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Chinese import liberalisation of manufacturing. Source: Author’s calculation, UN Comtrade, TRAINS, WTO IDB
Source publication
In the past few decades, China has put substantial efforts into liberalising its trade and economy that accelerated after its accession to the World Trade Organisation (WTO) in December 2001. In this period, China has significantly reduced its tariffs on manufacturing imports. However, the proliferation of non-tariff measures imposed by China has m...
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China’s systematic “innovation mercantilism” is a threat not only to the world’s major economies—particularly to the European Union, Japan, and the United States—but also to the very soul of the global trading system. Yet while China has imposed its corrosive and harmful economic and trade policies on the world unilaterally, it would be impossible...
Citations
... Technical measures as policy instruments represent countries 'characteristics, then their effects vary from countries to countries. Some empirical studies investigate one country or economy to give the specific insights as a lesson for the others such as: in China (Bao, 2014;Ghodsi, 2020), in Korea (Wood et al., 2017), in Egypt (Hoda et al., 2016), in France (Fontagn e et al., 2015;Fontagn e & Orefice, 2018). ...
... Trade costs for agricultural products are higher than for manufactured goods due to customs clearance requirements at the border, specialized inspection measures, strict phytosanitary measures, and the nature of perishable agricultural products. Thus, technical regulations and standards tend to create trade-restricting effect on agricultural sector, but trade-enhancing effects on manufacturing (Chen et al., 2008;Disdier et al., 2008;Ghodsi, 2020;Li & Beghin, 2012). Agricultural products respond slowly with the process of trade facilitation and liberalization. ...
Technical measures, particularly Sanitary and Phytosanitary measures (SPS) and Technical barriers to trade (TBT) can affect to firms’ market entry and the volume of trade. Yet, technical measures is ambiguous and complicated, especially for developing countries. Therefore, the study analyses the extensive and intensive effects of SPS and TBT measures imposed by Vietnam on agricultural imports across products and partners. The empirical analysis employs gravity model with Heckman two-stage estimation at the disaggregated level from 2007 to 2019. The findings show that SPS and TBT have positive effects at the extensive margin while having heterogeneous effects at the intensive margin. Across different products, technical measures imposed on agricultural processed products are significant positive to firms’ participation but are insignificant to the scale of trade. Imposing SPS measures on animal products facilitates market entry, while decreasing the intensive margin. In plant products, SPS measures play the market barriers to protect the advantage of exporting products, but firms can expand the import volume after adapting to TBT regulations. The estimation also shows that SPS and TBT increase the probability of imports from developed countries while having insignificant effects on developing countries.
... Furthermore, NTMs could be endogenous in the estimation of imports for three main reasons. Omitted variable bias, measurement error and reverse causality are the three sources of endogeneity of NTMs (Ghodsi, 2020b). Therefore, an instrumental variable (IV) approach will be applied following the literature (Kee et al., 2009;Bratt, 2017;Niu et al., 2018). ...
Multinational enterprises (MNEs) are increasingly dealing with challenges shaped by the new geopolitical and trade environments. Besides traditional tariffs, exporting firms need to comply with regulatory non-tariff measures (NTMs) in the form of technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures. Although trade costs associated with these policy measures affect all firms, implications could be multifaceted for multinationals that base their international activities on exporting and importing and are important for the formation of global supply chains. Applying Poisson pseudo maximum likelihood to the unique Orbis dataset of firms on multinational subsidiaries, we show that NTMs pose a greater challenge to MNEs’ subsidiaries’ activity and performance than tariffs do. High-tech manufacturing subsidiaries of foreign MNEs are particularly vulnerable to these NTMs, as they suffer higher regulatory losses. However, multinational affiliates that have higher productivity, those with full foreign ownership representation, those that are embedded within a larger international network of subsidiaries, and those that are located in trading partners with deep preferential trade agreements can turn these trade challenges to their advantage. Our results have important implications for policy makers regulating trade in goods.
JEL: F23, F211, F12, F13, F15, C55
... The default assumption of the system is complete elasticity, that is, exporting countries and importing countries are both recipients of market prices (Mbatha 2019). Researchers can make limited adjustments to export elasticity according to their own needs, so as to reflect the importing countries' certain control over market prices when importing large quantities of goods (Ghodsi 2020). The basic assumptions in this thesis are consistent with the assumptions of the supply side and demand side in the WITS-SMART model. ...
ABSTRACT
This paper employs the WITS-SMART model to analyze the potential impacts of the Regional Comprehensive Economic Partnership (RCEP) on specific industries in Malaysia and China. By modifying the Armington elasticity and the parameter ‘a’ in the Swiss formula, five distinct scenarios are established to simulate the effects of various tariff reduction schemes. The analysis reveals positive and significant overall trade effects. In a scenario of complete tariff elimination, Malaysia experiences higher trade and welfare effects compared to China, addressing the longstanding trade deficit between the two countries. Finally, recommendations are made to gradually reduce tariffs in stages and sectors, prioritize tariff reduction on specific goods, implement zero tariffs in China first, focus on products with international competitiveness, and address potential asymmetric industrial output effects.
... Several large enterprises are likely to form agglomerations and monopolize the industry, resulting in other enterprises lacking enthusiasm for innovation (Angerhofer & Blair, 2021). Technical barriers have become essential to innovation activities (Ghodsi, 2020). Owing to the technical specificity, specialized agglomeration of hightech industries constrained technology and information diffusion within the industries, which blocks the path of technology spillover in different industries. ...
Innovation is the primary driving force for national development, and industrial agglomeration is one of the key ways to improve the green innovation efficiency (GIE). Taking the data of 30 provinces in China from 2011 to 2021, we use the undesired SBM model to calculate the GIE, and utilize the interaction term method and threshold model to analyze the mechanisms of different agglomeration modes on it. The results show that the GIE of China's high-tech industries has steadily improved over time, and the efficiency of eastern region is higher than central and western regions. In high-tech industries, the existence of Williamson hypothesis is verified. The impacts of specialized and diversified agglomerations on GIE have double threshold effects of economic development. Following economic growth, the marginal effects of specialized agglomeration on GIE gradually decrease until turn to negative effects, while the effects of diversified agglomeration are always positive. The impacts of industrial agglomeration on GIE vary with different regions. The negative impacts of specialized and diversified agglomerations in eastern region have emerged. Consequently, China should encourage reasonable high-tech industrial agglomeration and prevent the negative impacts of excessive agglomeration at the same time, trying to mitigate the specialized agglomeration, actively give play to the advantages of diversified agglomeration and promote industries diversified integration and technology spillovers.
... Finally, the Chinese financial is considered a relatively restrictive financial system (Hussain & Bashir, 2019Hussain et al., 2021). China's weak financial market connections with other BRICS countries can be attributed to a range of factors, including regulatory barriers (Bao & Qiu, 2010;Blackman & Wu, 1999;Ghodsi, 2020), currency restrictions (Dobson & Masson, 2009), and differences in economic development levels. One of the main challenges facing China's financial market integration with other BRICS countries is regulatory barriers (Ouattara, 2017). ...
This paper investigated exchange rate and stock price volatility connectedness and spillover in Brazil, Russia, India, China, and South Africa (BRICS) during pandemic-induced crises. We first extracted volatility using the Generalized Auto-Regressive Conditional Heteroskedasticity (GARCH) model. Then volatility connectedness and spillover were investigated by using (Diebold and Yilmaz, International Journal of Forecasting, 28(1), 57–66, 2012) method. We find that exchange rate volatility and stock return volatilities are connected during pandemic-induced crises. The study also finds volatilities spillover among countries in the sample. Russia has strong volatility connectedness with India in these financial markets. The direction of volatility spillover is from Russia to India. Similarly, Brazil has strong volatility connectedness with South Africa and the direction volatility spillover is from Brazil to South Africa. Finally, China has a weak volatility connection with the remaining BRICS countries. Thus, the volatility transfer in these financial markets and across BRICS countries has economic implications.
... However, researchers also found that TBTs demonstrate no statistically significant impact on the trade value of each product. Ghodsi (2018) analyzed the impact of PRC TBTs and tariffs on the imports of manufacturing products at the six-digit HS level. A positive impact of tariff and TBT reductions by the PRC was shown for its import values and quantities. ...
... Hence, Lao PDR's export opportunities are expected to increase. This scenario agrees with the findings of Ghodsi (2018) and Ferraz et al. (2018), who studied such effects in the industrial sectors of developed and developing countries. Furthermore, SPS measures are likely to gradually improve agricultural exports for all consumers. ...
The main objectives of this study were tos agricultural exports using a demand export model with a fixed-effect method. The authors found that Lao PDR's agricultural exports to the PRC increased by an average of 46.91% from 2013 to 2020, covering a total of 51 product codes, comprising six of the most valuable product types (i.e., bananas, corn, tapioca flour, watermelon, sticky rice, and sweet potato) given priority by the PRC. Additionally, from 2013 to 2020, the average ACFI concentration with NTMs was 10.08%, and the average coverage ratio for goods was 14.43%. The results of statistical significance testing at 1% suggest that three factors demonstrated the most significant impact on value: agricultural products facing NTMs in the form of sanitary and phytosanitary (SPS)
... At present China has introduced a series of regulatory measures for the cultivation of GM crops, such as investigating and verifying the information of illegal GM rice in supermarkets, launching the supervision and spot inspection of GM seeds and emphasizing that GM technology cannot be used as principal food without approval. Ghodsi pointed out that the introduction of regulations requires a certain amount of time to investigate and demonstrate before the final implementation as well as the effectiveness of role-play 42 . This study believes the effectiveness of regulations depends not only on their strict comprehensive and systematic implementation but also on continuity and nonrandomness. ...
Rice-based products exported from China to Europe have repeatedly encountered technical trade barriers. Using panel data from 24 states of the European Union during 2001–2017, this study builds a theoretical model to investigate the impact of implementation, intensity and structure of the Rapid Alert System for Food and Feed (RASFF) on China-EU rice-based product trade. The study found that RASFF has a serious inhibitory effect on the trade of traditional rice-based products because of detecting GM ingredients, showing an obvious lag effect, diffusion effect and structure effect. The negative effect occurs in entry process, and the inhibitory effect of border rejection and information notifications results in time lag, but the marginal effect of alerts for market links is insignificant. Moreover, the positive information disclosure effect of technical barriers implemented by individual members is much smaller than the negative diffusion effect. Finally, countermeasures and suggestions are proposed, including the source supervision of the test, the supervision of GM variety approval and GM seed production, the establishment of an early-warning and rapid-response mechanism to technical barriers of agricultural products, and food enterprise information.
... While the first reason has been studied by many scholars in the literature, reasonable and sound empirical evidence for the second reason is still missing. For instance, earlier studies have analysed the trade implications of NTMs (Essaji, 2008;Bao and Qiu, 2012;Ronen, 2017;Disdier et al., 2008;Li and Beghin, 2012;Yousefi and Liu, 2013;Ghodsi, 2020), and some others have estimated the ad-valorem equivalents of NTMs (Kee et al., 2009;Beghin et al., 2015;Cadot and Gourdon, 2016;Bratt, 2017;Niu et al., 2018;Cadot et al., 2018a,b). These studies find a heterogeneous impact of NTMs on traded values, volumes and unit values that are importer-specific, which sheds light on some components of the NTM Black Box. ...
... As importer-product-time fixed effects are not used, following Ghodsi (2020) an instrumental variable approach is used to control for the endogeneity bias of the NTMs, which is combined with a Heckman (1979) selection procedure to control for zero trade flows. This specification follows a three-stage procedure that will be used as the benchmark model. ...
... The second-stage regression is instrumenting NTM variables with appropriate instruments following Ghodsi (2020). Reverse causality, measurement errors and omitted variables bias are the three sources of endogeneity when estimating trade flows with respect to NTMs. ...
Regulatory non-tariff measures (NTMs), such as technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures, have frequently been imposed to regulate the importing market when the market fails to address some issues of concern regarding harmful products. The mechanism through which regulatory NTMs affect the quality of imported products seems like a ‘Black Box’, which is fully opened and analysed in this paper. Our research is built on a monopolistic competition framework, in which firms choose both the quality and the price of their exports subject to the compliance costs of NTMs and a fixed cost of technological change or bureaucratic procedures. The quality of products at the six-digit level of the Harmonised System (HS) traded globally and bilaterally during the period 1996–2017 is then estimated. Using these estimates, the impacts of TBTs and SPS measures on trade values, volume, unit value and quality are estimated. Then, by estimating the importer-specific impact of NTMs on trade indicators for each product, the NTM Black Box is opened and analysed.
... Pengertian ini memiliki arti bahwa kegiatan impor melibatkan dua negara (Purnamawati, 2013). Teori dasar yang digunakan dalam studi ini adalah teori perdagangan internasional (Ghodsi, 2020). Menurut Ghodsi (2020), perdagangan internasional adalah kegiatan jual beli antar dua buah negara atau lebih dengan mencakup impor. ...
... Teori dasar yang digunakan dalam studi ini adalah teori perdagangan internasional (Ghodsi, 2020). Menurut Ghodsi (2020), perdagangan internasional adalah kegiatan jual beli antar dua buah negara atau lebih dengan mencakup impor. Kegiatan ini memberi dampak pada kemajuan perekonomian suatu negara. ...
... Namun dalam perdagangan internasional masih ditemui banyak hambatan. Menurut Ghodsi (2020), dari sekian banyak hambatan tersebut, hambatan impor relatif banyak ditemui di Indonesia. Tiga hambatan impor dimaksud yakni sebagai berikut: ...
Currently, import activities are experiencing many barriers. These barriers cause importer profits to decline. This study aims to find out factors inhibiting the entry of imported goods from the Port of Tanjung Priok to importers of PT XYZ. The analysis method used in this study is a qualitative method by obtaining primary data from interviews by e-mail containing questions to 22 employees who work at PT XYZ. The results showed the factors of the entry barriers of imported goods to PT XYZ are imported document errors, lack of port facility, and the break-down of the custom electronic system. Therefore, these barriers need to be corrected so that imported goods to PT XYZ will be in better shape. Saat ini kegiatan impor mengalami banyak hambatan. Hambatan ini menyebabkan keuntungan importir menurun. Penelitian ini bertujuan untuk mengetahui faktor-faktor penghambat masuknya barang impor dari Pelabuhan Tanjung Priok sampai ke importir PT XYZ. Metode analisis yang digunakan dalam penelitian ini adalah kualitatif dengan memperoleh data primer yang dikumpulkan dari hasil wawancara melalui e-mail yang berisi pertanyaan kepada 22 karyawan yang bekerja di PT XYZ. Dengan menjelaskan hasil wawancara diperoleh bahwa faktor penghambat masuknya barang impor sampai ke PT XYZ disebabkan kesalahan dokumen impor, masalah fasilitas pelabuhan dan down system dari Bea Cukai berdampak pada terhambatnya masuknya barang impor sampai ke PT XYZ.
... Third, we used the TBT data from UNCTAD TRAINS. Most previous empirical studies, such as that of Ghodsi (2019) andDal Bianco et al. (2016), used the World Trade Organization (WTO) notifications. However, there is often a gap between the TBT notification and TBT measures that are in force in several countries, as not all TBT measures are notified by the government to WTO. ...
... As a country that is still highly dependent on imported inputs, the imposition of restrictive TBT measures can potentially reduce the productivity of the manufacturing sector in Indonesia. Policy evaluation and improvement toward restrictive TBT are needed to support manufacturing policy (Ghodsi, 2019). However, the imposition of TBT is still needed to protect consumer safety and prevent deceptive practices. ...
Purpose
The purpose of this study is to investigate the effects of Indonesia’s technical barriers to trade (TBT) on manufacturing exports.
Design/methodology/approach
This study uses the UNCTAD database to calculate the coverage ratio and frequency index of TBTs, which represent the restrictiveness of TBTs on imports. The effects of TBTs are estimated using the gravity model (Tinbergen, 1962) and the pseudo-Poisson maximum likelihood methodology (Santos Silva and Tenreyro, 2006, 2011).
Findings
An estimation on the manufacturing sector shows that TBT reduces Indonesia’s manufacturing exports. However, the effect of TBT is different in disaggregated manufacturing sector. TBT is found to reduce exports of chemicals and transportation but increase exports of metal and textiles. This finding supports the empirical evidence that TBT can create trade-impeding and demand-enhancing effects on trade flows. The negative effect of TBT on chemical and transportation exports implies that the cost of compliance is higher than the increasing demand rate. This finding suggests the need for policy evaluation and improvements for restrictive TBT. As Indonesia is still highly dependent on imported inputs, restrictive TBT can potentially reduce the productivity of the Indonesian manufacturing sector.
Originality/value
This study aims to investigate the effects of TBT in Indonesia, as a manufacturing-based economy that relies heavily on imported intermediate inputs. Furthermore, this study contributes to the literature by using country-specific techniques and aggregated and disaggregated manufacturing sectors as subjects for study. Meanwhile, previous studies use multi-country and multi-product approaches and focus on the aggregate sector. This study estimates the effects of TBT on the disaggregated sector, given its high share of imported inputs and reliance on export-oriented industries. TBT is constructed in a more detailed product level (HS-4 digit level) to provide more accurate results.
