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Trade Policies Mix and Match : Theory, Evidence and the EU-Sino Electric Vehicle Disputes

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  • Hiau Looi Kee
  • Enze Xie

Abstract

This paper studies the factors affecting governments’ mixed use of tariffs and non-tariff measures (NTMs) as trade and industrial policies. Results based on detailed bilateral-product-level ad valorem equivalent estimates for a wide range of countries show that restrictive NTMs coexist with lower tariffs, particularly for high-income importing countries, low-income exporting countries, country pairs with deep trade agreements, and products with consumption externalities. A terms-of-trade model with externalities rationalizes the results. The model is further used to shed light on the recent Sino-EU battery electric vehicle (BEV) disputes, whereby the EU imposed NTMs on top of the tariffs on China’s BEVs.

Suggested Citation

  • Hiau Looi Kee & Enze Xie, 2024. "Trade Policies Mix and Match : Theory, Evidence and the EU-Sino Electric Vehicle Disputes," Policy Research Working Paper Series 10855, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10855
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