Reduction Of Non-tariff Barriers Research Articles

Ex-Ante Evaluation of India’s Trade Alliance with Indo-Pacific Region: A General Equilibrium Analysis

The study attempts to analyse the economy-wide impact of Indo-Pacific alliance between India and rest of the 45 participating members using computable general equilibrium (CGE) model. We introduce four simulation scenarios in the general equilibrium model. The first scenario is the one in which India bilaterally liberalises trade in terms of both tariffs liberalisation alone and then removal of tariffs and reduction of non-tariff barriers together with all the countries of Indo-Pacific region. The second scenario is when India bilaterally liberalises trade with all the Asian countries of the Indo-Pacific region. The third scenario is when India bilaterally liberalises trade with all the countries of the Indo-Pacific region but excludes China from the region because of the current geopolitical reasons. The fourth scenario is the one when free trade is considered among all the countries in the Indo-Pacific region. The Indo-Pacific alliance seems to go beyond strategic alliance with the 46 Indo-Pacific participating countries, wherein the members gain due to potential movement of capital and welfare and economic gains because of tariff and non-tariff liberalisation among the member countries. The article suggests the road map for maximum welfare gains for India, keeping strategic and economic engagements with other member countries and sub-regions. JEL Code: F15

Japan-AfCFTA Integration through Economic Impacts of Alternative EPA Scenarios -Examination of the GTAP 10A MRIO Database

This paper analyzes the impact on an economic partnership agreement (EPA) between African countries and Japan through trade liberalization and reduction in non-tariff barriers. This study aims to investigate sectoral interconnections and participation in the EPA that would facilitate further possible opportunities for the JapanAfrican businesses. The methodology employed is the Computable General Equilibrium model integrated with the Global Trade Analysis Project version 10A Multi-Region Input-Output database. We first modified the GTAP’s structure form to develop a long-run closure under steady-state and thereafter examined the African Continental Free Trade Area-Japan Economic Partnership Agreement (AfJEPA) with several EPAs scenarios relying on the quantitative comparison of economic impacts of different technical measurements. As a result, the AfJEPA can provide new possible opportunities for Africa-Japan businesses, such as contributing to the existing African and Japanese mega-regional trade agreements. Specifically, the electronics, petroleum and coal, and chemical, rubber, and plastic industries in Africa would see the highest percent growth. Likewise, the Japanese industries would improve their productivity in the motor vehicles and transport equipment, chemical, rubber, and plastic, and textiles and apparel industries. To sum up, trade facilitation and knowledge transfer, which policymakers can improve concrete action and investment, would considerably stimulate African and Japanese real GDP. Thus, potential growth would rely on deep regulation policy through a degree of openness and initial level of trade barriers to each country.

Implementation of the WCO Time Release Study to Mitigate Non-tariff Barriers in AfCFTA: Lessons to Be Learned by Africa

The African Continental Free Trade Area (AfCFTA) entered into force on 1 January 2021. Its ‘trade in goods’ pillar focuses on a reduction ofnon-tariff barriers (NTBs) in addition to tariff reduction. The World Customs Organization (WCO) Time Release Study (TRS) is particularly relevant in addressing NTBs. The TRS is a WCO tool designed to measure the time spent for release and/or clearance of goods at borders. It has been created to help administrations identify bottlenecks in the trade flow process and to facilitate trade while ensuring compliance and revenue collection at borders. The aim of this article is to share the importance and benefits of applying the WCO TRS methodology to identify and address NTBs that are hampering international trade. Implementation of the TRS will support AfCFTA countries in alleviating NTBs. In this document the authors provide an overview of the current situation relating to the TRS based on WCO survey results, together with anecdotal national and regional examples within Africa and externally. The article then shows lessons that could be learned by African countries, particularly in the context of the AfCFTA. TRS, non-tariff, Africa, barriers, AfCFTA, lesson and regional

The effect of non-tariff barriers reduction on trade of Kazakhstan

This article examines the impact of non-tariff barriers (NTBs) reduction on Kazakhstan’s trade due to the creation of the Eurasian Customs Union (ECU) in 2010. The assessment of the effect of NTBs reduction was carried out using a dynamic gravity model and econometric PMG method. The synchronization of the system of phytosanitary norms and the approval of a unified system of customs regulation have reduced the cost of trade. These innovations have reduced NTBs between ECU countries, which should increase trade flows between countries.According to the model’s estimates, the reduction in NTBs increased Kazakhstan’s imports from the ECU countries by 33% but did not have a significant impact on exports to these countries. That is, on average, Kazakhstani producers benefited less from joining the ECU than producers in other CU countries. These results confirm the findings of reports of international organizations that because of the creation of the ECU, non-tariff barriers between countries have significantly decreased. Unfortunately, Kazakh producers have not been able to take full advantage of the benefits of joining the ECU, and although NTBs between countries have decreased, total exports to ECU countries have not increased. At the same time, the reduction of barriers between countries allowed entrepreneurs from other countries to increase their exports to Kazakhstan (Kazakhstan’s imports) by 33 percent.

Modeling the Impact of Non-Tariff Barriers in Services on Intra-African Trade: GTAP Model

This paper examines the effects of African Continental Free Trade Agreement (AfCFTA) on intra-African trade in the medium- and long-term, focusing on trade in services. It assesses the impacts of a 50\% reduction of non-tariff barriers in four services sectors on bilateral trade in services between ECOWAS (Economic Organization of West African States) and SADC (Southern African Development Community) areas. Using the GTAP model and ad valorem equivalents of services restrictions, we find that services liberalization stimulates GDP and household income in both trading blocks. Bilateral trade in financial, transport, professional, and telecommunication services increases between the two trading blocks and the effects are significant in the long run. SADC member countries export more financial services as a result of ECOWAS macroeconomic and financial integration. ECOWAS benefits from the quality of SADC infrastructures to rise its exports of transport and telecommunication services. South Africa is the biggest exporter in the SADC region and Ghana and Nigeria share the top position in ECOWAS area. Liberalization has beneficial effects on trade only if it is combined with supporting policies aimed at stimulating domestic competition in services sectors.

The African Continental Free Trade Agreement

In March 2018, representatives of member countries of the African Union signed the African Continental Free Trade Area (AfCFTA) agreement. This agreement provides a framework for trade liberalization in goods and services and is expected to eventually cover all African countries. Using a multi-country, multi-sector general equilibrium model based on Costinot and Rodriguez-Clare (2014), we estimate the welfare effects of the AfCFTA for 45 countries in Africa. Three different model specifications—comprising both perfect competition and monopolistic competition—are used. Simulations include full elimination of import tariffs and partial but substantial reduction in non-tariff barriers (NTBs). Results reveal significant potential welfare gains from trade liberalization in Africa. As intra-regional import tariffs in the continent are already low, the bulk of these gains come from lowering NTBs. Overall gains for the continent are broadly similar under the three model specifications used, with considerable variation of potential welfare gains across countries in all model structures.

Deep integration in the Eurasian Economic Union: what are the benefits of successful implementation or wider liberalization?

ABSTRACTWhat are the potential gains to the members of the Eurasian Economic Union (EAEU) of successful deep integration through the reduction of time in trade costs, the reduction of non-tariff barriers in goods and the liberalization of barriers against foreign suppliers of services? We estimate that if the EAEU were to effectively implement its objectives for trade cost reduction, it would lead to welfare gains as a percent of consumption of 0.8% for Russia, 1.7% for Kazakhstan, 3.1% for Armenia and 4.8% for Belarus. If these deep integration measures were partially extended to third countries, the welfare gains would increase to 3.6% for Russia, 4.5% for Armenia, 6.3% for Kazakhstan and 7.2% for Belarus. We estimate that the right to legally work in the Russian Federation for Armenians is approximately of equal value to Armenia as the combined aspects of the reduction of trade costs, including spillovers. We identify the external region and reforms that are most important for each member country regarding reforms and spillovers; this may inform lobbying positions of the member governments. Our innovative model, that includes imperfect competition and foreign direct investment, produces important differences compared with a perfect competition model.

The African Continental Free Trade Agreement: Welfare Gains Estimates from a General Equilibrium Model

In March 2018, representatives of member countries of the African Union signed the African Continental Free Trade Area (AfCFTA) agreement. This agreement provides a framework for trade liberalization in goods and services and is expected to eventually cover all African countries. Using a multi-country, multi-sector general equilibrium model based on Costinot and Rodriguez-Clare (2014), we estimate the welfare effects of the AfCFTA for 45 countries in Africa. Three different model specifications-comprising both perfect competition and monopolistic competition-are used. Simulations include full elimination of import tariffs and partial but substantial reduction in non-tariff barriers (NTBs). Results reveal significant potential welfare gains from trade liberalization in Africa. As intra-regional import tariffs in the continent are already low, the bulk of these gains come from lowering NTBs. Overall gains for the continent are broadly similar under the three model specifications used, with considerable variation of potential welfare gains across countries in all model structures.

The Cost of Non-TTIP: A Global Value Chain Approach

What is the cost of non-TTIP for the European Union and the United States? To address this question, this paper develops a network trade model with international sector-level input-output linkages. Our model is entirely general with closed-form solutions and can be used for any trade policy experiment. We use World Input Output Data (WIOD) to simulate the effects of TTIP in terms of value added and employment. We find that a deep TTIP raises European GDP by 1.3%, and US GDP by 0.7%. The largest share of these TTIP gains result from the reduction in Non-Tariff Barriers (NTBs) rather than from the removal of tariffs. The potential gains from TTIP are higher for the EU than for the US. These findings may offer an explanation for the current US stance on TTIP.

Deep Integration in the Eurasian Economic Union: What are the Benefits of Successful Implementation or Wider Liberalization?

We assess deep integration in the Eurasian Economic Union (EAEU) through the reduction of time in trade costs, the reduction of non-tariff barriers in goods and the liberalization of barriers against foreign suppliers of services. We develop an innovative multi-region model of trade and FDI for preferential trade analysis where we incorporate Dixit-Stiglitz endogenous productivity effects from trade and FDI liberalization. This model produces important differences compared with a perfect competition model. We build on numerous surveys and econometric estimates of the trade and FDI barriers in our focus countries that we helped develop. We show that if the EAEU effectively implements its objectives for trade cost reduction, it would lead to significant welfare gains of between 0.8 to 4.8 percent of consumption, depending on the country. If these deep integration measures are extended to third countries, either by a wider liberalization effort or by spillovers, then the estimated welfare gains increase between 2.5 and 4.5 times for Belarus, Kazakhstan and the Russian Federation. Using the neoclassical model of labor migration, we estimate that the right to legally work in the Russian Federation is approximately of equal value to Armenia as the combined aspects of the reduction of trade costs, including FDI liberalization. Our estimates show that all the spillovers are beneficial to all the EAEU countries. But, we identify the different reforms and the different external region that are most important for each member country regarding spillovers, which may inform lobbying positions of the member governments.

Trans-Atlantic Trade and Investment Partnership: an opportunity or a threat to the EU textile and apparel industry?

This study quantitatively evaluated how tariff elimination and reduction of non-tariff barriers under the Trans-Atlantic Trade and Investment Partnership (T-TIP) could affect the textile and apparel (T&A) industry in the European Union (EU). Based on the Global Trade Analysis Project (GTAP) model, the study finds that: first, T-TIP’s trade creation effect will expand the EU-U.S. intra-industry trade for textiles. Meanwhile, T-TIP will significantly expand EU’s apparel exports to the United States. Second, trade T-TIP’s trade diversion effect will affect T&A exports from non-member suppliers to the T-TIP region negatively, including Asia’s T&A exports to the U.S. and EU and Turkey’s T&A exports to the EU. Third, T-TIP will affect the intra-region T&A trade in the EU region negatively but in a limited way. Findings of this study augment our understanding of the T&A-specific sectoral impact of T-TIP and provide valuable inputs supporting the T-TIP negotiation.

Does Trade Liberalization Improve Trade Balance in Pakistan?

This article examines the impact of trade liberalization, that is, reduction of tariff and non-tariff barriers on trade balance, in Pakistan over the period 1982–2013. The results reveal that reduction of average effective tariff rate improves trade balance in the short run, while lowering of non-tariff barriers deteriorates trade balance in the long run as well as in the short run. The analysis also suggests that depreciation of real effective exchange rate and foreign income causes an improvement in the trade balance, whereas domestic income deteriorates it. The negative association between the reduction in non-tariff barriers and trade balance worsens sustainability of current account of the balance of payments in Pakistan.

TTIP and Climate Change:

In the summer of 2013, the European Union (EU) and the United States (US) launched negotiations for the conclusion of a bilateral free trade agreement, the Transatlantic Trade and Investment Partnership (TTIP). There has been no information so far as to whether the parties to TTIP are discussing the inclusion in the agreement of provisions specifically related to climate change. It is also uncertain if TTIP will finally be concluded, given the strong opposition in some EU Member States and the election of Donald Trump as President of the US. The concerns underlying the discussion of TTIP however are part of a broader discourse taking place in many other fora for trade negotiations around the world. The considerations hereafter may be of relevance well beyond the case of TTIP. The article examines the impact that TTIP could have on existing and future climate policies and laws from the inclusion of provisions on investment protection including investor-to-State dispute settlement (ISDS), the reduction of non-tariff barriers and the introduction of rules for trade in energy and raw materials. It argues that from an environmental perspective, ISDS should not necessarily be seen as a regime that goes against the defence of the environment or prevention of climate change. Although it might be used to challenge policies of a home State that increase levels of environmental protection, it can also be used to contest changes in home State’s environmental policies that would reduce the protection of the environment. Benefits for the climate could further be seized from harmonisation of carbon laws at the level of the strictest regulations of two parties and provisions that promote trade in low-carbon technologies and renewables.

РОССИЯ–АТР: ПЕРСПЕКТИВЫ ЛИБЕРАЛИЗАЦИИ ТОРГОВЛИ

Trade and economic cooperation between Russia and Pacific Rim countries have expanded and deepened in recent years. Russia is guided by long-term interests in determining its place in the Pacific Rim, while continuing to carry out further trade liberalization with the region’s countries in an environment marked by fundamental competition between the US (TPP) and China (RCEP). Despite the negative price dynamics for traditional Russian exports at the global markets, the overall positive dynamics of bilateral economic relations with the Pacific Rim countries provides a framework for continuing cooperation and solving the existing problems in the future. At the same time, the commodity structure of Russian exports in the Pacific Rim countries has been traditionally unbalanced, due to the predominance of primary goods, while the commodity structure of imports has a tendency to convergence thanks to competition among the particular Pacific Rim countries at the Russian market. The author’s analysis confirmed the assumption of the positive bilateral effects of trade liberalization. The trade creation effect is likely to exceed the trade diversion effect and the total trade effect will be higher than the tariff revenues’ losses. These findings indicate the future benefits for the Russian economy under all potential scenarios of trade liberalization in the region. The tariff revenues’ losses for the Russian budget can be partially offset by increasing the export duty fees. The assessment showed that the trade liberalization with the Pacific Rim countries could lead to changes in the geographical structure of Russian trade. Significant changes of Russian exports could occur in the case of cooperation with either the potential participants of TPP (in the enlarged format) or China. Imports from the Pacific Rim can grow across a wide range of product groups, both consumer and investment. Probably, there will be a substantial increase in the supply of vehicles as well as agricultural products from the TPP countries when the restrictive trade barriers are removed. A noticeable change in the commodity structure of imports is likely to happen as a result of the reduction in non-tariff barriers. The benefits for Russia from the comparative convergence with the RCEP or TPP (in the enlarged format) are comparable. As the current trade liberalization process shows, in the near future Russia can create the conditions for signing a FTA with the RCEP if it comes into being. Regarding pure trade effects (trade creation effect and welfare effect), the Russian economy may receive the greatest gains by cooperating with the TPP countries. At the same time, as for a comparable increase in exports and imports, China would be the most preferable trade partner. Russia faces competing choices between the different Pacific Rim trade integration formats. But these choices are contingent due to closely intertwined interests of global, regional and national business entities in the region. The author argues that an increase of Russian exports to the Pacific Rim countries requires a more detailed consideration of costs and benefits, including the lowering of institutional barriers and cooperation between companies.

The Implications of the Trans-Pacific Partnership for SMEs: Opportunities and Challenges

The Trans-Pacific Partnership (TPP) will have profound implications for small and medium-sized enterprises (SMEs) within and beyond the free trade area. SME issues get more attention in the TPP than previous FTAs. Since there is limited research on the impact of the FTAs on SMEs, it is of great significance to probe into the practical implications of the TPP for SMEs. The key question will be analyzed: what are the challenges and opportunities that the TPP hold for SMEs? It is argued that, first, the support to SMEs, tariff elimination or reduction, and the reduction of non-tariff barriers are major opportunities presented by the TPP. The key benefits to SMEs are enhanced market opening and increased predictability. However, such opportunities may have limited effects in improving market position for certain SMEs. Second, the TPP will pose major challenges such as insufficiency of the opportunities to SMEs, the complexity of rules, difficulties in rule interpretation and implementation, remained regulatory differences, disadvantaged positions of SMEs from developing TPP countries, and the impact on SMEs negatively affected by trade liberalization. There will be more challenges for SMEs from non-TPP parties. Third, if the TPP is properly managed, it should bring more opportunities than challenges to SMEs. The opportunities and challenges deriving from the TPP are intimately connected.

The Trans-Pacific Partnership: Impact on British Columbia

This Research Report assesses the likely impact of the Trans-Pacific Partnership (TPP) on the British Columbia economy from the vantage point of what is known as the negotiations enter the end phase of negotiations in the Fall of 2014. The assessment is based on a two-step process. First, the impact of the TPP at Canada-level is simulated using a dynamic specification of the widely-used GTAP model, modified to directly represent services trade conducted through foreign affiliates as well as on a cross-border basis, and to reflect the impact of liberalization of FDI in the services sectors. The simulations take into account tariff reductions, preference utilization, the compliance cost of using preferences, the regionalization of rules of origin, and the reduction of non-tariff barriers to goods, services and investment. Second, a computable partial equilibrium (CPE) model – the Global Simulation Model (GSIM) – is used to identify the direct trade impacts on British Columbia and the Rest of Canada, which are represented directly as individual trading partners both with international partners and with each other. Based on the decomposition of the TPP trade impacts, the study infers the impacts of the TPP on the BC economy consistent with the Canada-level GTAP simulation results.

FTA (A Study on Japan's FTA Strategy and its Policy Implications for Korea)

FTA (A Study on Japan's FTA Strategy and its Policy Implications for Korea)

The Trans-Pacific Partnership: Evaluating the 'Landing Zone' for Negotiations

The Trans-Pacific Partnership (TPP) negotiation is searching for a “landing zone” – a set of compromises that will allow a deal to be concluded. We assess the potential impact of the TPP based on a “best guess” as to what the landing zone will look like, taking into account such information as has been made public on the state of the negotiations (including unofficially released texts) as well as what participating states have been prepared to offer in other recently concluded FTAs. The assessment takes into account the conclusion of the Australia-Japan FTA, which reduces the quantitative impact of the TPP and draws on the outcomes of that negotiation as an indication of how other key negotiating issues might be decided. The assessment is based on a dynamic specification of the GTAP model, modified to directly represent services trade conducted through foreign affiliates as well as on a cross-border basis, and to reflect the impact of liberalization of FDI in the services sectors. The simulations take into account tariff reductions, preference utilization, the compliance cost of using preferences, the regionalization of rules of origin, and the reduction of non-tariff barriers to goods, services and investment. We report overall impacts and comment specifically on Canada’s interests.

The European agro-food system in the outlook of the adoption of transatlantic trade and investment partnership

European Union (EU) together with the USA is engaged in the definition of an international negotiation called Transatlantic Trade and Investment Partnership (TTIP). When completed, the negotiation should lead to the elimination of tariffs and reduction of non-tariff barriers. It is not easy to manage this problem as EU and USA have a different legislative approach on critical themes such as food security and environmental safeguarding. It is therefore evident that the agreements on non-tariff barriers products will be through a mutual recognition rather than the standardisation of regulations. This means that producers operating in systems with more stringent regulations will have highest production costs and less competitiveness. The risk of a modification of European regulation is concrete even if, at present, EU wants to maintain the current level of guarantee.

The Impact of Taiwan's TPP Accession on Canada

This paper analyzes the impact on Canada’s economy of Taiwan’s accession to the Trans-Pacific Partnership (TPP) Agreement. While the TPP is to be concluded by the twelve current negotiating parties, it will allow accession by other regional economies, consistent with APEC’s endorsement of the TPP as a “pathfinder” approach to an FTAAP, which contemplates APEC economies that are ready to do so proceeding faster than others in deepening trade relations. Taiwan has clearly signaled its interest in acceding to the agreement. The approach in this study includes descriptive analysis of the commercial relationship between Taiwan and Canada and an analysis of the impact of Taiwan’s accession using computable general equilibrium model simulations that take in to account tariff liberalization, preference under-utilization and utilization costs, liberalized rules of origin, reduction of non-tariff barriers (NTBs) on goods and on cross-border services, and liberalization of foreign direct investment in services and the resulting implications for services trade through foreign affiliates (“commercial presence” or “Mode 3” services trade in WTO terminology). The liberalization assumptions are based on “best guesses” as to what the TPP agreement and the terms of Taiwan’s accession would actually be. The study concludes that Taiwan’s accession would generate over $20 billion of economic welfare gains for the incumbent TPP12 parties while Taiwan would enjoy a 2.8% increase in real GDP and $29 billion in economic welfare gains. For Canada, Taiwan’s TPP accession has some small structural/sectoral effects but no significant net impact on GDP or economic welfare. The results reported here suggest that Taiwan may need a “Canada strategy” to support its accession bid.