Non-tariff measures vs. tariffs: A fresh look at the evidence

Abstract

This paper examines the relationship between tariffs and the usage of non-tariff measures (NTMs) for a product-level global panel of 97 countries over the period 1996–2020. Using the most comprehensive NTM data set to date, I find that tariff levels or changes therein are of little relevance for implementing NTMs. Instead, smaller tariff overhangs, the difference between WTO members’ bound and applied tariff rates, emerge as a significant predictor of future NTM actions. The inverse link between tariff overhangs and NTMs is observable both (i) at the aggregate NTM level and (ii) for the large majority of different NTM subcategories.