The Impact of Non-tariff Barriers on Trade: The Gravity Model on Turkish Agri-Food Products

Abstract

The competition between the U.S. and the E.U. agricultural subsidies during 1980s decreased the world prices in agricultural and food markets but caused an extensive distortion in the international trade of agricultural and food products. Under these circumstances, World Trade Organization (WTO) was founded in 1995 as an institute responsible for executing and auditing 1994 Uruguay Agricultural Agreement (UAA) to regulate agricultural subsidies and international trade measures. Import quotas in international trade were repealed or converted into tariff rates, and with time tariff rates were reduced gradually first by UAA initiatives and later by those of the WTO. However, WTO policies allow countries to have rights to take precautions and to impose measures necessary to protect human, animal or plant life or health. In addition, countries continue to have rights to secure quality assurance in production, to protect environment, to regulate information transparency and accessibility, as well as to protect consumers against misleading labeling. These rights do not count as tariffs or quotas and are confirmed by international regulations, also referred to as technical regulations (Maskus et al. 2001). There is evidence that these technical regulations are now being used as political means in bilateral, regional and global trade in place of diminished tariffs and quotas. These regulations are called non-tariff barriers or technical barriers to trade. Developing countries are mostly affected by these regulations since they bear additional expenses to fulfill a mandatory standard imposed by the developed countries (Beghin and Bureau 2001).