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Wiener Institut für Internationale Wirtschaftsvergleiche The Vienna Institute for International Economic Studies www.wiiw.ac.at Julia Grübler (with Mahdi Ghodsi and Robert Stehrer) Banque de France and European Central Bank Workshop: Task Force on Global Trade 20 June 2016 This paper was produced as part of the PRONTO (Productivity, Non-Tariff Measures and Openness) project funded by the European Commission under the 7 th Framework Programme. Assessing the Impact of Non-Tariff Measures on Imports

Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

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Page 1: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

Wiener Institut für

Internationale

Wirtschaftsvergleiche

The Vienna Institute for

International Economic

Studies

www.wiiw.ac.at

Julia Grübler (with Mahdi Ghodsi and Robert Stehrer)

Banque de France and European Central Bank Workshop:

Task Force on Global Trade

20 June 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

Page 2: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

2

1. Non-Tariff Measures (NTMs)

♦ Types

♦ Structure (over time)

2. Ad Valorem Equivalents (AVEs) of NTMs

♦ Concept

♦ Methodology

♦ Results

Outline

By Country

♦ Region

♦ Income

By Product

♦ Sector

♦ HS

♦ BEC

Page 3: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

3

Number of PTAs over time

The Political Economy of NTMs

Depth of PTAs over time Trends in Tariffs and NTMs

0

500

1,000

1,500

2,000

2,500

3,000

0

2

4

6

8

10

12

14

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

United States

Simple avg. over all countries

Germany

NTM notifications

Note: PTA refers to Preferential Trade Agreements. Applied tariff rate, weighted mean, all products (%)

Sources: WTO I-TIP (NTM data), World Bank (WITS tariff data), wiiw calculations. Dür et al, 2014 (Number and Depth of PTAs).

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Page 4: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

4

15 out of 16 classifications concern imports

thereof 3 are technical in nature:

- TBT… technical barriers to trade

- SPS … sanitary and phytosanitary measures

- Pre-shipment inspection and other formalities

thereof 12 are non-technical measures:

- antidumping (ADP)

- countervailing duties (CVD)

- (special) safeguards (SG)

- quantity control measures (e.g. quotas, licensing) (QRS)

- …

Specific trade concerns (SPS & TBT)

Note: Total number of notifications (37,982) to the WTO between 1979 and March 2015; Graph excludes 899 Specific Trade Concerns.

Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations.

Non-tariff measures (NTMs)

other counteracting measures (OCA)

TBT50%

SPS35%

QRS2%

ADP10%

SG1%

SSG1%

CVD1%

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Page 5: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

5Source: WTO I-TIP; wiiw calculations

NTM Notifications to the WTO over Time

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

... Bilateral Product Lines?

Page 6: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

6Source: WTO I-TIP; wiiw calculations

NTM Notifications to the WTO by Income Level

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

... Quality of Reporting?

Page 7: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

7Source: WTO I-TIP; wiiw calculations

NTM Notifications to the WTO by HS Section

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Agri-Food Sector!

Page 8: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

8

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

› Neglect of product quality differences

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

New data set (WTO I-TIP & Ghodsi et al, forthcoming)

Types of NTMs

Intensity Measure for NTMs

Panel structure

Effects by Importing Country

Page 9: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

9

Poisson estimation procedure:

Transformation to AVEs:

Method

(1) ln 𝑚𝑖𝒋𝒕ℎ = 𝛽0ℎ + 𝛽1 ln 1 + 𝑡𝑖𝑗ℎ𝑡−1 +

𝑛=1

𝑁−1

𝛽2𝑛 𝑁𝑇𝑀𝑛𝑖𝑗ℎ𝑡−1 +

𝑖=1

𝐼

𝛽2𝑛′𝑖 𝜔𝑖 𝑁𝑇𝑀𝑛′𝑖𝑗ℎ𝑡−1

+ 𝛽3𝐶𝑖𝑗𝑡−1 + 𝜔𝑖𝑗ℎ + 𝜔𝑡 + 𝜇𝑖𝑗ℎ𝑡 ,

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

(2) 𝜕 ln 𝑚𝑖ℎ𝜕𝑁𝑇𝑀𝑖ℎ

𝑛 =𝜕 ln 𝑚𝑖ℎ𝜕 ln 𝑝𝑖ℎ

𝜕 ln 𝑝𝑖ℎ𝜕𝑁𝑇𝑀𝑖ℎ

𝑛 = 𝜀𝑖ℎ𝐴𝑉𝐸𝑖ℎ𝑛

(3) 𝐴𝑉𝐸𝑖ℎ𝑛 =

𝑒𝛽2𝑛′𝑖 − 1

𝜀𝑖ℎ

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

... and Heckman?

Page 10: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

10

Full Sample Excluding Intra-EU Trade

NTM Mean Median Obs. NTM Mean Median Obs.

all

ADP 14.0 23.5 6,031 ADP 13.3 23.4 5,947

CVD 2.9 10.3 697 CV 5.5 15.0 692

QRS -2.0 0.0 3,922 QR -0.8 0.3 3,782

SG 4.5 3.4 91 SG 2.7 7.1 90

SSG 0.5 5.3 154 SSG 9.1 16.3 76

SPS 0.9 0.0 24,481 SPS 2.9 0.3 21,021

SPSSTC -5.2 1.1 3,658 SPSSTC -6.2 -0.1 3,645

TBT 2.7 0.8 54,298 TBT 4.1 2.1 49,356

TBTSTC 8.9 16.6 12,112 TBTSTC 9.1 17.3 11,937

Total 105,444 Total 96,546

sig

nific

ant

impact of N

TM

s

on im

port

quantities (

p <

0.1

) ADP 20.8 44.0 4,198 ADP 19.4 43.7 4,133

CVD 7.0 32.5 479 CV 9.9 34.6 467

QRS 0.8 8.6 1,407 QR 2.5 11.9 1,380

SG 21.5 46.7 38 SG 14.9 46.8 41

SSG 14.2 28.4 58 SSG 18.9 34.6 44

SPS 4.1 1.1 8,374 SPS 8.2 6.4 8,888

SPSSTC -4.7 19.1 2,267 SPSSTC -5.9 15.8 2,242

TBT 8.6 6.8 19,768 TBT 10.8 11.2 21,620

TBTSTC 18.9 48.2 7,334 TBTSTC 19.0 48.5 7,179

Total 43,923 Total 45,994

AVEs by NTM type

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Share of negative AVEs ~40%

Page 11: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

11Note: Excluding Intra-EU trade

AVEs by Countryimport-weighted binding AVEs of SPS measures, TBTs and corresponding STCs

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

... and Data Limitations

Page 12: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

12

Note: Mean binding computed as simple averages over importer-specific AVEs computed as (a) simple averages over all imported products, (b) import-

weighted averages over all imported products. Binding AVE refers to AVEs where NTMs show a significant impact on import quantities at the 10% level.

NTMs by Type vs. Binding Average AVEs

TBT50%

SPS35%

QRS2%

ADP10%

OCA3%

TBT SPS QRS ADP OCA

AVE(TBT)

(a) 5.2; (b) 5.6

AVE(SPS)

(a) 3.5; (b) 0.4

AVE(QRS)

(a) 18.0; (b) 0.2

AVE(ADP)

(a) 15.7; (b) 4.3

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

AVE(OCA)

(a) 15.5; (b) -0.1

Page 13: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

13Note: Results are based on Poisson estimation excluding intra-EU trade. s.a. and w.a. refer to simple and import-weighted averages, respectively.

AVEs by Region

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Region SPS TBT QRS ADP OCA STC

PR

OD

UC

T

(sim

ple

avg. over

countr

y-

specific

AV

Es)

Europe & Central Asia 4.4 5.2 20.5 16.7 12.9 14.6

North America -0.3 -2.6 . -2.8 7.0 -5.5

Latin America & Caribbean 2.8 5.4 4.1 29.3 0.1 5.7

East Asia & Pacific 3.7 5.6 7.3 3.3 18.4 -10.2

South Asia 2.4 0.7 . 10.2 100.6 -39.2

Middle East & North Africa 0.7 6.1 27.2 7.6 27.8 11.0

Sub-Saharan Africa 10.5 6.3 . 4.5 64.6 44.0

CO

UN

TR

Y

(sim

ple

avg. over

countr

y-

specific

i.w

. A

VE

s)

Europe & Central Asia 1.1 -0.8 0.0 6.2 1.3 -0.1

North America -0.4 -1.5 . 1.8 -0.2 -8.1

Latin America & Caribbean -4.1 4.0 -0.3 3.2 -0.8 -0.3

East Asia & Pacific 4.3 9.6 1.2 3.5 0.1 -5.0

South Asia -2.8 -4.3 . -4.4 0.3 -12.0

Middle East & North Africa -2.7 11.2 3.7 2.3 -9.4 2.5

Sub-Saharan Africa 27.3 34.8 . -1.3 0.2 34.7

WO

RL

D

(i.w

. avg. over

countr

y-

specific

i.w

. A

VE

s)

Europe & Central Asia 0.3 -3.3 -0.6 3.5 -1.2 -3.6

North America -0.5 -3.3 . 1.8 0.2 -6.5

Latin America & Caribbean 0.9 2.4 0.0 2.4 -0.5 18.7

East Asia & Pacific -2.0 5.1 -0.1 1.2 0.1 -3.5

South Asia -5.1 -8.0 . -16.3 0.0 -11.7

Middle East & North Africa -0.4 11.4 0.1 1.3 -0.3 0.1

Sub-Saharan Africa -0.3 2.5 . -1.1 0.2 1.1

Page 14: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

14Note: Results based on Poisson estimation excluding intra-EU trade. i.w. avg. refers to import-weighted average.

AVEs by Income

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Income SPS TBT QRS ADP OCA STC

PRODUCT

(simple avg. over country-

specific AVEs)

Low income 13.6 8.6 . . . .

Lower middle income 0.5 4.2 . 6.3 52.8 7.2

Upper middle income 3.3 6.4 12.2 23.1 21.0 8.0

High income 4.1 4.6 19.1 14.1 5.9 10.1

COUNTRY

(simple avg. over country-

specific i.w. AVEs)

Low income 27.4 58.5 . . . .

Lower middle income -5.9 7.2 . -1.4 4.0 6.8

Upper middle income 2.0 4.8 0.2 2.5 0.3 2.7

High income 0.4 1.8 0.2 6.1 -1.0 -2.0

WORLD

(i.w. avg. over country-

specific i.w. AVEs)

Low income 0.9 18.0 . . . .

Lower middle income -3.8 -4.6 . -13.1 0.3 -9.4

Upper middle income -3.0 0.1 0.1 1.2 0.1 2.3

High income 0.1 -0.4 -0.3 2.5 -0.5 -4.2

Page 15: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

15Note: Simple average by Section over country-specific import-weighted binding AVEs. Results based on Poisson estimation excluding intra-EU trade.

AVEs by Product

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Page 16: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

16

Note: Binding AVEs by BEC/WIOD classification; WIOD refers to World Input-Output Database (www.wiod.org); BEC refers to Broad Economic

Categories; GFCF refers to Gross Fixed Capital Formation. Results based on Poisson estimation excluding intra-EU trade.

AVEs by BEC/WIOD

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Total BEC SPS TBT QRS ADP OCA STC

PRODUCT

(Simple Ø over country-

specific AVEs)

Intermediates 11.7 14.8 36.1 27.2 20.9 8.8

Final Consumption 2.1 1.3 31.4 15.4 2.7 4.9

GFCF 31.9 20.8 64.2 34.2 53.6 25.5

COUNTRY

(Simple Ø over country-

specific i.w. AVEs)

Intermediates 1.4 5.9 -0.2 5.3 0.2 -0.7

Final Consumption 1.0 -1.9 -0.4 1.9 -0.2 -1.3

GFCF 10.8 12.6 1.7 1.5 1.9 2.0

WORLD

(i.w. Ø over country-

specific i.w. AVEs)

Intermediates -3.6 2.1 -0.1 2.8 -0.5 -1.5

Final Consumption 0.2 -4.9 -1.0 0.3 -0.4 -5.6

GFCF 2.8 1.0 0.8 0.9 0.6 0.6

Page 17: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

17

1. New database: ♦ types of NTMs, ♦ counts of notifications, ♦ bilateral product lines,

♦ matched with HS codes, Panel data & effects by importer

2. NTMs vs. AVEs:

♦ Non-tariff measures need not be non-tariff barriers!

♦ By types: TBTs dominate data, AVEs highest for ADP

♦ By income: more NTMs used (notified?) by richer countries, but lower AVEs

♦ Aggregates of AVEs: hiding variation vs. detecting hotspots

3. Implications beyond the impact on international trade?

Conclusion

1. NTMs 2. AVEs

Political Economy

NTM Types

Structure Concept Method Results

Page 18: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

Wiener Institut für

Internationale

Wirtschaftsvergleiche

The Vienna Institute for

International Economic

Studies

www.wiiw.ac.at

Julia Grübler (with Mahdi Ghodsi and Robert Stehrer)

Banque de France and European Central Bank Workshop:

Task Force on Global Trade

20 June 2016

Assessing the Impact

of Non-Tariff Measures on Imports

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.

Merci!

Page 19: Assessing the Impact of Non-Tariff Measures on Imports · Sources: UNCTAD, 2013 (Classification), WTO I-TIP (NTM data), wiiw calculations. Non-tariff measures (NTMs) other counteracting

19

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, A., L. Baccini, and M. Elsig (2014), ‘The Design of International Trade Agreements: Introducing a New Database.’, Review of International Organizations.

Ghodsi, M., R. Stehrer, and O. Reiter, (forthcoming) ‘Compilation of a Database for Non-Tariff Measures from the WTO Integrated Trade Intelligence Portal (WTO I-TIP)’; mimeo, wiiw, Vienna..

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