Technical Barriers to Trade: Evaluating the Trade Effects of Supplier's Declaration of Conformity

Since the WTO Agreement on Technical Barriers to Trade (TBT) came into force, Members have invested considerable efforts in adopting and promoting the use of measures intended to reduce conformity assessment (CA) related barriers to trade. Our knowledge of the impact of specific trade facilitating programmes in the CA field is limited so far, making empirical studies of their trade impact desirable. This study investigates the impact of Supplier’s Declaration of Conformity (SDOC) on trade flows. As under SDOC regimes suppliers themselves provide written assurance of conformity to applicable technical regulations of a market, the costs of compliance are assumed to be smaller than for CA regimes requiring certification by third parties. The study focuses on three cases of SDOC introduction in the European Union covering eligible products from the medical devices, telecommunications equipment and machinery sectors. The paper explains the rationale for using SDOC, expected benefits and design characteristics of SDOC regimes. The quantitative analysis uses a gravity model and finds compelling evidence that the introduction of SDOC in the EU was a factor that influenced the evolution of import flows into EU markets positively. Intra-EU trade flows and imports from extra-EU OECD countries increased for SDOC-eligible radio and telecommunications equipment and low-risk medical devices, whereas the results for machinery are ambiguous. The most striking increases, visible in all three sectors, are found for exports to EU markets from non-OECD (developing) countries included in the sample. Analysis of the effect of SDOC for selected individual EU members furthermore suggest that the magnitude of effect depends on the nature of the CA regime that SDOC replaced.