85Quantifying the Impact of Technical Barriers to

QuantifyingtheImpactofTechnicalBarrierstoTrade:AReviewofPastAttemptsandtheNewPolicyContext+KeithE.Maskus*JohnS.Wilson**Abstract:Thispaperprovidesanoverviewofthepolicydebateandmethodologicalissuessurroundingproductstandardsandtechnicalbarrierstotrade.Therehasbeenarisinguseoftechnicalregulationsasinstrumentsofcommercialpolicyinunilateral,regional,andglobaltradecontexts.Thesenon-tariffbarriersareofparticularconcerntodevelopingcountries,whichmaybearadditionalcostsinmeetingsuchmandatorystandards.Webeginwithareviewofthepolicycontextdrivingdemandforempiricalanalysisofstandardsintrade.Wethenprovideananalyticaloverviewoftheroleofstandardsandtheirrelationshiptotrade.Thepaperthenexplainsjustificationsforvoluntarystandardsandmandatorytechnicalregulations.Standardshaveimpactsonbothstaticanddynamicmarketfailures.Wereviewmethodologicalapproachesthathavebeenusedtoanalyzestandards.Themaininterestliesinadvancingtechniquesthatarepracticalandmaybefruitfullyextendedtotheempiricalanalysisofstandardsandtrade.Thecontributionofthepaperistodiscussasetofconcretestepsthatcouldbetakentomoveforwardapolicy-relevantandpracticalresearchprogramofempiricalwork.Suchstepswouldinclude(1)administeringfirm-levelsurveysindevelopingcountries,(2)devisingmethodsforassessingthetraderestrictivenessofstandards,and(3)establishingeconometricapproachesthatcouldbeappliedtosurveyandmicrodataforunderstandingtheroleofstandardsinexportdynamics.+PaperpreparedfortheWorldBankWorkshoponQuantifyingtheTradeEffectofStandardsandTechnicalBarriers:IsitPossible?April27,2000.*DepartmentofEconomics,UniversityofColoradoatBoulder,CampusBox256,BoulderColorado80309-0256,andTheWorldBank,email:[e-mail].**DevelopmentResearchGroup(DECRG),TheWorldBank,1818HStreet,N.W.,Washington,D.C.20433,email:[e-mail]tandardsandtechnicalregulationsontradeisattheforefrontofpolicydiscussions.1Thisisparticularlytrueinrelationtochallengesconfrontingdevelopingnationsastheyseektoincreaseproductionforglobalexportmarkets.Inregardtovoluntarystandards,suchasthoseintheInternationalOrganizationforStandardization(ISO)9000seriesonqualityforexample,developingnationsfacecontinuedconstraintsindiffusingbestpracticeinformationonstandardsandresourcesnecessarytoaidintheadoptionofappropriateprocessandproductionmethods(WorldBank2000).Inaddition,astraditionaltradeprotectionmeasuressuchastariffs,quotas,andvoluntaryexportrestraint(VER)agreementshavebeeneliminatedthroughoutthe1990s,barrierstotradereflectedinuseofdomestictechnicalregulationshavebecomemuchmoreimportantchannelsthroughwhichtradeisblocked.2ThesuccessofmultilateralliberalizationthroughtradetalksendinginconclusionoftheUruguayRoundin1994hashighlightedtheimportanceofnon-tariffbarriersinnationalstandards.CertainlynotallmarketaccesscommitmentsintheWorldTradeOrganization(WTO)Agreementsconcludedinthe1994havebeenfullyimplementedorenforced.3Norisitthecasethatbarrierstotradesuchassubsidiestoagriculturalproductionorprohibitiononforeigninvestmentinservices,forexample,havebeencompletelyeliminated.Itisclear,however,thatdomesticregulationaffectingimportsthroughtechnicalrequirements,testing,certification,andlabelingrepresentoneofthemostimportantnewareasforfocusincontinuingliberalizationefforts.Mandatoryregulationsimposedbygovernmentsatthebordercanproduceseriousdistortionsincommercialmarkets.Domesticregulatorysystemsmayrestraintradeandlimitmarketentrythroughenvironmental,health,orsafetymandatesnotbasedoninternationalnorms,forexample.ThesetypesofmarketaccessrequirementsmayormaynotbediscriminatorywithinthecontextofWTOdisciplines,includingcommitmentsundertakenbyWTOmembersintheAgreementonTechnicalBarrierstoTradeor1Thispaperfocusesonproductorprocessstandardsrelatedtogoodsandagriculturalcommodities.Itdoesnotassessstandardsastheymaybeappliedintheservicesectororlaborstandards.2Thereareanumberofrecentstudiesthatassessthechangingnatureofbarrierstotradeinnon-tariffareas,includingthoseofparticularimportancetodevelopingcountries.ForadiscussionoftheseissuesseeHertelandMartin(1999),Hertel,Hoekman,andMartin(2000),amongothers.3ForanoverviewofthestatusofimplementationofUruguayRoundcommitmentsofparticularimportancetodevelopingcountriessee;FingerandSchuler(1999).ThediscussioninWilson(2000)outlinesspecificimplementationdifficultiesfacedbydevelopingcountriesintheAgreementonTechnicalBarrierstoTrade.SeealsoTechnicalBarrierstoTrade:ChallengesandOpportunitiesforDevelopingCountries,StatementoftheWorldBank,TechnicalBarrierstoTradeCommittee,WorldTradeOrganization,Geneva,24February2000.3AgreementontheApplicationofSanitaryandPhytosanitaryStandards.Insum,whethersanctionedornotundermultilateraltraderules,technicalregulationsimposedontradeingoodsandagriculturalproductsareaffectingtradepatterns,theabilityofproducerstoenternewexportmarkets,andalsoconsumercosts.Importantquestionsremain,however,theanswerstowhichwilldirectlyeffecttradepolicychoicesandthesuccessorfailureofliberalizationeffortsinwhichdevelopingcountrieshaveadirectstake.Whatisthespecificeconomici