Measuring Costs And Benefits Of Non-Tariff MeasuresIn Agri-Food Trade

This paper provides a systematic welfare-based approach to analyze the impact of non-tariffmeasures (NTMs) on trade and welfare in presence of market imperfections. We focus onstandard-like measures such as technical barriers and sanitary and phytosanitary regulations.The approach overcomes the shortcomings of the mainstream approach based on the analysisof forgone trade caused by trade costs. The latter ignores market imperfections: welfareincreases when NTMs are removed and trade expands. We explain how to account forexternal effects and market failures in trade-focused welfare analysis, leading to a morebalanced overall assessment of measures despite a potential reduction of trade flows. Weshow that the relationship between trade, welfare, and NTMs is complex. The optimum NTMis often not zero. An application to shrimp trade illustrates the feasibility of the proposedapproach. The illustration shows that the reinforcement of a food safety standard can besocially preferable to the status-quo situation, both domestically and internationally.[...]