DOI QR코드

DOI QR Code

Non-Tariff Trade Policy in the Context of Deep Trade Integration: An Ex-Post Gravity Model Application to the EU-South Korea Agreement

  • Received : 2020.11.09
  • Accepted : 2021.02.04
  • Published : 2021.03.30

Abstract

Many different approaches and databases have been developed for the evaluation of non-tariff measures (NTMs) and free trade agreements (FTAs). This paper is devoted to the EU-South Korea agreement, which is the first 'second-generation' FTA of the EU, addressing a wide array of non-tariff policies. We review the evolution of NTM types applicable to the EU-South Korea trade relationship and the role of NTMs in ex-ante and ex-post analyses of the agreement. Subsequently a structural gravity model is employed to assess the value added of information on different aspects of FTAs and types of NTMs by evaluating their ability to predict the trade effects of the EU-South Korea FTA. Our results show that, when accounting for information on the components common in modern deep trade agreements, no additional trade effect is attributable to the EU-South Korea FTA. The evolution of NTMs differs considerably across indicators used, but trade predictions are hardly affected. Most specifications point towards a negative effect of bilateral differences in the number of technical barriers to trade (TBT) applied and sanitary and phytosanitary measures (SPS) against which trading partners issued complaints at the WTO.

Keywords

References

  1. Aisbett, E. and M. Silberberger. 2020. "Tariff Liberalization and Product Standards: Regulatory Chill and Race to the Bottom?" Regulation & Governance. forthcoming. (accessed October 21, 2020)
  2. Allee, T., Elsig, M. and A. Lugg. 2017. "Is the European Union Trade Deal with Canada New or Recycled? A Text-as-Data Approach," Global Policy, vol. 8, no. 2, pp. 246-252. https://doi.org/10.1111/1758-5899.12420
  3. Altenberg, P., Berglund, I., Jagerstedt, H., Prawitz, C., Stalenheim, P. and P. Tingvall. 2019. The Trade Effects of EU Regional Trade Agreements - Evidence and Strategic Choices. Kommerskollegium (National Board of Trade Sweden) eBook. (accessed October 21, 2020)
  4. Anderson, J. E. and E. van Wincoop. 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, vol. 93, no. 1, pp. 170-192. https://doi.org/10.1257/000282803321455214
  5. Arita, S., Beckman J. and L. Mitchell. 2017. "Reducing Transatlantic Barriers on US-EU AgriFood Trade: What are the Possible Gains?" Food Policy, vol. 68, pp. 233-247. https://doi.org/10.1016/j.foodpol.2016.12.006
  6. Bacchetta, M., Beverelli, C., Cadot, O., Fugazza, M., Grether, J.-M., Helble, M., Nicita, A. and R. Piermartini. 2012. A Practical Guide to Trade Policy Analysis. Geneva: World Trade Organization (WTO) and United Nations (UN).
  7. Baier, S. L. and J. H. Bergstrand. 2007. "Do Free Trade Agreements Actually Increase Members' International Trade?" Journal of International Economics, vol. 71, no. 1, pp. 72-95. https://doi.org/10.1016/j.jinteco.2006.02.005
  8. Baldwin, R. and D. Taglioni. 2006. Gravity for Dummies and Dummies for Gravity Equations. NBER Working Papers, no. 12516.
  9. Bao, X. and L. D. Qiu. 2010. "Do Technical Barriers to Trade Promote or Restrict Trade? Evidence from China," Asia-Pacific Journal of Accounting & Economics, vol. 17, no. 3, pp. 253-278. https://doi.org/10.1080/16081625.2010.9720865
  10. Beghin, J., Disdier, A.-C. and S. Marette. 2015. "Trade Restrictiveness Indices in the Presence of Externalities: An Application to Non-Tariff Measures," Canadian Journal of Economics, vol. 48, no. 4, pp.1513-1536. https://doi.org/10.1111/caje.12157
  11. Berden, K. and J. Francois. 2015. "Chapter 4. Quantifying Non-Tariff Measures for TTIP," In Hamilton, D. S. and J. Pelkmans. (eds.) Rule-Makers or Rule-Takers? Exploring the Transatlantic Trade and Investment Partnership. Washington D.C: Centre for Transatlantic Relations (CTR) and Johns Hopkins University School of Advanced International Studies. pp.97-138.
  12. Bora, B., Kuwahara, A. and S. Laird. 2002. Quantification of Non-Tariff Measures. Policy Issues in International Trade and Commodities Study Series, no. 18. UNCTAD/ITCD/TAB/19. New York and Geneva: United Nations.
  13. Bown, C. P. 2005. Global Antidumping Database Version 1.0. World Bank Policy Research Working Paper, no. 3737, Washington, D.C.: World Bank.
  14. Bown, C. P. 2016. Global Antidumping Database (GAD): 1980s-2015. World Bank. (accessed October 21, 2020)
  15. Bratt, M. 2017. "Estimating the Bilateral Impact of Nontariff Measures on Trade," Review of International Economics, vol. 25, no. 5, pp. 1105-1129. (accessed October 21, 2020)
  16. Cadot, O., Asprilla, A., Gourdon, J., Knebel, C. and R. Peters. 2015. Deep Regional Integration and Non-Tariff Measures: A Methodology for Data Analysis. Policy Issues in International Trade and Commodities Research Study Series, no. 69. UNCTAD/ITCD/TAB/71. UNCTAD.
  17. Cadot, O. and J. Gourdon. 2016. "Non-Tariff Measures, Preferential Trade Agreements, and Prices: New Evidence," Review of World Economics, vol. 152, no. 2, pp. 227-249. https://doi.org/10.1007/s10290-015-0242-9
  18. Cadot, O., Gourdon, J. and F. van Tongeren. 2018. Estimating Ad Valorem Equivalents of NonTariff Measures: Combining Price-Based and Quantity-Based Approaches. OECD Trade Policy Papers, no. 215. (accessed October 21, 2020)
  19. Cadot, O., Munadi, E. and L.Y. Ing. 2015. "Streamlining Non-Tariff Measures in ASEAN: The Way Forward," Asian Economic Papers, vol. 14, no. 1, pp. 35-70. https://doi.org/10.1162/ASEP_a_00315
  20. Cherry, J. 2018. "The Hydra Revisited: Expectations and Perceptions of the Impact of the EUKorea Free Trade Agreement," Asia Europe Journal, vol. 16, no. 1, pp. 19-35. https://doi.org/10.1007/s10308-017-0481-6
  21. Dal Bianco, A., Boatto, V., Caracciolo, F. and F. G. Santeramo. 2016. "Tariffs and Non-Tariff Frictions in the World Wine Trade," European Review of Agricultural Economics, vol. 43, no. 1, pp. 31-57. https://doi.org/10.1093/erae/jbv008
  22. Decreux, Y., Milner, C. and N. Peridy. 2010. "Some New Insights into the Effects of the EUSouth Korea Free Trade Area: The Role of Non Tariff Barriers," Journal of Economic Integration, vol. 25, no. 4, pp. 783-817. https://doi.org/10.11130/jei.2010.25.4.783
  23. Dur, A., Baccini, L. and M. Elsig. 2014. "The Design of International Trade Agreements: Introducing a New Dataset," The Review of International Organizations, vol. 9, no. 3, pp. 353-375. https://doi.org/10.1007/s11558-013-9179-8
  24. European Commission (EC). 2006. Global Europe: Competing in the World- A Contribution to the EU's Growth and Jobs Strategy. COM(2006)567final. (accessed October 21, 2020)
  25. European Commission (EC. 2007. Commission Staff Working Document - Annex to the Annual Report from the Commission to the European Parliament on Third Country Anti-Dumping, AntiSubsidy and Safeguard Action against the Community (2005). COM(2006)873final. (accessed October 21, 2020)
  26. European Commission (EC). 2016. Annual Report on the Implementation of the EU-Korea Free Trade Agreement. COM(2016)268final. (accessed October 21, 2020)
  27. European Commission (EC). 2017. Annual Report on the Implementation of the EU-Korea Free Trade Agreement. COM(2017)614final. (accessed October 21, 2020)
  28. European Commission (EC). 2018. Evaluation of the Implementation of the Free Trade Agreement between the EU and its Member States and the Republic of Korea- Final Report. Prepared by Civic Consulting and the Ifo Institute. (accessed October 21, 2020)
  29. European Commission (EC). 2019. Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Implementation of Free Trade Agreement 1 January 2018 - 31 December 2018. COM (2019)455 final. (accessed October 21, 2020)
  30. Egger, P. and M. Larch. 2008. "Interdependent Preferential Trade Agreement Memberships: An Empirical Analysis," Journal of International Economics, vol. 76, no. 2, pp. 384-399. https://doi.org/10.1016/j.jinteco.2008.08.003
  31. Evenett, S. J. 2019. "Protectionism, State Discrimination, and International Business since the Onset of the Global Financial Crisis," Journal of International Business Policy, vol. 2, no. 1, pp. 9-36. https://doi.org/10.1057/s42214-019-00021-0
  32. Fernandes, A. M., Ferro, E. and J. S. Wilson. 2019. "Product Standards and Firms' Export Decisions," World Bank Economic Review, vol. 33, no. 2, pp. 353-374. https://doi.org/10.1093/wber/lhw071
  33. Ferrantino, M. 2006. Quantifying the Trade and Economic Effects of Non-Tariff Measures. OECD Trade Policy Working Papers. no. 28.
  34. Francois, J., Norberg, H. and M. Thelle. 2007. Economic Impact of a Potential Free Trade Agreement (FTA) Between the European Union and South Korea. IIDE Discussion Paper, no. 200703-01. (accessed October 21, 2020)
  35. Ghodsi, M., Grubler, J. and R. Stehrer. 2016. Estimating Importer-Specific Ad Valorem Equivalents of Non-Tariff Measures. WIIW Working Papers, no. 129.
  36. Ghodsi, M., Grubler, J., Reiter, O. and R. Stehrer. 2017. The Evolution of Non-Tariff Measures and their Diverse Effects on Trade. WIIW Research Reports, no. 419. (accessed October 21, 2020)
  37. Gourdon, J. 2014. CEPII NTM-MAP: A Tool for Assessing the Economic Impact of NonTariff Measures. CEPII Working Papers, no. 2014-24.
  38. Grubler, J. and O. Reiter. 2020. Characterising Non-Tariff Trade Policy. WIIW Research Reports, no. 449.
  39. Juust, M., Vahter, P. and U. Varblane. 2020. "Trade Effects of the EU-South Korea Free Trade Agreement in the Automotive Industry," Journal of East-West Business. (accessed October 21, 2020)
  40. Kee, H. L., Nicita, A. and M. Olarreaga. 2009. "Estimating Trade Restrictiveness Indices," The Economic Journal, vol. 119, no. 534, pp. 172-199. https://doi.org/10.1111/j.1468-0297.2008.02209.x
  41. Knebel, C. and R. Peters. 2019. "Chapter 5. Non-Tariff Measures and the Impact of Regulatory Convergence in ASEAN." In Ing, L.Y., Peters, R. and O. Cadot. (eds.) Regional Integration and Non-Tariff Measures in ASEAN. Jakarta: ERIA. pp. 65-89.
  42. Kohl T., Brakman, S. and H. Garretsen. 2016. "Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements," The World Economy, vol. 39, no. 1, pp. 97-131. https://doi.org/10.1111/twec.12272
  43. Lakatos, C. and L. Nilsson. 2017. "The EU-Korea FTA: Anticipation, Trade Policy Uncertainty and Impact," Review of World Economics, vol. 153, no. 1, pp. 179-198. https://doi.org/10.1007/s10290-016-0261-1
  44. Li, Y. and J. C. Beghin. 2014. "Protectionism Indices for Non-Tariff Measures: An Application to Maximum Residue Levels," Food Policy, vol. 45, pp. 57-68. https://doi.org/10.1016/j.foodpol.2013.12.005
  45. Nicita, A. and J. Gourdon. 2013. A Preliminary Analysis on Newly Collected Data on NonTariff Measures. Policy Issues in International Trade and Commodities Study Series, no. 53. UNCTAD/IRCD/TAB/54. UNCTAD.
  46. Olivero M. P. and Y. V. Yotov. 2012. "Dynamic Gravity: Endogenous Country Size and Asset Accumulation," Canadian Journal of Economics, vol. 45, no. 1, pp. 64-92. https://doi.org/10.1111/j.1540-5982.2011.01687.x
  47. Peterson, E., Grant, J., Roberts, D. and V. Karov. 2013. "Evaluating the Trade Restrictiveness of Phytosanitary Measures on U.S. Fresh Fruit and Vegetable Imports," American Journal of Agricultural Economics, vol. 95, no. 4, pp. 842-858. https://doi.org/10.1093/ajae/aat015
  48. Reiter, O. and R. Stehrer. 2018. Trade Policies and Integration of the Western Balkans. WIIW Working Papers, no. 148.
  49. Sandkamp, A. 2020. "The Trade Effects of Antidumping Duties: Evidence from the 2004 EU Enlargement," Journal of International Economics, vol. 123. (accessed October 21, 2020)
  50. Santeramo, F. G. and E. Lamonaca. 2019. "The Effects of Non-tariff Measures on Agri-Food Trade: A Review and Meta-analysis of Empirical Evidence," Journal of Agricultural Economics, vol. 70, no. 3, pp. 595-617. https://doi.org/10.1111/1477-9552.12316
  51. Timmer, M. P., Dietzenbacher, E., Los, B., Stehrer, R. and G. J. de Vries. 2015. "An Illustrated User Guide to the World Input-Output Database: the Case of Global Automotive Production," Review of International Economics, vol. 23, no. 3, pp. 575-605. https://doi.org/10.1111/roie.12178
  52. Timmer, M. P., Los, B., Stehrer, R. and G. J. de Vries. 2016. "An Anatomy of the Global Trade Slowdown Based on the WIOD 2016 Release," GGDC Research Memorandum, no. 162. (accessed October 21, 2020)
  53. United Nations Conference on Trade and Development (UNCTAD) and World Bank. 2018. The Unseen Impact of Non-Tariff Measures: Insights from a New Database. UNCT AD/DITC/TAB/2018/2.
  54. United Nations Conference on Trade and Development (UNCTAD). 2019. International Classification of Non-Tariff Measures- 2019 Version. UNCTAD/DITC/TAB/2019/5. New York: United Nations Publications. (accessed October 21, 2020)
  55. Wood, J., Wu, J., Li, Y. and J. Kim. 2019. "The Impact of TBT and SPS Measures on Japanese and Korean Exports to China," Sustainability, vol. 11, no. 21. (accessed October 21, 2020)
  56. World Trade Organization (WTO). 2017. Special Agricultural Safeguard, note by the Secretariat, Revision. TN/AG/S/29/Rev.1. (accessed October 21, 2020)
  57. Yotov, Y. V., Piermartini, R., Monteiro, J.-A. and M. Larch. 2016. An Advanced Guide to Trade Policy Analysis: The Structural Gravity Model. New York, NY: United Nations and World Trade Organization.