Impact Evaluation of Non-Tariff Measures and New Forms of Protectionism

Ample anecdotal evidence suggests that non-tariff measures (NTMs) raise trade costs and inhibit trade. However, little is known about the magnitude of the price-raising effects involved. This project will return to the issue of measuring the trade and price effects of NTMs using a new database compiled as part of a collaborative effort.

The project will also have access to a unique set of firm survey data providing pairwise (sector-origin-destination) rankings of market access for trade and FDI. These data will generate evidence on intra-EU preference margins for NTBs (as for tariffs with intra-EU trade).  Working with these survey data, and taking advantage of recent developments in gravity modelling for trade and FDI, we will quantify the scope for cost reductions linked to trans-Atlantic trade and investment.  This includes not only trade and investment separately, but the cross-impact of FDI restrictions on market access in goods.  These estimates will then be integrated to examine not only EU-US liberalisation, but also the potential impact of broader G20 level NTB reductions.


In terms of methodology, it will propose a new approach to quantity-based estimation designed to overcome a bias arising from the use of trade values (which may embody the cost of complying with NTMs through price effects) instead of volumes.