Wiener Institut für
Internationale
Wirtschaftsvergleiche
The Vienna Institute for
International Economic
Studies
www.wiiw.ac.at
Julia Grübler (with Mahdi Ghodsi and Robert Stehrer)
PRONTO Annual Conference:
Quantifying Non-Tariff Barriers to Trade and Investment
27 February 2016
This paper was produced as part of the PRONTO (Productivity, Non-Tariff Measures and Openness) project funded by the European Commission under the 7th Framework Programme.
Assessing the Impact
of Non-Tariff Measures on Imports
2
Ad-valorem equivalents (AVEs) of NTMsor: How to make NTMs directly comparable to tariffs?
Price gap method Indirect Approach
Wh
at? Deriving AVEs from an analysis of the price
wedge due to the implementation of NTMsDeriving AVEs with a Gravity estimation approachfrom the impact on import quantities and import demand elasticities
Wh
o?
• Dean et al., 2009
• Nimenya et al., 2012
• Cadot and Gourdon, 2015
• Kee et al., 2009
• Bratt, 2014
• Beghin et al, 2014
Issu
es
› Necessity to compare different prices along the production and supply chain
› Neglect of product quality differences
› Price data availability usually restricts to few countries for a small set of products
› Based on import demand elasticities, which are themselves estimates
› Neglect of product quality differences
NTM type Importer Product EU & USMethodology
3
Ad-valorem equivalents (AVEs) of NTMsor: How to make NTMs directly comparable to tariffs?
Price gap method Indirect Approach
Wh
at? Deriving AVEs from an analysis of the price
wedge due to the implementation of NTMsDeriving AVEs with a Gravity estimation approachfrom the impact on import quantities and import demand elasticities
Wh
o?
• Dean et al., 2009
• Nimenya et al., 2012
• Cadot and Gourdon, 2015
• Kee et al., 2009
• Bratt, 2014
• Beghin et al, 2014
Issu
es
› Necessity to compare different prices along the production and supply chain
› Neglect of product quality differences
› Price data availability usually restricts to few countries for a small set of products
› Based on import demand elasticities, which are themselves estimates
› Neglect of product quality differences
NTM type Importer Product EU & USMethodology
New data set (WTO I-TIP complemented by Ghodsi et al, 2015)
Types of NTMs
Intensity Measure for NTMs
Using a panel structure
4
Heckman two-stage estimation procedure:
Transformation to AVEs:
Methodology
(1 ) 𝑃𝑟𝑜𝑏 𝑚𝑖𝑗ℎ𝑡 > 0 = 𝛼0ℎ + 𝛼1 𝑙𝑛 1 + 𝑡𝑖𝑗ℎ𝑡 +
𝑛
𝛼2𝑛 𝑁𝑇𝑀𝑛𝑖𝑗ℎ𝑡 + 𝛼3𝐶𝑖𝑗𝑡 + 𝜔𝑖 + 𝜔𝑗 + 𝜔𝑡 + 𝜖𝑖𝑗ℎ𝑡 ,
∀ℎ; 𝑛 ∈ 𝐴𝐷𝑃, 𝐶𝑉𝐷, 𝑆𝐺, 𝑆𝑆𝐺, 𝑆𝑃𝑆, 𝑇𝐵𝑇, 𝑄𝑅𝑆; 𝑆𝑇𝐶𝑆𝑃𝑆, 𝑆𝑇𝐶𝑇𝐵𝑇
(2) 𝑙𝑛 𝑚𝑖𝑗ℎ𝑡 𝑚𝑖𝑗ℎ𝑡 > 0 = 𝛽0ℎ + 𝛽1 𝑙𝑛 1 + 𝑡𝑖𝑗ℎ𝑡 +
𝑛=1
𝑁−1
𝛽2𝑛 𝑁𝑇𝑀𝑛𝑖𝑗ℎ𝑡 +
𝑖=1
𝐼
𝛽2𝑛′𝑖 𝜔𝑖 𝑁𝑇𝑀𝑛′𝑖𝑗ℎ𝑡 + 𝛽3𝐶𝑖𝑗𝑡
+ 𝜔𝑖𝑗 + 𝜔𝑡 + 𝜙𝑖𝑗ℎ𝑡 + 𝜇𝑖𝑗ℎ𝑡 ,
∀ℎ; ∀𝑛, 𝑛′ ∈ 𝐴𝐷𝑃, 𝐶𝑉𝐷, 𝑆𝐺, 𝑆𝑆𝐺, 𝑆𝑃𝑆, 𝑇𝐵𝑇,𝑄𝑅𝑆; 𝑆𝑇𝐶𝑆𝑃𝑆, 𝑆𝑇𝐶𝑇𝐵𝑇 𝑤ℎ𝑒𝑟𝑒 𝑛′ ≠ 𝑛
(3 ) 𝜕 ln 𝑚𝑖ℎ𝜕𝑁𝑇𝑀𝑖ℎ
𝑛 =𝜕 ln 𝑚𝑖ℎ𝜕 ln 𝑝𝑖ℎ
𝜕 ln 𝑝𝑖ℎ𝜕𝑁𝑇𝑀𝑖ℎ
𝑛 = 𝜀𝑖ℎ𝐴𝑉𝐸𝑖ℎ𝑛
(4) 𝐴𝑉𝐸𝑖ℎ𝑛 =
𝑒𝛽2𝑛′𝑖 − 1
𝜀𝑖ℎ
NTM type Importer Product EU & USMethodology
5Note: Total of 37,982 NTM notifications over the period 1979 to March 2015; Graph excludes 899 Specific Trade Concerns.
NTMs by type: Sum 2002-2011
NTM type Importer Product EU & USMethodology
49.6%
35.2%
2.1%
10.1%
1.5%
0.8%
0.7%
TBT SPS QRS ADP SSG SG CVD
6
Note: Mean binding AVEs (i.e. statistically different from zero at the 10% level) computed as simple averages over all observations for two samples:
(a) the full sample and (b) excluding intra-EU trade in the estimation
NTMs by type vs. average AVEs
NTM type Importer Product EU & USMethodology
49.6%
35.2%
2.1%
10.1%
1.5%
0.8%
0.7%
TBT SPS QRS ADP SSG SG CVD
TBT AVE 4.4; 6.5(Full sample; excl. intra-EU
trade from the estimation)
SPS AVE 6.2; 9.7
AVE 7.8; 15.1;
AVE -20.2; -12.3;
AVE 21.7; 30.0;
AVE 28.0; 9.7;
AVE -11.0; 0.5
7Note: Figures on countries affected exclude all NTMs that apply to all exporters. Income group classification of the World Bank.
NTMs by income
NTM type Importer Product EU & USMethodology
8
NTMs by income vs. average AVEs
Income Group SPS TBT QRS ADP OCA STC
Simple Averages
over country-specific AVEs
Low income 32.6 5.0 . . . .
Lower middle income 11.9 7.5 . -4.0 -5.6 14.4
Upper middle income 12.1 5.8 -4.7 -9.6 67.4 11.3
High income 9.1 4.0 38.6 -17.5 13.9 -5.4
Simple Averages
over country-specific i.w. AVEs
Low income 11.1 -1.2 . . . .
Lower middle income 0.2 0.0 . -3.5 0.6 5.9
Upper middle income 0.7 1.5 -0.4 0.3 0.1 -5.6
High income 0.5 -3.3 -0.4 -2.8 -0.1 -6.3
i.w. Averages
over country-specific i.w. AVEs
Low income 2.3 -3.6 . . . .
Lower middle income -2.0 -3.2 . -5.4 -0.1 -5.7
Upper middle income 2.6 -2.2 0.0 -0.1 0.1 -9.7
High income 0.1 -4.4 -0.4 -1.3 0.1 -7.5
Note: Income classification of the World Bank
NTM type Importer Product EU & USMethodology
9
NTMs by Product
NTM type Importer Product EU & USMethodology
10
NTMs by Product vs. simple average AVEs
Note: 𝐴𝑉𝐸𝐻𝑆2 = 𝑖 𝐻𝑆2,𝑖 𝐴𝑉𝐸𝑖ℎ
𝐻𝑖ℎ/𝐼
NTM type Importer Product EU & USMethodology
11
NTMs by Product vs. import-weighted average AVEs
Note: 𝐴𝑉𝐸𝐻𝑆2 = 𝑖 𝐻𝑆2,𝑖 𝐴𝑉𝐸𝑖ℎ∗ 𝐼𝑚𝑝𝑜𝑟𝑡𝑖ℎ
𝐼𝑚𝑝𝑜𝑟𝑡𝑖,𝐻𝑆2/𝐼
NTM type Importer Product EU & USMethodology
12
NTMs by Product: EU Exports vs. US AVEs
Note: HS 2-digits computed as simple average over HS 6-digit products. Ranks are based on all products for which at least one NTM applied.
NTM type Importer Product EU & USMethodology
EU Exports US AVEs
HS2World
ExportsRank: World
Rank: US
SPS TBT QRS
84 388.0 1 1 8.6 -44.1 . Nuclear reactors, boilers, machinery […]
87 220.0 2 3 4.9 -3.4 . Vehicles other than railway or tramway […]
85 194.0 3 6 7.0 14.5 . Electrical machinery and equipment […]
27 146.0 4 5 1.5 . . Mineral fuels, mineral oils and products […]
30 129.0 5 2 -1.1 -84.0 . Pharmaceutical products.
90 93.0 6 4 6.3 43.4 . Optical, photographic, cinematographic […]
71 72.5 7 10 -5.5 30.6 . Natural or cultured pearls, precious […]
29 63.2 8 7 1.8 -29.2 . Organic chemicals.
39 60.1 9 11 2.7 33.1 . Plastics and articles thereof.
88 53.1 10 8 7.4 -39.5 . Aircraft, spacecraft, and parts thereof.
13
NTMs by Product: US Exports vs. EU AVEs
NTM type Importer Product EU & USMethodology
US Exports EU AVEs
HS2World
ExportsRank: World
Rank: EU
SPS TBT QRS
84 207.0 1 1 9.9 0.3 -5.1 Nuclear reactors, boilers, machinery […]
85 158.0 2 4 . 1.2 . Electrical machinery and equipment […]
27 131.0 3 2 16.0 1.0 . Mineral fuels, mineral oils and products[…]
87 120.0 4 7 . -1.1 5.5 Vehicles other than railway or tramway […]
90 79.4 5 3 . -4.5 . Optical, photographic, cinematographic […]
71 71.8 6 6 . -39.0 . Natural or cultured pearls, precious […]
39 59.1 7 9 -1.3 0.0 7.4 Plastics and articles thereof.
29 45.7 8 8 -4.6 -2.7 -2.3 Organic chemicals.
30 38.1 9 5 7.2 2.8 -7.1 Pharmaceutical products.
10 28.3 10 35 -4.0 -1.0 . Cereals.
Note: EU aggregate computed by applying import weights at the HS 6-digit level. HS 2-digits computed as simple average over HS 6-digit products.
Ranks are based on all products for which at least one NTM applied.
14
Data limitationsshown with import-weighted AVEs of SPS measures and TBTs, sign. at 10%
Wiener Institut für
Internationale
Wirtschaftsvergleiche
The Vienna Institute for
International Economic
Studies
www.wiiw.ac.at
Julia Grübler (with Mahdi Ghodsi and Robert Stehrer)
PRONTO Annual Conference:
Quantifying Non-Tariff Barriers to Trade and Investment
27 February 2016
This paper was produced as part of the PRONTO (Productivity, Non-Tariff Measures and Openness) project funded by the European Commission under the 7th Framework Programme.
Assessing the Impact
of Non-Tariff Measures on Imports
16
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Bratt, M. (2014). “Estimating the bilateral impact of non-tariff measures (NTMs)”, Working Paper WPS 14-01-1, Université de Genève
Cadot, O. and J. Gourdon, 2015. "NTMs, Preferential Trade Agreements, and Prices: New evidence," Working Papers 2015-01, CEPII research center.
Dean, J.M., J. Signoret, R.M. Feinberg, R.D. Ludema, and M.J. Ferrantino (2009). “Estimating the Price Effects of Non-Tariff Barriers”, The B.E. Journal of Economic Analysis & Policy, 9 (1), Art. 12.
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Literature