehiro Otsuki & John S. Wilson, 2013. "Do foreign product standards matter? Impacts on costs for developing country exporters," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 20(1), pages 37-57, March.
    2. Fontagné, Lionel & Orefice, Gianluca & Piermartini, Roberta & Rocha, Nadia, 2015. "Product standards and margins of trade: Firm-level evidence," Journal of International Economics, Elsevier, vol. 97(1), pages 29-44.
    3. John Wilson & Tsunehiro Otsuki & Baishali Majumdsar, 2003. "Balancing food safety and risk: do drug residue limits affect international trade in beef?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 377-402.
    4. Mitsuyo Ando & Fukunari Kimura, 2005. "The Formation of International Production and Distribution Networks in East Asia," NBER Chapters, in: International Trade in East Asia, pages 177-216, National Bureau of Economic Research, Inc.
    5. Niven Winchester & Marie-Luise Rau & Christian Goetz & Bruno Larue & Tsunehiro Otsuki & Karl Shutes & Christine Wieck & Heloisa L. Burnquist & Maurício J. Pinto de Souza & Rosane Nunes de Faria, 2012. "The Impact of Regulatory Heterogeneity on Agri-food Trade," The World Economy, Wiley Blackwell, vol. 35(8), pages 973-993, August.
    6. Maertens, Miet & Swinnen, Johan F.M., 2009. "Trade, Standards, and Poverty: Evidence from Senegal," World Development, Elsevier, vol. 37(1), pages 161-178, January.
    7. Drogué, Sophie & DeMaria, Federica, 2012. "Pesticide residues and trade, the apple of discord?," Food Policy, Elsevier, vol. 37(6), pages 641-649.
    8. 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..
    9. Koh, S.C.L. & Gunasekaran, A. & Tseng, C.S., 2012. "Cross-tier ripple and indirect effects of directives WEEE and RoHS on greening a supply chain," International Journal of Production Economics, Elsevier, vol. 140(1), pages 305-317.
    10. Ito, Takatoshi & Rose, Andrew K. (ed.), 2005. "International Trade in East Asia," National Bureau of Economic Research Books, University of Chicago Press, number 9780226378961, December.
    11. Chunlai Chen & Jun Yang & Christopher Findlay, 2008. "Measuring the Effect of Food Safety Standards on China’s Agricultural Exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(1), pages 83-106, April.
    12. 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..
    13. Catherine Ragasa & Suzanne Thornsbury & Satish Joshi, 2011. "Are Food Certification Costs Misestimated? Exporter‐Perspective on the European Standard," Journal of Agricultural Economics, Wiley Blackwell, vol. 62(3), pages 669-689, September.
    14. Otsuki, Tsunehiro & S. Wilson, John, 2003. "Food Safety and Trade: Winners and Losers in a Non-Harmonized World," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 266-287.
    15. Maggie Xiaoyang Chen & John Wilson & Tsunehiro Otsuki, 2008. "Standards and export decisions: Firm-level evidence from developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 17(4), pages 501-523.
    16. Miet Maertens & Liesbeth Colen & Johan F. M. Swinnen, 2011. "Globalisation and poverty in Senegal: a worst case scenario?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 38(1), pages 31-54, March.
    17. Tien Manh Vu & Hiroyuki Yamada & Tsunehiro Otsuki, 2014. "The rise and fall of multinational enterprises in Vietnam: survival analysis using census data during 2000-2011," OSIPP Discussion Paper 14E001, Osaka School of International Public Policy, Osaka University.
    18. Takatoshi Ito & Andrew K. Rose, 2005. "International Trade in East Asia," NBER Books, National Bureau of Economic Research, Inc, number ito_05-1, March.
    19. Honda, Keiichiro, 2012. "The effect of EU environmental regulation on international trade : restriction of hazardous substance as a trade barrier," IDE Discussion Papers 341, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Otsuki, Tsunehiro & Michida, Etsuyo & Nabeshima, Kaoru & Ueki, Yasushi, 2014. "Estimating the effect of chemical safety standards on firm performance in Malaysia and Vietnam," IDE Discussion Papers 455, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. John C. Beghin & Miet Maertens & Johan Swinnen, 2017. "Nontariff Measures and Standards in Trade and Global Value Chains," World Scientific Book Chapters,in: Nontariff Measures and International Trade, chapter 2, pages 13-38 World Scientific Publishing Co. Pte. Ltd..
    3. John C. Beghin & Miet Maertens & Johan Swinnen, 2017. "Nontariff Measures and Standards in Trade and Global Value Chains," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 2, pages 13-38, World Scientific Publishing Co. Pte. Ltd..
    4. Fabio Gaetano Santeramo & Emilia Lamonaca, 2019. "The Effects of Non‐tariff Measures on Agri‐food Trade: A Review and Meta‐analysis of Empirical Evidence," Journal of Agricultural Economics, Wiley Blackwell, vol. 70(3), pages 595-617, September.
    5. Santeramo, Fabio G., 2017. "On Non-Tariff Measures and Changes in Trade Routes: From North-North to South-South Trade?," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 263493, European Association of Agricultural Economists.
    6. Annalisa Zezza & Federica Demaria & Maria Rosaria Pupo d'Andrea & Jo Swinnen & Giulia Meloni & Senne Vandevelde & Alessandro Olper & Daniele Curzi & Valentina Raimondi & Sophie Drogue, 2018. "Research for AGRI Committee - Agricultural trade: assessing reciprocity of standards," Working Papers hal-02787948, HAL.
    7. Schuster, Monica & Maertens, Miet, 2015. "The Impact of Private Food Standards on Developing Countries’ Export Performance: An Analysis of Asparagus Firms in Peru," World Development, Elsevier, vol. 66(C), pages 208-221.
    8. Ana M Fernandes & Esteban Ferro & John S Wilson, 2019. "Product Standards and Firms’ Export Decisions," The World Bank Economic Review, World Bank, vol. 33(2), pages 353-374.
    9. Nabeshima, Kaoru & Obashi, Ayako & Kim, Kunhyui, 2021. "Impacts of additional compliance requirements of regulations on the margins of trade," Japan and the World Economy, Elsevier, vol. 59(C).
    10. Curzi, Daniele & Schuster, Monica & Maertens, Miet & Olper, Alessandro, 2020. "Standards, trade margins and product quality: Firm-level evidence from Peru," Food Policy, Elsevier, vol. 91(C).
    11. Fabio Gaetano Santeramo & Emilia Lamonaca, 2019. "On the impact of non-tariff measures on trade performances of the African agri-food sector," Agrekon, Taylor & Francis Journals, vol. 58(4), pages 389-406, October.
    12. Hejazi, Mina & Grant, Jason H. & Peterson, Everett, 2022. "Trade impact of maximum residue limits in fresh fruits and vegetables," Food Policy, Elsevier, vol. 106(C).
    13. Hejazi, Mina & Grant, Jason H. & Peterson, Everett, 2016. "Hidden Trade Costs? Maximum Residue Limits and US Exports to Trans-Atlantic and Trans-Pacific Trading Partners," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235847, Agricultural and Applied Economics Association.
    14. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.
    15. Dela-Dem Doe Fiankor & Daniele Curzi & Alessandro Olper, 2021. "Trade, price and quality upgrading effects of agri-food standards [Endogenous Trade Policy with Heterogeneous Firms]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(4), pages 835-877.
    16. Maertens, Miet & Swinnen, Johan, 2015. "Agricultural trade and development: A value chain perspective," WTO Staff Working Papers ERSD-2015-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    17. Ferro, Esteban & Otsuki, Tsunehiro & Wilson, John S., 2015. "The effect of product standards on agricultural exports," Food Policy, Elsevier, vol. 50(C), pages 68-79.
    18. Stefan Borsky & Andrea Leiter & Michael Pfaffermayr, 2018. "Product quality and sustainability: The effect of international environmental agreements on bilateral trade," The World Economy, Wiley Blackwell, vol. 41(11), pages 3098-3129, November.
    19. Kareem, Fatima Olanike & Brümmer, Bernhard & Martinez-Zarzoso, Inmaculada, 2015. "The Implication of European Union’s Food Regulations on Developing Countries: Food Safety Standards, Entry Price System and Africa’s Export," GlobalFood Discussion Papers 198719, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    20. Grant, Jason & Arita, Shawn, 2017. "Sanitary and Phyto-Sanitary Measures: Assessment, Measurement, and Impact," Commissioned Papers 259417, International Agricultural Trade Research Consortium.

    More about this item

    Keywords

    Malaysia; Vietnam; International Trade; Productivity; Regulation; Costs; Trade; RoHS; REACH; Cost Function; Market Access; Supply Chain;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jet:dpaper:dpaper526. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michitaka Imamitsu (email available below). General contact details of provider: https://edirc.repec.org/data/idegvjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.