How do technical regulations shape global trade?

New research from the World Trade Institute examines the economy-wide effects of technical non-tariff measures (NTMs)—such as product labeling requirements, conformity assessments, importer registration, and health and safety standards—across 78 countries and 21 sectors between 2012 and 2017.

Using structural gravity estimates combined with a global general equilibrium model, the study finds that regulatory changes increased trade costs, reducing global goods trade by 1.2%—equivalent to around 40% of the observed decline in nominal merchandise trade during the period. While the overall impact on global real income was relatively small, the effects varied significantly across countries and sectors.

The findings suggest that greater international coordination and harmonization of technical regulations can reduce unnecessary trade frictions, facilitate trade, and enhance real incomes, while continuing to support legitimate public policy objectives such as health, safety, and consumer protection.