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Non-Tariff Measures a Non-Tariff Measures – A Fresh Look at Trade Policy’s New Frontier Policy’s Look at Trade – A Fresh Measures Non-Tariff In a world where many forms of protection – including tariffs – are constrained by WTO disciplines, non-tariff measures (NTMs) are the new frontier of trade policy. NTMs that are poorly designed or captured by special interests can hurt competitiveness and Non-Tariff Measures – fragment markets; whereas well-designed ones can effectively overcome informational and other market failures. Assisting governments in the design of NTMs is a critical challenge for donors and development agencies. However, many issues relating, for Public Disclosure Authorized A Fresh Look at Trade example, to regional harmonisation and the interaction of NTMs with market structure are still imperfectly understood. This volume brings together recent work by young scholars that draws on original data to shed light on some of the key analytical and Policy’s New Frontier policy issues. “Non-tariff measures are of increasing importance, and as we understand them better, we also increasingly see their complexity. This volume provides up to date information and analysis of this complexity, together with valuable implications for making NTMs better serve legitimate purposes without distorting trade. It will be an essential source for trade policy specialists as well as those concerned with domestic regulation.” Alan V. Deardorff, John W. Sweetland Professor of International Economics and Professor of Economics and Public Policy, University of Michigan Public Disclosure Authorized “Non-tariff measures (NTMs) are spreading, sometimes raising trade costs, sometimes alleviating market failures. Disentangling these effects is urgent and necessary to inform policymakers about the appropriate reforms to carry out. Drawing on new NTM data, this volume leads the way showing how NTMs should be included as part of developing countries’ domestic competiveness and regulatory reform agendas while also showing that regional harmonisation of standards should be conducted in a flexible way.” Jaime de Melo, Senior Fellow, FERDI and Professor, University of Geneva “The application of non-tariff measures to international trade is expanding rapidly, but our knowledge about them is not; at least, until now. This book offers a number of original and instructive exercises to quantify the existence and the effects of NTMs and to see how best to tame them as a form of protection. It will be an important guide and inspiration for policy researchers as they seek to investigate the multifarious ways in which governments Public Disclosure Authorized manage trade for better or for worse.” L Alan Winters, Professor of Economics, University of Sussex a THE WORLD BANK ISBN 978-1-907142-53-6 edited by Olivier Cadot and Mariem Malouche a THE WORLD BANK 9 781907 142536 Public Disclosure Authorized NON-TARIFF MEASURES – A FRESH LOOK AT TRADE POLICY’S NEW FRONTIER Non-Tariff Measures – A Fresh Look at Trade Policy’s New Frontier Copyright © 2012 by The International Bank for Reconstruction and Development/The World Bank 1818 H Street, NW, Washington, DC 20433, USA ISBN: 978-1-907142-53-6 All rights reserved The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Executive Directors of the International Bank for Reconstruction and Development/The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development/The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@ worldbank.org. Centre for Economic Policy Research The Centre for Economic Policy Research is a network of over 700 Research Fellows and Affiliates, based primarily in European universities. The Centre coordinates the research activities of its Fellows and Affiliates and communicates the results to the public and private sectors. CEPR is an entrepreneur, developing research initiatives with the producers, consumers and sponsors of research. Established in 1983, CEPR is a European economics research organization with uniquely wide-ranging scope and activities. The Centre is pluralist and non-partisan, bringing economic research to bear on the analysis of medium- and long-run policy questions. CEPR research may include views on policy, but the Executive Committee of the Centre does not give prior review to its publications, and the Centre takes no institutional policy positions. The opinions expressed in this report are those of the authors and not those of the Centre for Economic Policy Research. CEPR is a registered charity (No. 287287) and a company limited by guarantee and registered in England (No. 1727026). Chair of the Board Guillermo de la Dehesa President Richard Portes Chief Executive Officer Stephen Yeo Research Director Lucrezia Reichlin Policy Director Richard Baldwin The World Bank The World Bank Group is a major source of financial and technical assistance to developing countries around the world, providing low-interest loans, interest- free credits and grants for investments and projects in areas such as education, health, public administration, infrastructure, trade, financial and private sector development, agriculture, and environmental and natural resource management. Established in 1944 and headquartered in Washington, DC, the Group has over 100 offices worldwide. The World Bank’s mission is to fight poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors. Non-Tariff Measures – A Fresh Look at Trade Policy’s New Frontier edited by OLIVIER CADOT AND MARIEM MALOUCHE Contents About the Authors xiii Foreword xix 1 Overview 1 Olivier Cadot and Mariem Malouche PART I: PREVALENCE AND PERVASIVENESS OF NTMS 2 How Much Light Do WTO Notifications Shed on NTMs? 23 Marc Bacchetta, Jürgen Richtering and Roy Santana 3 NTMs: Interpreting the New Data 57 Julien Gourdon and Alessandro Nicita 4 AVEs in TRIST 81 Olivier Cadot and Olivier Jammes PART II: StanDARDS AND TECHNICAL REGUlationS: TRADE BARRIERS OR FacilitatorS? 5 Reputation Matters: Spillover Effects in the Enforcement of US SPS Measures 95 Marie-Agnès Jouanjean, Jean-Christophe Maur and Ben Shepherd 6 Sanitary Risk and Concentration in EU Food Imports 117 Mélise Jaud, Olivier Cadot and Akiko Suwa-Eisenmann 7 Do Better Standards Facilitate Exports? Evidence from China 141 Axel Mangelsdorf, Alberto Portugal-Perez and John Wilson 8 Standards Harmonisation and South–South Trade 155 Anne-Célia Disdier, Lionel Fontagné and Olivier Cadot 9 The Pro-Competitive Effect of International Harmonisation of Product Standards 167 José-Daniel Reyes 10 Standards Harmonisation and Trade: The Case of the East African Dairy Industry 187 Michael F Jensen and John C Keyser PART III: GOVERNMENTs’ EFFORTS to ImproVE NTMS 11 Improving the Quality of NTMs through Regulatory Impact Assessment 213 Olivier Cadot and Mariem Malouche 12 Addressing Non-Tariff Barriers on Regional Trade in Southern Africa 225 Ian Gillson and Nick Charalambides 13 Streamlining NTMs: How Mexico Did It 247 Ali Haddou 14 Regulatory Impact and Cost-Benefit Analyses – Tools to Evaluate Regulatory Quality and Improve Transparency among Countries 271 Sílvia Helena G de Miranda 15 How Can Risk Management Help Enforce Technical Measures? 283 Christopher Grigoriou List of Tables Table A2.1 WTO notifications’ coverage of NTMs by Multi-Agency Coding 50 Table A2.2 Members reporting for some key WTO notification requirements 54 Table A2.3 Precision of reporting for some key WTO notification requirements 55 Table 3.1 Use of multiple types of NTMs at different level of aggregation 70 Table 3.2 Frequency indices across economic sectors 73 Table 4.1 Illustrative case – the raw tariff data in importing country 89 Table 4.2 Ad valorem rates and pre-reform fiscal revenue 90 Table 4.3 Illustrative case: demand effect of eliminating a standard 90 Table 4.4 Illustrative case: fiscal revenue effect of eliminating a standard 91 Table 5.1 Data used in the analysis of US import refusals 105 Table 5.2 Regression results 109 Table 5A.1 Industry Class Codes for fruit and fruit products 114 Table 5A.2 Industry Class Codes for vegetables and vegetable products 115 Table 6.1 Structure of EU agri-food import (in percentage) 125 Table 6.2 Sanitary Risk Index, number of alerts and
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