Non-trade concerns: reconciling domestic policy objectives with trade liberalisation

Abstract

In seeking appropriate economic policies to address non-trade concerns (NTC), a distinction must be made between those concerns that relate to market failure and the misallocation of resources, and those that relate to distributional issues. To deal with both types of NTC, domestic policies are required that correct for missing institutions or address institutional failure. We identify the NTC that fall into the two categories of NTC and the types of domestic policies that can be used for each type. International policies and agreements, such as those concluded through the World Trade Organisation (WTO), while potentially significant for the liberalisation of international trade, play a secondary and supporting role to domestic policies in addressing NTC. In particular, they are not an efficient means of addressing domestic market failure.