How Do Technical Barriers to Trade Affect China's Imports?

• Date: 01 May 2014
• Author: Xiaohua Bao
• DOI: http://doi.org/10.1111/rode.12084
• Published date: 01 May 2014

How Do Technical Barriers to Trade Affect

China’s Imports?

Xiaohua Bao*

Abstract

This research adopts the heterogeneous-firm approach to analyze how technical barriers to trade (TBT)

imposed by China affect its imports. The empirical analysis is based on a sample covering China’s import

control measures (e.g. TBT, tariff, license and quota) of all harmonized system (HS) 4-digit products during

the period 1998–2006. A modified two-stage gravity model is used to correct for Heckman selection bias

and firm heterogeneity bias. This paper finds that, in general, TBT reduce China’s import probability with

potential trade partners, but raise the import values with existing trade partners. Further evidence shows

that the TBT effects on trade value remain quite stable. However, the TBT effects on trade probability vary

a great deal across industries and countries in different time periods.

1. Introduction

As multilateral negotiations lower tariff and traditional non-tariff barriers, technical

barriers to trade (TBT) have come to play an increasingly important role in the global

trade system and have been considered a real trade problem of the twenty-first

century (Chen and Mattoo, 2008). Generally, an importing country’s TBT require

that foreign exporters meet a set of conditions in order to sell their products in the

importing country’s market. TBT impact on trade is twofold. On the one hand, TBT

inform consumers about the safety and quality of the imported products, thus helping

correct market failure due to incomplete information and thus promoting imports. On

the other hand, TBT raise the compliance cost to exporters and thus reduce their

exports. Given the increasing importance and the complexity of TBT, the existing

studies have tried to understand the impacts of TBT on trade. While most studies find

TBT trade restricting, others find them trade promoting in some sectors of some

countries.1In contradistinction to these studies, the main objective of the present

paper is not simply to examine whether TBT is trade promoting or restricting, but also

to study how TBT affect trade, if indeed they do. Specifically, I investigate the TBT

effects on the probability of trade with potential trade partners, and the volume of

traded goods with existing trade partners.

TBT take various forms, including technical regulations, standards and conformity

assessment procedures. If standards vary across importing countries, the producers

must comply with different standards, and the stricter the standards, the higher the

compliance costs. Even if an importing country’s standards apply to all export coun-

tries without discrimination, different export countries still face different compliance

* Bao: Shanghai University of Finance and Economics (SHUFE), Shanghai, China, 200433. Tel: (86)21-

6590-7045; Fax: (86)21-6590-7458; E-mail: xhbao369@mail.shufe.edu.cn. I would like to thank the anony-

mous referee and participants at the 2012 IEFS China Annual Meeting (Tianjin) for their valuable

comments and suggestions. In addition, I wish to acknowledge the financial support from the National

Science Foundation of China (NSFC project No. 71273161) Chair Professor Program of SHUFE and the

Fok Ying Tung Education Foundation (121085).

Review of Development Economics, 18(2), 286–299, 2014

DOI:10.1111/rode.12084

© 2014 John Wiley & Sons Ltd