Developing countries, standards and the WTO

Abstract

Quality standards play an important role in global transactions, but can represent a barrier to trade if they differ across countries. International standards reduce transaction costs and WTO Agreements encourage the use of such standards. This paper presents a simple analytical framework to analyse the welfare effects of quality standards in a trade set-up, with a particular focus on voluntary measures. It illustrates that international standards can have positive or negative welfare effects for individual countries. The paper describes developing countries' involvement in international standard setting bodies and suggests that their engagement needs to be enhanced in order for international standards to work in the advantage of developing economies.