Trade Policies Mix and Match: Theory and Global Evidence, with the Sino-EU Battery Electric Vehicle Dispute as an Illustrative Application

Hiau Looi Kee and Enze Xie

No 10855, Policy Research Working Paper Series from The World Bank

Abstract: This paper studies the factors influencing governments’ mixed use of tariffs and non-tariff measures (NTMs) as policy instruments. Results based on bilateral product-level ad valorem-equivalent estimates across diverse countries indicate that restrictive NTMs coexist with low tariffs, a pattern consistent with imperfect policy substitution. This negative correlation is evident for high-income importing countries, low-income exporting countries, country pairs with deep trade agreements, and products with consumption externalities. A terms-of-trade model with externalities rationalizes part of the findings and is also used to interpret the recent Sino-EU trade dispute, in which the EU imposed NTMs on top of tariffs on China’s battery electric vehicles.

Date: 2024-07-17
New Economics Papers: this item is included in nep-cna, nep-eec, nep-ene, nep-int and nep-tre
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