Academic journal article Global Journal of Business Research

The Impact of the Asia-Pacific Economic Cooperation Mutual Recognition Arrangement for Conformity Assessment of Telecommunications Equipment on Trade: Evidence from Taiwan

Academic journal article Global Journal of Business Research

The Impact of the Asia-Pacific Economic Cooperation Mutual Recognition Arrangement for Conformity Assessment of Telecommunications Equipment on Trade: Evidence from Taiwan

Article excerpt

ABSTRACT

We use Taiwanese trade data from 2009 to 2012 to examine the impacts of the Asia-Pacific Economic Cooperation Mutual Recognition Arrangement for Conformity Assessment of Telecommunications Equipment on trade. The results show that Asia-Pacific Economic Cooperation Mutual Recognition Arrangement for Conformity Assessment of Telecommunications Equipment can increase Taiwan s exports of cellular phones and laptop computers to other Asia-Pacific Economic Cooperation members. We also provide evidence that a mutual recognition agreement can reduce the non-tariff barriers caused by technological regulations and standards in some cases.

JEL: F14, F53, F15

KEYWORDS: APEC, Mutual Recognition Agreement, Trade, Gravity Equation

INTRODUCTION

Although the World Trade Organization (WTO) Doha round negotiation, begun in 2001, has yet to conclude, trade barriers caused by tariffs have been lowered due to several sets of negotiations before and after the establishment of the WTO; however, non-tariff barriers continue to impede the flow of goods between countries. The different types of non-tariff barriers are varied and complicated, and hence, it is difficult to reach a consensus to eliminate non-tariff barriers in negotiations. Quotas, a type of quantitative constraint, are one formerly popular form of non-tariff barrier, but more recently, technical standards have overtaken quotas to become the major cause of disputes over non-agriculture goods in the WTO (Santana and Jackson, 2012). Among the various WTO trade agreements, the Technical Barriers to Trade (TBT) and the Sanitary and Phytosanitary (SPS) agreements are conceptually similar. Seeking to protect the safety of human being and living things, these two agreements empower WTO members to set non-discriminatory regulations on the technical standards for goods (TBT) and animals, plants, and food (SBS). Clearly, different technical standards and SPS measures can create trade barriers among the WTO members by creating extra examination costs for exporters.

Harmonization and mutual recognition are two major methods used to alleviate the unnecessary trade barriers caused by technical standards and SPS measures, especially in European countries (Brenton, Sheehy, and Vancauteren, 2001). Harmonization means that trade partners coordinate to apply the same technical standards or SPS measures to products. Due to sovereignty concerns, most countries reserve the right to set the standards or measures to protect their citizens, although suggestions from international organizations such as the Codex Alimentarius Commission will be considered. In most cases, mutual recognition is more important to alleviate this type of non-tariff trade barrier. Indeed the mutual recognition agreements (MRAs) between the United States, European Commission, and other countries are studied in the literature, such as Amurgo-Pacheco(2006).

Under the arrangement of mutual recognition, the tests or certifications for export goods can be preceded in the exporters' countries, thus avoiding duplicate testing and shortening the time to market for new products. Further, the required technical standards and SPS measures will be more transparent. It is expected that MRAs between trade partners can alleviate trade barriers and promote trade flows. This paper will examine this theoretical prediction by exploring Taiwanese trade data. The Asia-Pacific Economic Cooperation Mutual Recognition Arrangement for Conformity Assessment of Telecommunications Equipment (APEC Tel MRA) is the targeted MRA in this paper. APEC Tel MRA was endorsed in 1998 and commenced in 1999. The scope of the conformity assessments covered by APEC Tel MRA includes electromagnetic compatibility (EMC) and electrical safety. Many of Taiwan's major export goods, such as laptop computers and cellular phones, need to pass the conformity assessments covered by APEC Tel MRA before they can be exported to other APEC members, which is the reason we have chosen to analyze APEC Tel MRA in this paper. …

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