Quantifying the Impact of Technical Barriers to Trade: A Review of Past Attempts and the New Policy Context

Quantifying the Impact of Technical Barriers to Trade: A Review of Past Attempts and the New Policy Context+ Keith E. Maskus∗ John S. Wilson** Abstract: This paper provides an overview of the policy debate and methodological issues surrounding product standards and technical barriers to trade. There has been a rising use of technical regulations as instruments of commercial policy in unilateral, regional, and global trade contexts. These non-tariff barriers are of particular concern to developing countries, which may bear additional costs in meeting such mandatory standards. We begin with a review of the policy context driving demand for empirical analysis of standards in trade. We then provide an analytical overview of the role of standards and their relationship to trade. The paper then explains justifications for voluntary standards and mandatory technical regulations. Standards have impacts on both static and dynamic market failures. We review methodological approaches that have been used to analyze standards. The main interest lies in advancing techniques that are practical and may be fruitfully extended to the empirical analysis of standards and trade. The contribution of the paper is to discuss a set of concrete steps that could be taken to move forward a policy-relevant and practical research program of empirical work. Such steps would include (1) administering firm-level surveys in developing countries, (2) devising methods for assessing the trade restrictiveness of standards, and (3) establishing econometric approaches that could be applied to survey and micro data for understanding the role of standards in export dynamics.

Paper prepared for the World Bank Workshop on "Quantifying the Trade Effect of Standards and Technical Barriers: Is it Possible?" April 27, 2000. ∗ Department of Economics, University of Colorado at Boulder, Campus Box 256, Boulder Colorado 80309-0256, and The World Bank, email: [e-mail]. ** Development Research