Trade Effects of Regional Standards Liberalization : A Heterogeneous Firms Approach

This study investigates trade effects of the regional liberalization of technical barriers to trade (TBTs) in the form of harmonization and mutual recognition agreements (MRAs) for testing procedures. The theoretical part of the paper is framed in...

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Bibliographic Details
Main Author:	Baller, Silja
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ABOLISHING TARIFFS ASYMMETRIC INFORMATION AVERAGE PRODUCTIVITY BILATERAL TRADE BILATERAL TRADE FLOWS COMMON STANDARDS COMPETITION POLICY COMPLETE HARMONIZATION CONFORMITY ASSESSMENT CONFORMITY ASSESSMENT PROCEDURES CONSTANT ELASTICITY OF SUBSTITUTION CONSUMER PREFERENCES CONSUMER PROTECTION CONVERGENCE COUNTRY PRODUCERS CUSTOMS CUSTOMS PROCEDURES DISPUTE SETTLEMENT DOMESTIC MARKET DOMESTIC REGULATIONS ECONOMIC GEOGRAPHY ECONOMIES OF SCALE ELASTICITY ELASTICITY OF SUBSTITUTION ENVIRONMENTAL STANDARDS EXPENDITURE EXPORT MARKET EXPORT MARKETS EXPORT PERFORMANCE EXPORTERS EXPORTING COUNTRY EXPORTS EXTERNALITY FAX MACHINES FIXED COSTS FOREIGN INDUSTRIES FOREIGN INVESTMENT FOREIGN MARKET FOREIGN MARKETS FOREIGN PRODUCERS FREE ENTRY GLOBAL TRADE GOVERNMENT REGULATION GRAVITY EQUATION HARMONIZATION HARMONIZATION DIRECTIVES HOME MARKET IMPORTING COUNTRY INCREASING RETURNS INCREASING RETURNS TO SCALE INEFFICIENCY INTEGRATED MARKETS INTERNAL TARIFFS INTERNATIONAL STANDARD INTERNATIONAL STANDARDS INTERNATIONAL TRADE INTRA-REGIONAL TRADE LABOR STANDARDS LIBERALIZATION EFFORTS LOCAL CONSUMERS MARGINAL COST MARGINAL COST OF PRODUCTION MARKET ENTRY MARKET ENTRY COSTS MARKET FAILURE MARKET FAILURES MARKET FORCES MARKET INTEGRATION MARKET MECHANISM MARKET SHARES MARKETING MODELING MONOPOLISTIC COMPETITION MUTUAL RECOGNITION MUTUAL RECOGNITION AGREEMENTS MUTUAL RECOGNITION OF STANDARDS NATIONAL BORDERS NATIONAL MARKETS NATIONAL REGULATORY REGIMES NATIONAL STANDARDS NEGATIVE EXTERNALITIES NON-TARIFF BARRIERS PACIFIC REGION PARTNER COUNTRIES PATENTS PREFERENTIAL AGREEMENTS PREFERENTIAL LIBERALIZATION PRIVATE SECTOR PRODUCT CYCLE PRODUCT QUALITY PRODUCT STANDARDS PRODUCTION COSTS PRODUCTION PROCESS PRODUCTIVITY REGIONAL LIBERALIZATION REGIONAL STANDARD REGIONAL STANDARDS REGIONAL TRADING ARRANGEMENTS REGULATORY OBJECTIVES REGULATORY REGIME REGULATORY REGIMES RESEARCH WORKING PAPERS RESEARCHERS RULES OF ORIGIN SAFETY STANDARDS SALE SALES SIDE EFFECTS SPREAD STANDARD SETTING STANDARDS REGIMES SUNK COSTS SUPPLIER SUPPLIERS TECHNICAL BARRIERS TECHNICAL REGULATIONS TESTING LABORATORIES TRADE BARRIERS TRADE COSTS TRADE DIVERSION TRADE EFFECT TRADE EFFECTS TRADE FACILITATION TRADE MODELS TRADE THEORY TRADE VOLUMES TRADING PARTNERS TRANSPORT COSTS UNILATERAL RECOGNITION UTILITY FUNCTION VARIABLE COSTS VOLUME OF TRADE WEALTH WTO
Online Access:	http://documents.worldbank.org/curated/en/2007/02/7401769/trade-effects-regional-standards-liberalization-heterogeneous-firms-approach http://hdl.handle.net/10986/7156

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Summary:	This study investigates trade effects of the regional liberalization of technical barriers to trade (TBTs) in the form of harmonization and mutual recognition agreements (MRAs) for testing procedures. The theoretical part of the paper is framed in terms of a heterogeneous firms approach. This paper adds to the existing literature by formalizing the effects of MRAs and harmonization initiatives on bilateral trade flows and by applying this new theoretical framework in the empirical part of the paper. The latter consists of a two-stage gravity estimation and investigates sectoral effects of TBT liberalization on parties to the agreement as well as excluded industrial and developing countries. It finds that MRAs have a strong positive influence on both export probabilities and trade volumes for partner countries. Regarding harmonization, results seem to suggest that the impact on parties to the agreement is negligible, however that on excluded OECD countries is large and positive. Third party developing countries do not seem to benefit from the market integration effect brought about by harmonization in other regions. Overall, effects on the probability that a new firm will export are much more pronounced than effects on the trade volumes of incumbent exporters.

Trade Effects of Regional Standards Liberalization : A Heterogeneous Firms Approach

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