Assessing the Impact of Non-Tariff Measures on...

Wiener Institut für

Internationale

Wirtschaftsvergleiche

The Vienna Institute for

International Economic

Studies

www.wiiw.ac.at

Julia Grübler (with Mahdi Ghodsi and Robert Stehrer)

PRONTO Annual Conference:

Quantifying Non-Tariff Barriers to Trade and Investment

27 February 2016

This paper was produced as part of the PRONTO (Productivity, Non-Tariff Measures and Openness) project funded by the European Commission under the 7th Framework Programme.

Assessing the Impact

of Non-Tariff Measures on Imports

2

Ad-valorem equivalents (AVEs) of NTMsor: How to make NTMs directly comparable to tariffs?

Price gap method Indirect Approach

Wh

at? Deriving AVEs from an analysis of the price

wedge due to the implementation of NTMsDeriving AVEs with a Gravity estimation approachfrom the impact on import quantities and import demand elasticities

Wh

o?

• Dean et al., 2009

• Nimenya et al., 2012

• Cadot and Gourdon, 2015

• Kee et al., 2009

• Bratt, 2014

• Beghin et al, 2014

Issu

es

› Necessity to compare different prices along the production and supply chain

› Neglect of product quality differences

› Price data availability usually restricts to few countries for a small set of products

› Based on import demand elasticities, which are themselves estimates


NTM type Importer Product EU & USMethodology

3

Ad-valorem equivalents (AVEs) of NTMsor: How to make NTMs directly comparable to tariffs?

Price gap method Indirect Approach

Wh

at? Deriving AVEs from an analysis of the price

wedge due to the implementation of NTMsDeriving AVEs with a Gravity estimation approachfrom the impact on import quantities and import demand elasticities

Wh

o?

• Dean et al., 2009

• Nimenya et al., 2012

• Cadot and Gourdon, 2015

• Kee et al., 2009

• Bratt, 2014

• Beghin et al, 2014

Issu

es

› Necessity to compare different prices along the production and supply chain


› Price data availability usually restricts to few countries for a small set of products

› Based on import demand elasticities, which are themselves estimates



New data set (WTO I-TIP complemented by Ghodsi et al, 2015)

Types of NTMs

Intensity Measure for NTMs

Using a panel structure

4

Heckman two-stage estimation procedure:

Transformation to AVEs:

Methodology

(1 ) 𝑃𝑟𝑜𝑏 𝑚𝑖𝑗ℎ𝑡 > 0 = 𝛼0ℎ + 𝛼1 𝑙𝑛 1 + 𝑡𝑖𝑗ℎ𝑡 +

𝑛

𝛼2𝑛 𝑁𝑇𝑀𝑛𝑖𝑗ℎ𝑡 + 𝛼3𝐶𝑖𝑗𝑡 + 𝜔𝑖 + 𝜔𝑗 + 𝜔𝑡 + 𝜖𝑖𝑗ℎ𝑡 ,

∀ℎ; 𝑛 ∈ 𝐴𝐷𝑃, 𝐶𝑉𝐷, 𝑆𝐺, 𝑆𝑆𝐺, 𝑆𝑃𝑆, 𝑇𝐵𝑇, 𝑄𝑅𝑆; 𝑆𝑇𝐶𝑆𝑃𝑆, 𝑆𝑇𝐶𝑇𝐵𝑇

(2) 𝑙𝑛 𝑚𝑖𝑗ℎ𝑡 𝑚𝑖𝑗ℎ𝑡 > 0 = 𝛽0ℎ + 𝛽1 𝑙𝑛 1 + 𝑡𝑖𝑗ℎ𝑡 +

𝑛=1

𝑁−1

𝛽2𝑛 𝑁𝑇𝑀𝑛𝑖𝑗ℎ𝑡 +

𝑖=1

𝐼

𝛽2𝑛′𝑖 𝜔𝑖 𝑁𝑇𝑀𝑛′𝑖𝑗ℎ𝑡 + 𝛽3𝐶𝑖𝑗𝑡

+ 𝜔𝑖𝑗 + 𝜔𝑡 + 𝜙𝑖𝑗ℎ𝑡 + 𝜇𝑖𝑗ℎ𝑡 ,

∀ℎ; ∀𝑛, 𝑛′ ∈ 𝐴𝐷𝑃, 𝐶𝑉𝐷, 𝑆𝐺, 𝑆𝑆𝐺, 𝑆𝑃𝑆, 𝑇𝐵𝑇,𝑄𝑅𝑆; 𝑆𝑇𝐶𝑆𝑃𝑆, 𝑆𝑇𝐶𝑇𝐵𝑇 𝑤ℎ𝑒𝑟𝑒 𝑛′ ≠ 𝑛

(3 ) 𝜕 ln 𝑚𝑖ℎ𝜕𝑁𝑇𝑀𝑖ℎ

𝑛 =𝜕 ln 𝑚𝑖ℎ𝜕 ln 𝑝𝑖ℎ

𝜕 ln 𝑝𝑖ℎ𝜕𝑁𝑇𝑀𝑖ℎ

𝑛 = 𝜀𝑖ℎ𝐴𝑉𝐸𝑖ℎ𝑛

(4) 𝐴𝑉𝐸𝑖ℎ𝑛 =

𝑒𝛽2𝑛′𝑖 − 1

𝜀𝑖ℎ


5Note: Total of 37,982 NTM notifications over the period 1979 to March 2015; Graph excludes 899 Specific Trade Concerns.

NTMs by type: Sum 2002-2011


49.6%

35.2%

2.1%

10.1%

1.5%

0.8%

0.7%

TBT SPS QRS ADP SSG SG CVD

6

Note: Mean binding AVEs (i.e. statistically different from zero at the 10% level) computed as simple averages over all observations for two samples:

(a) the full sample and (b) excluding intra-EU trade in the estimation

NTMs by type vs. average AVEs


49.6%

35.2%

2.1%

10.1%

1.5%

0.8%

0.7%

TBT SPS QRS ADP SSG SG CVD

TBT AVE 4.4; 6.5(Full sample; excl. intra-EU

trade from the estimation)

SPS AVE 6.2; 9.7

AVE 7.8; 15.1;

AVE -20.2; -12.3;

AVE 21.7; 30.0;

AVE 28.0; 9.7;

AVE -11.0; 0.5

7Note: Figures on countries affected exclude all NTMs that apply to all exporters. Income group classification of the World Bank.

NTMs by income


8

NTMs by income vs. average AVEs

Income Group SPS TBT QRS ADP OCA STC

Simple Averages

over country-specific AVEs

Low income 32.6 5.0 . . . .

Lower middle income 11.9 7.5 . -4.0 -5.6 14.4

Upper middle income 12.1 5.8 -4.7 -9.6 67.4 11.3

High income 9.1 4.0 38.6 -17.5 13.9 -5.4

Simple Averages

over country-specific i.w. AVEs

Low income 11.1 -1.2 . . . .

Lower middle income 0.2 0.0 . -3.5 0.6 5.9

Upper middle income 0.7 1.5 -0.4 0.3 0.1 -5.6

High income 0.5 -3.3 -0.4 -2.8 -0.1 -6.3

i.w. Averages

over country-specific i.w. AVEs

Low income 2.3 -3.6 . . . .

Lower middle income -2.0 -3.2 . -5.4 -0.1 -5.7

Upper middle income 2.6 -2.2 0.0 -0.1 0.1 -9.7

High income 0.1 -4.4 -0.4 -1.3 0.1 -7.5

Note: Income classification of the World Bank


9

NTMs by Product


10

NTMs by Product vs. simple average AVEs

Note: 𝐴𝑉𝐸𝐻𝑆2 = 𝑖 𝐻𝑆2,𝑖 𝐴𝑉𝐸𝑖ℎ

𝐻𝑖ℎ/𝐼


11

NTMs by Product vs. import-weighted average AVEs

Note: 𝐴𝑉𝐸𝐻𝑆2 = 𝑖 𝐻𝑆2,𝑖 𝐴𝑉𝐸𝑖ℎ∗ 𝐼𝑚𝑝𝑜𝑟𝑡𝑖ℎ

𝐼𝑚𝑝𝑜𝑟𝑡𝑖,𝐻𝑆2/𝐼


12

NTMs by Product: EU Exports vs. US AVEs

Note: HS 2-digits computed as simple average over HS 6-digit products. Ranks are based on all products for which at least one NTM applied.


EU Exports US AVEs

HS2World

ExportsRank: World

Rank: US

SPS TBT QRS

84 388.0 1 1 8.6 -44.1 . Nuclear reactors, boilers, machinery […]

87 220.0 2 3 4.9 -3.4 . Vehicles other than railway or tramway […]

85 194.0 3 6 7.0 14.5 . Electrical machinery and equipment […]

27 146.0 4 5 1.5 . . Mineral fuels, mineral oils and products […]

30 129.0 5 2 -1.1 -84.0 . Pharmaceutical products.

90 93.0 6 4 6.3 43.4 . Optical, photographic, cinematographic […]

71 72.5 7 10 -5.5 30.6 . Natural or cultured pearls, precious […]

29 63.2 8 7 1.8 -29.2 . Organic chemicals.

39 60.1 9 11 2.7 33.1 . Plastics and articles thereof.

88 53.1 10 8 7.4 -39.5 . Aircraft, spacecraft, and parts thereof.

13

NTMs by Product: US Exports vs. EU AVEs


US Exports EU AVEs

HS2World

ExportsRank: World

Rank: EU

SPS TBT QRS

84 207.0 1 1 9.9 0.3 -5.1 Nuclear reactors, boilers, machinery […]

85 158.0 2 4 . 1.2 . Electrical machinery and equipment […]

27 131.0 3 2 16.0 1.0 . Mineral fuels, mineral oils and products[…]

87 120.0 4 7 . -1.1 5.5 Vehicles other than railway or tramway […]

90 79.4 5 3 . -4.5 . Optical, photographic, cinematographic […]

71 71.8 6 6 . -39.0 . Natural or cultured pearls, precious […]

39 59.1 7 9 -1.3 0.0 7.4 Plastics and articles thereof.

29 45.7 8 8 -4.6 -2.7 -2.3 Organic chemicals.

30 38.1 9 5 7.2 2.8 -7.1 Pharmaceutical products.

10 28.3 10 35 -4.0 -1.0 . Cereals.

Note: EU aggregate computed by applying import weights at the HS 6-digit level. HS 2-digits computed as simple average over HS 6-digit products.

Ranks are based on all products for which at least one NTM applied.

14

Data limitationsshown with import-weighted AVEs of SPS measures and TBTs, sign. at 10%

Wiener Institut für

Internationale

Wirtschaftsvergleiche

The Vienna Institute for

International Economic

Studies

www.wiiw.ac.at

Julia Grübler (with Mahdi Ghodsi and Robert Stehrer)

PRONTO Annual Conference:

Quantifying Non-Tariff Barriers to Trade and Investment

27 February 2016

This paper was produced as part of the PRONTO (Productivity, Non-Tariff Measures and Openness) project funded by the European Commission under the 7th Framework Programme.

Assessing the Impact

of Non-Tariff Measures on Imports

16

Beghin, J., A.-C. Disdier, S. Marette (2014). “Trade Restrictiveness Indices in Presence of externalities: An Application to Non-tariff Measures”, CESifo Working Paper No. 4968, September 2014.

Bratt, M. (2014). “Estimating the bilateral impact of non-tariff measures (NTMs)”, Working Paper WPS 14-01-1, Université de Genève

Cadot, O. and J. Gourdon, 2015. "NTMs, Preferential Trade Agreements, and Prices: New evidence," Working Papers 2015-01, CEPII research center.

Dean, J.M., J. Signoret, R.M. Feinberg, R.D. Ludema, and M.J. Ferrantino (2009). “Estimating the Price Effects of Non-Tariff Barriers”, The B.E. Journal of Economic Analysis & Policy, 9 (1), Art. 12.

Dür, Andreas, Leonardo Baccini, and Manfred Elsig (2014), “The Design of International Trade Agreements: Introducing a New Database.” Review of International Organizations

Ghodsi, M., S. Jokubauskaite, and R. Stehrer, (2015) “Non-Tariff Measures and the quality of imported products”, mimeo

Kee, H.L, A. Nicita, und M. Olarreaga (2009). “Estimating Trade Restrictiveness Indices”, The Economic Journal, 119: 172-199

Nimenya, N., P.-F. Ndimira and B. H. de Frahan (2012). “Tariff equivalents of nontariff measures: the case of European horticultural and fish imports from African countries”, Agricultural Economics, 43: 635-653.

UNCTAD (2013), „Classification of non-tariff measures.“ February 2012 Version, New York and Geneva. URL: http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=299

Literature

http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=299

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