The Economic And Trade Effect Of Techinical Barrier To Trade

Tariffs had been greatly reduced after rounds of WTO multilateral negotiations.The traditional non-tariff measures had been restricted to a large extent, such asquotas and VERs. However, trade protectionism never stops, but in a disguised form,technical barrier to trade. While technical regulations were imposed on almost37percent of tariff lines in1999, the equivalent figure for2010is more than50per cent.The bulk of technical regulations are grouped in two major categories, namelysanitary or phytosanitary (SPS) measures and technical barriers to trade (TBTs). Theformer includes regulations and restrictions to protect human, animal or plant life orhealth, while the latter addresses all other technical regulations, standards andprocedures. SPS measures and TBT measures have great impact on internationaltrade, in addition to objectives and legal framework. In terms of incidence, TBTs areby far the most used regulatory measures, with the average country imposing themon about30per cent of products and trade. Countries also impose SPS measures onan average of approximately15per cent of trade. TBT had become one of mainobstacles to China’s export trade and had great influences on China’s economicdevelopment.The main reason for the popularity of TBT is the reduction of tariff. Forimporting country, the government, being pressed by the domestic enterprises, tendsto substitute TBT for tariff to protect the national industries. The thesis applies aneconomic game theory to explain how TBT takes the place of tariff to protect thedomestic industry with the assumption that there exist informed consumers and thetrade policies’ transparency varies. The externality and its interaction with TBT is animportant research field. The thesis did some exploration on this.The main obstacle of analyzing the economic effect and trade effect of TBT isthe quantification of TBT. The TBT STC data base is used in this paper, on the basisof which we collect and process the product code concerned with the EU’, USA andJapan’s technical measures. We analyze the dynamic panel data by using system GMM to verify the trade destroying effect and trade diversion effect. The resultshows that although technical measures have dual targets, to solve the negativeexternalities and to protect the domestic trade respectively, there will still be tradedestroying effect and diversion effect in the short run no matter what their originaltarget is. In order to cross the technical barrier, China, as a developing country,should build up a dynamic monitoring system, import advanced technologies fromabroad and improve our technologies in the end.