Working Paper: CEPR ID: DP10798
Authors: Olivier Cadot; Julien Gourdon
Abstract: This paper combines price data from the CEPII bilateral Unit Values with a new database on non-tariff measures (NTMs) to estimate their effect on consumer prices for selected 4500 products in 60 countries. Results based on panel regressions on 270,000 country-product pairs suggest that, after controlling for tariffs, systematic cross-country cost-of-living and factor endowment differences, origin country-specific and product-specific unobservables, NTMs increase trade unit values in two thirds of the product lines. However, we also find that, in Preferential Trade Agreements (PTA) with deep-integration clauses, harmonization and mutual recognition of standards or conformity assessment substantially reduce the this price-raising effect, suggesting that the compliance-cost component of the price rise is reduced by ?deep integration? clauses in PTAs.
Keywords: Ad-valorem equivalents; Economic integration agreement; Free trade agreements; Harmonization; Nontariff measures; Regionalism and trade
JEL Codes: F13; F15; O19
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| NTMs (F29) | Trade Unit Values (D46) |
| NTMs (F29) | Compliance Costs (Q52) |
| NTMs (F29) | Quality Signaling (L15) |
| Compliance Costs (Q52) | Trade Unit Values (D46) |
| Quality Signaling (L15) | Trade Unit Values (D46) |
| NTMs + Deep Integration Clauses (F15) | Reduced Price-Raising Effect of NTMs (F16) |