Who Bears the Burden of U.S. Nontariff Measures?

By Clark, Don P.; Bruce, Donald | Contemporary Economic Policy, April 2006 | Go to article overview

Who Bears the Burden of U.S. Nontariff Measures?


Clark, Don P., Bruce, Donald, Contemporary Economic Policy


I. INTRODUCTION

Considerable attention has been devoted to the study of industrial nations' trade policies and their impacts on developing countries. Tariffs used by industrial nations have been found to bear more heavily on products of export interest to developing countries than on imports from other industrial nations (see, for example, Balassa 1967; Clark 1981; Deardorff and Stern 1998; Laird and Yeats 1990). Successive rounds of multilateral trade negotiations have lowered tariffs facing developing countries in markets of industrial nations. As tariff barriers have fallen, industrial nations have used nontariff measures (NTMs) to provide relief from import competition. Some NTMs have been applied against technologically unsophisticated and unskilled labor intensive products of export interest to developing countries, and others have been aimed at exports from the newly industrializing countries. Although several studies have shown that NTMs tend to bear more heavily on products of export interest to developing countries than on imports from other industrial nations, they have not given adequate recognition to the disparate manner in which NTMs are applied to the trade of countries that have widely different levels of economic well-being. (1)

This article provides evidence on the differential incidence of NTMs on products of export interest to developing countries by investigating the relationship between per capita income and various indicators of NTM use. Included here are import-licensing schemes, antidumping duty actions, tariff-rate quotas, price actions, import quotas, and voluntary export restraints (VERs). Results are used to determine whether advanced or poorer countries are the primary targets of trade restrictions used by the United States. Findings will also determine how the use of newer measures (e.g., VERs, antidumping duty actions) is influencing the overall pattern of protection faced by developing countries. Differences in incidence patterns displayed by voluntary export restraints and import quotas will be highlighted.

Several features of the present study represent improvements over earlier attempts to identify the intercountry pattern of NTM incidence. First, NTM trade coverage ratios are used to assess the incidence of NTMs imposed by the United States on imports from countries that span the entire range of per capita incomes. Previous studies compare simple average NTM trade coverage ratios for industrial nations and developing countries. Second, the present study of the relationship between NTM use and the level of economic development identifies both country- and industry-level determinants of NTM use. Earlier studies focus only on industry-level determinants. A third improvement pertains to the scope of country and industry coverage. The present study is based on 72 countries and includes more than 370 four-digit U.S. Standard Industrial Classification (SIC) industries. Other studies use far fewer observations and a much higher level of industry aggregation. Fourth, unlike previous studies, the authors provide estimates for all NTMs and for individual categories of trade control measures, such as antidumping duty actions, quantitative restrictions, import quotas, and voluntary export restraints. Finally, the data pertain to 1992 and account for newer trade control measures such as antidumping duties and VER agreements. Previous studies use data from the early 1980s.

II. DETERMINANTS OF NONTARIFF MEASURES

The purpose here is to empirically examine the incidence of U.S. NTMs on imports from countries that span the entire per capita income distribution. The authors focus on a regression approach that specifies NTM trade coverage as a function of per capita income. For such an approach to yield unbiased estimates, other important determinants of NTM coverage must be included in the model. The authors examine a broad array of country and industry-level determinants of NTM use. …

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