Tariffs and Non-Tariff Measures: Substitutes or Complements. A Cross Country Analysis

Eyal Ronen

MPRA Paper from University Library of Munich, Germany

Abstract: Alongside the global tariff liberalization, a growing body of evidence demonstrates the rise in the use of non-tariff measures (NTMs), which suggests a substitution effect between these two import policy instruments. Yet, detailed economic data reveals that in countries with lower tariff rates (developed countries), the use of NTMs is significantly lower compared to developing countries, which implies a possible complementary effect between tariffs and NTMs across nations. Using a dataset of Kee, Nicita and Olarreaga (2009) on ad valorem tariff equivalents of NTMs, at a very disaggregated product level, this paper explores the determinants of NTMs and their substitutability/complementarity relations with tariff barriers. While exploiting the country variation, it demonstrates the decreasing trend of substitutability between the two import policy instruments with the rise in economic development. In particular, a significant complementarity correlation exists between the two trade measures among the wealthiest nations, implying a stronger commitment to freer trade.

Keywords: Non-Tariff Measures; Technical Barriers to Trade; WTO (search for similar items in EconPapers)
JEL-codes: F13 F14 F53 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Bank i Kredyt, National Bank of Poland 1.48(2017): pp. 45-72

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Related works:
Journal Article: Tariffs and non-tariff measures: substitutes or complements. A cross-country analysis (2017)
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