ACDE Trade & Development Seminars
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While tariffs have been substantially reduced under the ASEAN Free Trade Agreement (AFTA), little progress has been made in reducing non-tariff measures (NTMs), such as sanitary and phyto-sanitary restrictions, certification procedures, quantity control measures, other technical regulations and intellectual property rights.
Six ASEAN countries have 100 per cent of their imports covered by one NTM or another. What is the scope for increasing inter-regional trade by reforming or harmonising NTMs to common standards? If a country has similar regulations, for example regarding SPS rules, then it is likely that these rules are not an impediment to trade. We measure the similarity in regulations between two different countries. Using a gravity model to explain trade unit values, we find that regulatory convergence can substantially reduce the costs effect of NTMs. We then attempt to quantify the trade impacts of these NTMs using a computable general equilibrium model.