The political economy of non‐tariff measures

• DOI: http://doi.org/10.1111/twec.12582
• Author: Cristina Herghelegiu
• Date: 01 January 2018
• Published date: 01 January 2018

ORIGINAL ARTICLE

The political economy of non-tariff measures

Cristina Herghelegiu

Paris School of Economics, Universit

e Paris 1 Panth

eon-Sorbonne, Paris, France

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INTRODUCTION

Over the last decades, multilateral and regional trade negotiations have led to massive liberalisation

through tariff reductions. As a result, attention has shifted towards non-tariff measures (NTM s),

which are more diverse and complex policy instruments. The main objective of early measures

(e.g., quotas, anti-dumping duties) was to replace tariff protection (Anderson & Schmitt, 2003;

Baldwin, 1984). Over the years, globalisation has been associated with greater interdependency

among States and new types of NTMs have proliferated in response to public policy objectives

(i.e., health and safety of consumers, environmental protection). However, the same NTMs may be

used to pursue both legitimate and protectionist goals and the boundary between the different moti-

vations is very thin. Depending on the reasons that lie behind the adoption and design of NTMs,

trade effects may be very different. For instance, if NTMs seek to correct a market failure such as

information asymmetry, trade may be enhanced as consumer confidence in the foreign product will

increase demand for it. When countries employ NTMs to protect domestic producers, they are

likely to induce negative trade effects on partners. This paper analyses the reasons that may prompt

a government to implement non-tariff protection in the manufacturing industries.

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Our main focus is on developing countries. Over the recent years, these countries have adopted

a growing number of NTMs. On average, slightly more than half of developing countries’imports

(in value) and almost half of their imported products are affected by at least one NTM. Some

products, especially in the agri-food sector, are highly regulated, in response to growing concerns

regarding health, safety and environmental quality, whereas some other products are as a mat ter of

course less affected by non-tariff protection (Gourdon, 2014).

Different types of measures exist and, owing to the UNCTAD (United Nations Conference on

Trade and Development) new coding system, NTMs can be classified according to their intended

goal (Cadot, Malouche, & Saez, 2012). Both sanitary and phytosanitary measures (SPS) and tech-

nical barriers to trade (TBT), also known as technical measures, are officially designed to achieve

public policy objectives. They constitute the bulk of NTMs, applying to a wide range of products.

However, these are complex policy tools and, despite their official status, they can also be used

for political economy reasons, becoming unnecessary barriers to trade (WTO, 2012). Non-technical

measures, such as contingent, quantity or price control measures, are trade regulatory instruments.

Unlike SPS and TBT measures, their distortionary effect on trade is well documented (Gourdon &

Nicita, 2013). In other words, if tariffs are committed to in the WTO and difficult to raise,

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Manufacturing industries include the agri-food sector.

DOI: 10.1111/twec.12582

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©2017 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/twec World Econ. 2018;41:262–286.

governments have more room for manoeuvre when it comes to NTMs, being able to respond to

pressures from both producer and consumer lobbies.

However, NTMs may also be subject to international scrutiny and discipline to a certain extent.

Increasing efforts are made by the WTO to boost the transparency of trade policies worldwide.

Under the SPS and TBT Agreements, WTO members are required to notify all the adopted regula-

tions. Nevertheless, there may be little incentive for countries to do so. As this may jeopar dise the

transparency process, alternative mechanisms have been implemented. For instance, exporters that

are negatively affected by SPS and TBT measures imposed by their trading partners can raise

Specific Trade Concerns (STCs) in the SPS and TBT Committees at the WTO (Bacchetta, Richter-

ing, & Santana, 2012). Thus, they question whether the implemented SPS and TBT measures

adhere to the previously mentioned agreements. According to Horn, Mavroidis, and Wijkstr€

om

(2013), by raising STCs, exporters convey a signal suggesting that there are reasons to interrogate

the legitimacy of certain measures under the SPS and TBT Agreements. These STCs are therefore

an interesting source of information as they reveal the restrictive and potentially non-legitimate

character of certain technical measures. One example is the concern raised in October 2009, by

Brazil against South Africa.

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South African imports of beef and pork meat from Brazil had been

suspended, because of a foot-and-mouth disease (FMD) outbreak. However, the FMD outbreak

had only affected the bovine herd and South Africa’s rejection of Brazilian pork meat could not be

scientifically justified. By raising an STC, Brazil required South Africa to respect the SPS Agree-

ment, so that exports of the affected products could resume soon, as the ban was unjustified and

excessive.

As for non-technical measures, they are not the subject of specific trade concerns discussions.

The motivations behind their use are easier to understand. However, they can be challenged

through the Dispute Settlement Mechanism.

This paper explores the political economy determinants of NTMs in different developing coun-

tries. A case study is also conducted for two developed countries (the EU and Japan) for compar-

ison purposes. Relying on a very comprehensive data set on NTMs, our analysis is run at a highly

disaggregated level—the six-digit level of the Harmonized System (HS)—and includes several

types of measures, from both technical and non-technical categories.

Our contributions to the literature are twofold. First, we take into account the fact that NTMs

may be adopted for both protectionist and legitimate purposes. On the one hand, as previously

mentioned, non-technical measures have been traditionally used as instruments of commercial pol-

icy and their trade restrictive character is well documented. On the other hand, technical measures,

such as SPS and TBT measures, may pursue both public policy and political economy objectives,

inducing different effects on trade. Therefore, besides the analysis conducted on all NTMs taken

together, regardless their nature, we also distinguish between restrictive and non-restrictive mea-

sures. This analysis is intended to shed more light on the reasons leading governments to adopt

NTMs. To track restrictive measures, we proceed as follows. Non-technical measures are consid-

ered as de facto restrictive. Technical measures are considered as restrictive only if they have been

raised as concerns in the SPS and/or TBT Committees at the WTO.

Second, we go a step further and examine the relationship between transnational lobbying and

the adoption of NTMs at the national level. As national policies increasingly fall under the influ-

ence of international rules, governments become more and more limited in their power to set trade

policy and raise trade barriers. Hence, beyond national lobbying, we expect transnational lobbying

to play an important role in trade policy decisions. Over the last decade, the WTO has increased

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SPS-STC no. 287 http://spsims.wto.org/en/SpecificTradeConcerns/View/287.

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