Notes on Detecting The Effects of Non Tariff Measures

Alternative approaches to estimating the effects of nontariff measures (NTMs) on trade flows are discussed and evaluated critically. Recent econometric studies point to three results: (i) NTM restrictiveness measures based on an aggregate of ‘core’ NTMs are more restrictive than existing tariffs and, because of export composition towards agricultural products, in the aggregate, these ‘core’ NTMs limit market access most for low-income countries; (ii) Proxies for individual NTMs have a negative effect on the volume of bilateral trade for the detailed product under scrutiny; (iii) harmonization of standards is trade enhancing. Case studies confirm several of these patterns, and also that perceived severity of NTMs varies across products and across destinations for a given product. Across broadly defined imports at the section level, NTMs are more restrictive than the corresponding tariffs with two-thirds of the ad-valorem equivalent estimates in the 25%-50% range. Technical regulations and non-automatic licensing are the most used single-NTM measures and the restrictiveness of technical regulations increases with income per capita.