Trade policy and global value chains: tariffs versus non-tariff measures

Globalisation is increasingly characterised by intertwined geographical and local production processes through global value chains (GVCs). In the presence of GVCs, import tariffs not only affect the direct trading partners, but also result in indirect impacts through inter-country and inter-industry...

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Bibliographic Details
Published inReview of world economics Vol. 158; no. 3; pp. 887 - 916
Main Authors Ghodsi, Mahdi, Stehrer, Robert
Format Journal Article
LanguageEnglish
Published Berlin/Heidelberg Springer Berlin Heidelberg 01.08.2022
Springer Nature B.V
Subjects
Consumers
Costs
Economic Policy
Economic theory
Economics
Economics and Finance
European Integration
Exports
Global economy
Globalization
Gravity
Indexes
International Economics
International trade
Macroeconomics/Monetary Economics//Financial Economics
Original Paper
Quality standards
Supply chains
Tariffs
Trade barriers
Trade negotiation
Trade policy
Trading
Value added
Value chain
F14
Ad-valorem equivalents of NTMs
F13
Cumulative ad-valorem equivalents
Non-tariff measures
Global value chains
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Summary:Globalisation is increasingly characterised by intertwined geographical and local production processes through global value chains (GVCs). In the presence of GVCs, import tariffs not only affect the direct trading partners, but also result in indirect impacts through inter-country and inter-industry linkages. This is also the case for non-tariff measures (NTMs), which have gained in significance in recent decades and are an important part of comprehensive trade negotiations and agreements. This paper analyses the effects of such trade policy instruments along GVCs. The authors estimate bilateral ad-valorem equivalents (AVEs) of two types of NTMs (technical barriers to trade, and sanitary and phytosanitary measures) and calculate cumulative bilateral trade restrictiveness indices based on these AVEs and tariffs by taking GVC linkages into account. This produces a ‘trade restrictiveness index’. Using this index, the authors investigate the impacts of these trade policy measures by applying a structural gravity model on value added and gross exports. The results indicate that tariffs have a stronger impact on exports than do NTMs, though tariffs have been reduced significantly in the past decades. As for the impact of NTMs, the results confirm the existing literature that suggests there can be both trade-enhancing and trade-hampering effects.
ISSN:1610-2878
1610-2886
DOI:10.1007/s10290-021-00448-9