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2 Feb 2015    Working Papers
Cadot, Olivier


NTMs, Preferential Trade Agreements, and Prices: New evidence

NTMs, Preferential Trade Agreements, and Prices: New evidence

a working paper by Cadot and Gourdon

Combining for the first time a new dataset of non-tariff measures (NTMs) in 65 countries with the CEPII’s unit values database, we estimate average ad-valorem equivalents (AVEs) for SPS, TBT and other measures by section of the Harmonized System of product classification. While most existing AVEs are obtained from indirect quantity-based estimation, ours are obtained from direct price-gap estimation. They lie in a single-digit range, i.e. substantially lower than previous estimates based on older data. Our results may reflect the progressive phasing out of commandand- control instruments such as quantitative restrictions in many countries; they also suggest that sanitary and technical regulations have not substituted for them as trade-restrictive interventions. Most interestingly, we show that deep-integration clauses in regional trade agreements, in particular the mutual recognition of conformity-assessment procedures, substantially reduce the price-raising effect of NTMs, possibly reflecting lower compliance costs.

NTMs, Preferential Trade Agreements, and Prices: New evidence