Estimating the Impacts of Non-Tariff Measures in the Indian Ocean Rim Association

Abdallah Akintola,Lokman Zaibet,Alessandro Antimiani,Houcine Boughanmi,Hemesiri Kotagama

doi:10.3390/su14010068

Abstract

In recent years, the Indian Ocean Rim Association has witnessed an increasing trend in the use of non-tariff measures (NTMs). This study evaluated the impact of NTMs in the Indian Ocean Rim Association through estimations of their ad valorem equivalents at the HS chapter and country levels. A gravity model using NTM count data (intensity) was specified and estimated to derive the importer-specific ad valorem equivalents for the four (4) most used NTMs in the region. The results showed the presence of both import-impeding and import-promoting effects of NTMs; however, the import-impeding effects dominated in the region. The quantitative restriction and safeguard measures were more restrictive compared to the sanitary and phytosanitary measures and technical barriers to trade. This was expected since quantitative restrictions are trade-distorting by design. This calls for reforming trade policy in the region toward NTMs that are more transparent and trade enhancing for successful subsequent trade negotiations in the Indian Ocean Rim Association, which would support the sustainable economic development of the region.

Highlights

In the last three decades, the world has witnessed a dramatic increase in international trade, with many countries trading unilaterally and multilaterally
Four main non-tariff measures (NTMs) (SPS, TBT, QR and SG) were considered in the analysis based on their prevalence in the Indian Ocean Rim Association (IORA) region
It should be noted that the NTM effect depends on the commodity and the country been analysed [41]

Summary

Introduction

In the last three decades, the world has witnessed a dramatic increase in international trade, with many countries trading unilaterally and multilaterally. International trade has grown twice as much has global production [1], with total merchandise trade reaching. USD 34.9 trillion in 2017 [2]. This growth was partly linked to the rapid technological development across the globe, the process of trade liberalization under the multilateral trading system (WTO), and the proliferation of regional trade integration arrangements (RTAs). The process of multilateral trade liberalization has been successful in significantly reducing import tariffs, which currently stand at an average below 5% globally [3]. Non-tariff measures (NTMs) are on the rise and can hinder trade-driven sustainable economic development.

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Conclusion