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Trade and Economic Effects of IRC: Further Empirical Evidence from SPS and TBT provisions

Author

Listed:
  • Anne-Célia Disdier

    (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Susan F Stone

    (OCDE - Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development)

  • Frank van Tongeren

    (OCDE - Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development)

Abstract

Cutting trade costs, especially those stemming from non-tariff measures, is a growing priority for policymakers. One way to achieve this is for countries to improve their co-operation on regulatory matters. An avenue open to governments is to include provisions related to international regulatory co-operation (IRC) into preferential trade agreements (PTAs). However, there exists little empirical evidence of the benefits of these co-operative mechanisms. This paper provides this evidence, in the context of Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) provisions. It measures the effect of IRC mechanisms on trade flows using the latest developments in the gravity literature and the most recent data sources. The work distinguishes between different forms of co-operation implemented between countries within PTAs while also accounting for the level of commitment between partners. The estimationresults suggest that PTAs including SPS and TBT measures have a significant and positive effect on trade flows, with the legal enforceability of IRC mechanisms having the strongest and most robust impact on trade flows. This result holds even when WTO-related provisions and dispute settlement procedures are controlled for, implying that binding commitments are important in maximizing post-PTA trade flows. The work shows that transparency and co-operation are significant and robust factors in increasing trade. It also reinforces the view that the impact takes some time to materialise, which is important when evaluating the effectiveness of deep IRC mechanisms.

Suggested Citation

  • Anne-Célia Disdier & Susan F Stone & Frank van Tongeren, 2020. "Trade and Economic Effects of IRC: Further Empirical Evidence from SPS and TBT provisions," Working Papers hal-02953673, HAL.
  • Handle: RePEc:hal:wpaper:hal-02953673
    DOI: 10.1787/8648b6ca-en
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    Cited by:

    1. Christine Wieck & Jason H. Grant, 2021. "Codex in Motion: Food Safety Standard Setting and Impacts on Developing Countries’ Agricultural Exports," EuroChoices, The Agricultural Economics Society, vol. 20(1), pages 37-47, April.
    2. William C. Ridley & Jeff Luckstead & Stephen Devadoss, 2024. "Impacts of tariffs and NTMs on beef, pork and poultry trade," Journal of Agricultural Economics, Wiley Blackwell, vol. 75(2), pages 546-572, June.
    3. Fernandes,Ana Margarida & Lefebvre,Kevin Jean-Rene & Rocha,Nadia, 2021. "Heterogeneous Impacts of SPS and TBT Regulations : Firm-Level Evidence from Deep Trade Agreements," Policy Research Working Paper Series 9700, The World Bank.
    4. Kym Anderson, 2022. "Agriculture in a more uncertain global trade environment," Agricultural Economics, International Association of Agricultural Economists, vol. 53(4), pages 563-579, July.
    5. Wassie, Mengistu Alamneh & Kornher, Lukas & Zaki, Chahir, 2024. "Revisiting the Impact of Trade Facilitation Measures in Africa: Structural Gravity Estimation and Ad Valorem Tariff Equivalents," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344296, International Association of Agricultural Economists (IAAE).

    More about this item

    Keywords

    Trade; international regulation co-operation; trade agreements; gravity equation; Sanitary and Phytosanitary; technical barriers to trade;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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