This paper provides a systematic welfare-based approach to analyze the impact of non-tariff measures (NTMs) on trade and welfare in the presence of market imperfections. It focuses on standard-like measures such as technical barriers and sanitary and phytosanitary regulations. The approach overcomes the shortcomings of the mainstream approach based on the analysis of foregone trade caused by trade costs. The latter ignores market imperfections, and welfare is found to increases when NTMs are reduced and trade expands. We explain how to account for external effects and market failures in trade-focused welfare analysis, leading to a more balanced overall assessment of measures despite a potential reduction of trade flows. The relationships between trade, welfare, and NTMs are complex, and generalizations are best avoided. Very often, the optimum NTM is not the absence of regulation. An application to shrimp trade illustrates the feasibility of the proposed approach. The illustration shows that the reinforcement of a food safety standard can be socially preferable to the status-quo situation, both domestically and internationally.

The tension between standards being a response to market failures versus creating barriers to trade characterizes much of their economic analysis. This article explores in more detail the link between international trade and standards based on resolution of a public bad(s) problem. Specifically, a general equilibrium setting is sketched out, drawing on existing analysis in the trade and environmental economics literature, and designed to capture some key stylized facts and basic hypotheses concerning North–South trade where standards are targeted at negative externalities in production. The key conclusions to be drawn are that while a clear theoretical foundation exists for the hypothesis of ‘standards as barriers’ to trade, and the likely benefits of aid for trade programs, this is not the case for the hypothesis of ‘barriers as a catalyst’ for trade, pointing to the need for further research on the latter hypothesis.

This paper reviews the emerging literature on the political economy of public standards in an open economy to explain why standards are set at certain levels, and how this affects trade. We use a simple framework to illustrate how interest groups may influence the standard-setting process, and which factors may affect the political equilibria. We analyze the relation between trade and standards, and their potential protectionist nature. We argue that standards may act as barriers or catalysts to trade, that both under- or over-standardization may occur, and that standards may serve as protectionist instruments, or not.

In this article, we review the literature on the measurement of trade costs in international trade with a special emphasis on non-tariff measures and in particular on standards and technical regulations. We distinguish ‘direct’ from ‘indirect’ approaches. The direct approach collects observable data or proxy variables on trade cost components which are then typically used as regressors in a gravity equation of trade. Instead, the indirect approach infers the extent of trade impediments from trade flows. It compares actual trade flows to the trade flows predicted by a hypothetical frictionless benchmark scenario based on a micro-founded trade model, attributing the deviation of actual from predicted trade flows to trade frictions. We argue that economists and policy-makers can gain useful insights from both approaches.

This paper quantifies the effect of GMO regulation on bilateral trade flows of agricultural products. We develop a composite index of GMO regulations and using a gravity model we show that bilateral differences in GMO regulation negatively affect trade flows. This effect is especially driven by labeling, approval process, and traceability. Our results are robust to the endogeneity of GMO standards to trade flows.

By disentangling productivity- from quality-sorting in horticultural exports, this paper investigates the impact of food safety standards and consumers’ preference for quality on developing countries’ capacity to export high care and differentiated agricultural products (HCAs). Using a unique database on US import refusals, the empirical analysis shows that a shock to reputation has a downgrading effect, reducing the capacity to participate and benefit from trade in HCAs. The occurrence of at least one refusal in the current year reduces HS 6-digit average unit export price by over 8% and the long-run propensity suggests a 25% cut.

The multilateral trading system has continuously evolved to take account of the changing nature of non-tariff barriers (NTBs). This paper contrasts GATT terminology with the definitions frequently found in the literature and describes the multilateral tools that were used in the past to identify NTBs. The latter includes an overview of inventories based on ‘reverse’ notifications and, more recently, the ‘specific trade concerns’ raised in WTO Committees. The paper also looks at the provisions cited by complainants in more than 60 years of multilateral disputes as a proxy for identifying the most relevant NTBs affecting trade in goods, as well as the manner in which they have evolved over time. It concludes that agricultural and non-agricultural products face very different NTBs, and observes that while disputes involving agricultural products are increasingly about ‘behind-the-border’ NTBs, those involving non-agricultural or mixed products are not. Finally, the paper proposes the establishment of a new multilateral instrument to collect and classify information on NTBs based on specific trade concerns raised in the context of the ordinary WTO bodies.

Private standards have increasingly become a contentious issue in the multilateral trading system. The ever increasing number of sector-specific standards developed by businesses, in particular in the food market, may have significant implications for developing countries in terms of market access. Some countries see private food standards as a particular form of non-tariff barriers. The World Trade Organization (WTO) deals with non-tariff barriers in the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement) and in the Agreement on Technical Barriers to Trade (TBT Agreement). This paper examines to what extent these agreements cover private standards, as they were originally intended to regulate standard-setting by public authorities. We find that there is an important difference between the SPS Agreement and the TBT Agreement in that the drafters of the latter realized the importance of the private sector in standard-setting. Finally, we discuss whether a ‘Code of Good Practice for the Preparation, Adoption and Application of Standards’, similar to that under the TBT Agreement, could be adopted under the SPS Agreement.

This paper investigates whether the Pesticides Initiative Program has significantly affected the export performance of Senegal's horticulture industry. We apply two main microeconometric techniques, difference-in-differences and matching difference-in-differences, to identify the effect of the Pesticides Initiative Program on exports of fresh fruits and vegetables. We use a unique firm-level dataset containing data on sales, employment, and exports by product and destination markets, as well as firm enrolment year, over 2000–2008. The results suggest that while the program had no significant effect on exports pooled over all products and destinations, it had a positive effect when considering fresh fruits and vegetables exports to the European Union.

Using a new database on standards in China, we estimate the impact of voluntary and mandatory standards – either harmonized to international norms or purely domestic – on Chinese food exports. The dataset covers seven Chinese products over the period 1992–2008. We find that standards have a positive effect on China's export performance, as the benefits to standardization in terms of reducing potential information asymmetry and signaling enhance food safety, and quality in foreign markets seem to surpass compliance costs. Our estimation results show that the positive effect of Chinese standards is larger when they are harmonized to international measures. The results suggest that there are clear benefits to China's steps to base their domestic standards and regulations on international measures.

The EU's decision to follow in the footsteps of the United States by breaking with its past practice of not applying countervailing duties against Chinese subsidies has left many wondering whether its first imposition of such duties on Coated Fine Paper from China was a watershed moment in EU trade defense history or merely an aberration, and if the former, just how profound of an impact these cases might have in the future. The article examines the key considerations which can aid one in determining the probability of the EU making an anti-subsidy practice against China routine, as well as the extent to which that practice could have a substantial practical impact on duty rates. This examination entails a look at the EU's historical use of the anti-subsidy instrument as a subordinate complement to the anti-dumping instrument, the impact of the EU's adoption of the ‘lesser duty rule’ on concurrent investigations, the way in which the expiration of a key provision in China's Protocol of Accession to the WTO will increase the desirability of the anti-subsidy instrument, as well as a look at how the European Commission might have fallen foul of the SCM Agreement with regard to a few key points.