The effect of nontariff barriers on unreported trade: exploring a customs duty reform

Low trading costs, more significant consumer markets, and favourable economic ties between China and Pakistan provide a strong rationale for bilateral trade. Both countries have signed several bilateral trade agreements to boost mutual trade since 1963. The agreement that marked the beginning of a new era of cooperation between two trading partners and paved the way for free trade agreements was the Early Harvest Program (EHP), implemented in 2006. The first China-Pakistan Free Trade Agreement (CPFTA) was signed in November 2006 and became operational in 2007. CPFTA aimed to remove tariff and non-tariff barriers, enhance the comparative value of exports, and increase exportable surplus mainly through technical and financial cooperation. The paper critically evaluates the impact of tariff and non-tariff barriers on Pakistan’s key exports in the pre- and post-CPFTA period. Further, the study quantifies the impact of non-tariff barriers using quantitative techniques of restrictiveness index, converge ratio, and frequency index with 4-digit H.S. code industry-level data. The analysis reveals that China imposed a relatively high tariff rate on Pakistan's top five exports compared to China's other FTA partner countries. The results about the effect of non-tariff barriers (NTBs) show that exports related to cereals, edible fruits, and textile sectors are highly covered under Sanitary and Phytosanitary (SPS) and technical barriers to trade (TBT) despite FTA. Our findings have substantial implications for sustained trade ties between China and Pakistan.

This study assessed the effect of non-tariff barriers (NTBs) on the production and marketing of maize for smallholder farmers in Mbozi and Momba Districts located in Songwe region in Tanzania. A cross-sectional design was employed in gathering primary data. A two-stage stratified sampling procedure was used in the selection of 400 smallholder farmers, who were surveyed using standardized questionnaires. In estimating the effect of NTBs on maize production and supply, the duality model was employed. The results indicate that NTBs have a depressive effect on the quantity of maize produced and marketed. The findings further show that a unit increase in transaction costs attributed to NTBs could reduce the quantity of maize produced by 16 per cent in the two districts. Based on these findings, it is concluded that the quantity of maize produced and supplied by farmers in the two districts decreases with an increase in the NTB costs. The study recommends the reduction and/or removal of the NTBs, which impede maize production and marketing among smallholder farmers. This would help the government to achieve its goals of creating high prices in the surplus districts and attain low consumer prices in the deficit urban centers, thus reducing poverty.

In the context of the ASEAN Free Trade Area, Thai exports of key vegetables have been affected by non-tariff barriers (NTBs) since 2010. This has led to the concern as to what extent such measures adopted by ASEAN countries have impacted the export of Thai vegetables. This study applied a gravity model under panel data where the estimates of a random effect model revealed that NTBs have caused damage to the export of root crops with a statistical significance of 0.01. On the other hand, a fixed effect model implied that NTBs were not the key trade barrier decreasing the export of Thai mushrooms to other ASEAN countries. Therefore, ASEAN should carefully reconsider NTB issues for the real benefit of farmers and consumers in the region in response to the Asian Economic Community (AEC) which was established in December 2015.

Regional Economic Integrations (REIs) drive economic growth within partner states but face hurdles from significant trade barriers, including tariffs and non-tariff obstacles.This study assesses the impact of Non-Tariff Barriers (NTBs) on maize trade in the East African Community (EAC) from 2011 to 2020, using Tanzanian exporters to Kenya.It examines Tanzanian maize export volumes, identifies NTBs faced by exporters to Kenya, and assesses measures taken by Tanzanian and Kenyan governments to address NTBs.Utilizing secondary data, the study employs gravity models and content analysis.The findings show that delays of six to seven hours that raise transportation costs are the key NTBs impact in the study area.Although NTBs exist for Tanzanian maize exports within the EAC, their impact on trade volume is limited.NTBs contribute to increased business costs due to roadblock delays, but weigh-in-motion technology and infrastructure enhancements help mitigate costs.Initiatives like One-Stop Border Posts (OSBPs) and the Electronic Cargo Tracking System (ETS) reduce transit time.Between 2011 and 2020, 232 NTBs were reported, with 199 resolved and a few in the final resolution stages.Recommendations emphasize eliminating non-tariff barriers, with a call for further research on trade dynamics among other East African Community countries.

This paper analyses the extent to which preferential trade agreements can lead to the substitution of non-tariff barriers for tariffs, and the effects of non-tariff barriers on welfare and other parameters. Its main results are that non-tariff barriers reduce aggregate welfare, and that the governments of economically integrated countries replace tariffs by non-tariff barriers if and only if their priority is protection of their nations’ firms.

Along with the strong propositions of freer bilateral or multilateral trade advocated by numerous trade organizations, traditional customs tariffs have been reducing or even cutting down in recent years. However, more and more non-tariff barriers to trade (NTBs) are prevailing and attracting attentions from policy makers and academic researchers nowadays. As a matter of fact, there are large amounts of policy measures can be regarded as NTBs which refer to all the measures that can distort the trade excluding tariffs. This dissertation attempts to study the influence of NTBs and quantitatively measure the effects of NTBs on trade flows and welfares based on the analyses of some trade policies and empirical trade data. As mentioned already, there are actually many categories of NTBs, and in the process of selecting objects as the study issues, two principles are followed. One of the principles is that those NTBs to be discussed in this dissertation should be hot and controversial topics in recent years and thus are worthy to do research. Moreover, the other principle is that those NTBs to be analyzed should have the impacts on agricultural product trade and distort the agricultural trade flows. Therefore, three kinds of NTBs—foreign exchange rate control, positive list system, and import quota are chosen to be studied in this dissertation. In fact, the models constructed in this research can be applied to analyze many kinds of NTBs, and hereinto the above three policy cases are taken into consideration and empirically examined their effects on agricultural trade. The first study focused on China’s exchange rate reform. In order to protect local industries and weaken the exporting advantages of China, many countries have begun to put much pressure on the appreciation of Chinese currency. In the context of huge pressures from many countries, in July 2005, China decided that Chinese currency yuan would no longer only be pegged to U.S. dollar but move into a managed floating exchange rate regime with reference to a basket of currencies. Although exchange rate had been paid much attention by economists since long time ago, yet nowadays this topic is still popular and moreover, now the study subjects become focusing on exchange rate volatility instead of exchange rate itself. Therefore,

Terminological, as well as substantive, problems with other-than-customs-duty trade protection issues have existed for a long time. After World War II, these problems proved troublesome for trade analysts. Baldwin [1970], Denton and O'Cleiracain [1972], and Lloyd [1973] were among the first who helped clarify language and ideas. Unlike many at that time, I chose to stick with as a generic shorthand to describe a world of government measures, other than tariffs or customs taxes, which restrict or distort international commerce between domestic and imported goods and services. Viewed in this simple fashion, nontariff barriers [NTBs] came to mean the totality of instruments, other than customs duties, which restrict international trade. As to substance, the nontariff barrier issue wasn't new even in the early nineteen fifties. It was getting little attention, however, particularly in agricultural circles. International trade, itself, was a subject which was far down the list of issues important to U.S. policy circles, which were occupied mainly with parity prices, supply controls, and product utilization schemes. Most everyone appeared blithely to assume that the United States would continue to be indefinitely a creditor nation and a residual supplier of agricultural products to the world market. About the only works relating to agricultural trade were a 1920s book by Nourse [Nourse, 1924] and Gale Johnson's work on the trade policy dilemma of U.S. agriculture [Johnson,1950]. As to nontariff protection studies, they were almost nonexistent, and Bidwell's excellent treatise The Invisible Tariff seems to have gotten lost during World War II. I still find it difficult to comprehend why this work is almost universally absent in modern NTB bibliographies. Hence, one sub-theme of my presentation is that one should not be surprised at the early neglect of the NTB topic by academics and policy makers. Agricultural protection in general was not fashionable research in the United States for a period of 40 to 50 years, beginning in the early 1930s. I have examined the inward-looking U.S. agricultural policy during that era elsewhere in a book that was a very early product of the International Agricultural Trade Research Consortium [IATRC, or Consortium]. [McCalla and Josling, Chapter 7]. The first part of this paper will be devoted to revisiting the evolution of the so-called nontariff trade barrier question, and to make some modest hints and suggestions as to what the Consortium might do toward understanding its significance. Initially, I shall describe how the NTB question... through a series of passive actions on the part of governments, eco-political professionals and others... underwent a metamorphosis from a rather vague conglomerate of lists and anecdotal examples of protection to a more definitive pattern of concerns, such as those embodied in the so-called technical terminology; then how the trend was reversed by the use of a broader appellation environmental barriers. I shall not attempt to analyze these phenomena, only to describe how we evolved to where we are today in this sector of agricultural protection. Second, I shall present broadly some topical areas in which nontariff problems appear to exist for resolution by the World Trade Organization [WTO] in the future. The presentation will, perforce, ask why nontariff barriers came into play as protective devices in selected areas, their social and economic implications, and the groups of interests in their perpetuation. Third, and finally, some suggestions will be made, and some questions and challenges raised as to what the Consortium can do to encourage its members to be more aggressive in addressing NTB issues.

Purpose - The purpose of this study is to analyze the effects of non-tariff barriers on the Free Trade Agreement. Currently, it has achieved significant export effects by signing free trade agreements with many countries in Korea. However, most countries have implemented non-tariff barriers to protect their industries. This study analyzes the effects of non-tariff barriers in counterpart countries that have signed a free trade agreement. Design/methodology/approach - For analysis, first, prior studies were summarized, and second, the current status of free trade agreements and non-tariff barriers were identified. And, based on the current situation, the relationship between non-tariff barriers and export volume was analyzed. The targets of analysis are the United States, China, and Vietnam, which are Korea s three largest exporters. As for non-tariff barriers, anti-dumping tariffs, countervailing tariffs, and emergency import restrictions were analyzed as import regulatory measures. Findings - In the case of the United States, it can be seen that the decline in textiles, steel and electronics sectors is even greater. In the case of China, it can be seen that exports declined after imposing non-tariff barriers in the steel sector. Finally, it can be seen that exports declined after Vietnam implemented a non-tariff barrier on the steel sector. It was found that non-tariff barriers offset the effects of the Free Trade Agreement. Research implications or Originality - Currently, Korea has free trade agreements with numerous countries. However, after the free trade agreement entered into force, the number of annual average import regulation investigations for Korean products is on the rise. In the end, the implementation of non-tariff barriers is offsetting the effects of free trade agreements. Therefore, when signing a free trade agreement, it is necessary to thoroughly prepare for import regulatory measures such as the insertion of provisions of non-tariff barriers.

The following study presents a theory of cross-border arbitrage by consumers. Competitive forces should explain how equilibrium prices would be set on each side of a border. Various trading partners have ratified numerous free-trade pacts. There is a need to investigate the success or failure of these agreements. Because of the many non-tariff trade barriers, it is sometimes difficult to construct meaningful tests of the free-trade issues for products on an individualized basis. Our comprehensive model of cross-border price variation develops an appropriate test. A series of hypotheses on geographical arbitrage are presented. We also explain why some products may have larger price differences than others based on price sensitive arbitrage. Our model may be used to measure the likelihood of undermining influences to free trade from any non-tariff barriers that continue to plague relations between trading partners.

Non Tariff Barriers to Trade in Mercosur: Focusing Brazilian Exports of Steel Products

1. Introduction The contraction in world during the first phase of the Great Depression stands out the strongest adverse shock to international in modern history. From 1929 to 1932 world import and export volume in the industrialized nations decreased about 30%. However, it is not well understood which factors were responsible for the collapse. The factors that have been highlighted in the literature are declining demand, escalating tariff and nontariff barriers, increasing bilateral agreements, and international exchange rate policies. The importance attributed to each of these factors has often been controversial. Pollard (1962, p. 200) for instance argues that for Britain the fall in total foreign a proportion of home production was a part of a secular trend, and may well not have been caused the tariff such. By contrast, Khan (1946, p. 246) claims that, within 12 to 18 months, UK nominal imports of manufactures from most of Europe and the United States were reduced something like 60% as a result of the tariff. Similarly, Saint-Etienne (1984, p. 29) argues that by the mid-1930's, international had become, in large proportion, barter trade a result of the tariffs and nontariff barriers. Empirical studies have examined the effects of restrictions on incomes to explain the declining for individual countries. The studies of Crucini and Kahn (1996) and Irwin (1998) find that the tariffs were influential for the U.S. imports and exports. In his study of nominal imports to the European countries, Friedman (1974) quantified the effects of barriers on nominal imports, and ultimately income, means of dummies in periods of significant tariffs and nontariff barriers. He found that restrictions had a significant impact on in a few countries. However, Friedman himself acknowledges, the weakness of this approach is that strong and weak forms of barriers are restricted to impact equally on imports in the estimates. Coupled with the small sample problems that plagued his estimates, the trade-barrier dummies were unlikely to effectively have captured the effects of barriers on imports, which explains substantial variations of the estimated effects of the tariffs and the nontariff barriers across countries. The study of Eichengreen and Irwin (1995) is probably the most extensive analysis of flows in the interwar period. Using 561 cross-sectional bilateral flows over three periods (1928, 1935, and 1938) they estimate a gravity model of patterns. They relate the value of bilateral flows to national income, population, distance, contiguity, and currency block indicators, and exchange rate variability, to examine the effects on of and currency blocks, and exchange rate variability. They observe a declining marginal propensity to import and export during the Depression, which they attribute to quotas and other binding restrictions, but do not formally test their importance. This paper seeks to estimate the contribution of income, tariffs, and nontariff barriers on world during the Depression using panel data for 17 countries over the period from 1920 to 1938. The panel data approach enables the assessment of the influence on of nontariff barriers from estimates of import and export functions, using an identifying assumption that the nontariff barriers were to some degree simultaneously imposed and relaxed across the industrialized nations during the interwar period. The estimates and extensive evidence from the literature suggest that this identifying assumption is valid (section 3). In section 4 the changes in world in the interwar period are decomposed into income effects, tariff effects, and nontariff barrier effects. The effects of the tariff changes are furthermore decomposed into deflation/ inflation-induced tariff changes and discretionary tariff-induced changes. …

Following the Arab Spring in 2011, Egypt implemented policies to restrict imports to control foreign currency spending, as foreign currency reserves dwindled. This decline was driven by reduced tourism revenues and remittances from Egyptians abroad. Among the measures Egypt adopted were floating the local currency, raising the customs exchange rate (used to calculate customs duties), and increasing tariff rates on numerous goods. These actions significantly raised the cost of imports, potentially incentivizing importers to evade customs duties. This study aims to explore the determinants of customs duties evasion in Egypt using a time series econometric model. Key variables analyzed include tariff rates, customs clearance efficiency, corruption, trade openness, and non-tariff barriers (NTBs). The analysis covers the period from 2001 to 2023. Regression analysis and econometric tests were conducted to validate the results. Findings suggest that customs clearance processes, tariff policies, corruption, trade openness, and NTBs significantly influence customs duties evasion in Egypt

For all the economies in the global world the question of trade is becoming more important by the day. But the possibility to export on the global market meets many impediments in the form of non-tariff barriers, rather than tariff these days. CEFTA 2006 regional trade integration is not an exception with more than 100 NTBs introduced during its existence. Our research found that Serbia and Albania are CEFTA 2006 signatories with the most NTBs introduced in the observed period. CEFTA has a very efficient institutional mechanism, Subcommittee on Technical Barriers to Trade (TBT) and Non-Tariff Barriers (NTBs), for the removal of NTBs between signatories. We have researched three case studies of bilateral NTBs in Serbia’s intra-CEFTA 2006 which demonstrate that our trade partner uses policy oriented NTBs. The removal of NTBs at the global, as well as regional levels is crucial for the development of trade flows after the world economic crisis.

We know that the friendly ties between Europe and the United States and Canada are unique and without alternative. There is no lack of shared challenge. I believe they are more likely to increase than decrease. But we know together as partners we are strong.1During the course of Germany's EU council presidency in 2007, Canada was mentioned often in official speeches, government documents, and petitions. Nonetheless, EU-Canadian economic integration was not a serious priority for Germany-or for that matter the European Union. The EU-Canada economic partnership project remained vague in design and scope; there was no mention of free trade or a transatlantic marketplace. Instead, Chancellor Angela Merkel concentrated on an EU-US-centred transatlantic marketplace. This article outlines and explains the dominance of the United States in Merkel' s transatlantic market place initiative. The first part analyses official documents and speeches from Germany's EU council presidency to show how and when Canada appears on Merkel' s transatlantic agenda. The second part of the article explains Canada's role in transatlantic economic relations by evaluating commercial ties, interests, and strategies. The article concludes that the fate of the EU-Canada economic partnership project depends very much on high-level support on both sides of the Atlantic, as well as the development of a clear vision. Otherwise the initiative is destined to fail, as have many of its predecessors.GERMANY'S EU PRESIDENCY: APUSH FOR DEEPER TRANSATLANTIC INTEGRATION? EU-US ECONOMIC INTEGRATION AND THE TRANSATLANTIC MARKETPLACEOn 1 January 2007, Germany took over the six-month rotating presidency of the European Union. During its tenure, Germany proved to be a strong strategic leader with regard to transatlantic economic integration. The initiative for a transatlantic marketplace came directly from the chancellery and was driven at the highest political level from fall 2006. In contrast to other trade issues on the presidency's agenda, the chancellery was in charge of Merkels transatlantic initiative, with the groundwork being carried out by the federal ministry of economics and technology (BMWi) and the federal foreign ministry, via their respective country desks.The chancellor announced her idea to create a transatlantic free trade area in September 2006, reacting to the lack of progress in the WTO Doha round of negotiations and rising global competition due to the economic emergence of China and India. At first Merkel's initiative, which was at the time still vague, caused reactions in Berlin and Brussels that ranged from the reserved to the outright critical. It was not clear what she had in mind, a free trade area along the lines of previous proposals or deeper internal market integration. The idea of using a European-US free trade area as a bulwark against the leading emerging economies was particularly strongly criticized. Bernd Pfaffenbach, state secretary in the BMWi, described the initiative as the deathblow of the Doha round. EU Commissioner Peter Mandelson warned that the rest of the world would react with dismay if the two largest economic powers agreed to exclusive trade preferences.2.Above all, the idea of a transatlantic FTA met with resistance because it is no longer deemed appropriate, given that free trade agreements have hardly any effect on non-tariff barriers (FTAs, by definition, focus on the elimination of tariffs). Average customs duties in transatlantic trade, with the exception of some areas with high import tariffs, such as trade in agriculture and textiles, are now extremely low-less than four percent. The problem lies with non-tariff barriers, which continue to represent a serious impediment to market access. These barriers are to be found in standards set for industrial goods-in testing, licensing, and accounting-as well as in customs systems and in the area of government procurement. According to the OECD, liberalizing transatlantic trade could therefore result in considerable growth of up to three percent of GDP for both trade partners. …

The impact of China's trade liberalisation on the greenhouse gas emissions of WTO countries