Your assessment is welcome here: the trade impacts of mutual recognition agreements

Abstract

ABSTRACT As tariffs and transportation costs have progressively declined over time, trade obstacles such as technical regulations have become relatively more important, but their impacts remain under-studied. In this analysis we measure the trade impacts of a mutual recognition arrangement established by Mexico with Canada and the United States in the electronics sector. We found that the arrangement induced a positive impact on trade flows, increasing the exports of the products associated with the agreement by around 23%. The finding is important because unlike tariffs, technical regulations cannot simply be eliminated as they are often aimed at legitimate objectives, but their negative effects on trade could potentially be reduced with approaches such as mutual recognition agreements, as shown in this analysis.