The substitution effect of preferential tariffs on non-tariff measures: evidence from Vietnam

This study empirically investigates the effects of ASEAN Trade in Goods Agreement (ATIGA) tariffs on non-tariff measures (NTMs) in Vietnam from 2012 to 2018. Our findings reveal the following. First, o ur gravity estimation demonstrates that although the reduction of ATIGA tariffs increases Vietna m’s imports, the introduction of certain NTM types, particularly price control and finance measur es, decreases them. Second, the reduction of ATIGA tariffs tends to introduce price control measur es in particular. Third, when ATIGA tariffs decrease, the pre-shipment inspection, non-automatic licensi ng, and finance measures are more likely to be eliminated for products in which Vietnam has high export competitiveness. Fourth, both ATIGA tariffs and ASEAN+1 free trade agreement tariffs have signific ant effects on the introduction of NTMs in Vietnam. Finally, we found that the reduction in ATIGA tariffs a lso results in decreasing most favored nation tariffs.