The impact of non-tariff measures in Spanish foreigh trade: A structural gravity approach.

Abstract

We study the trade impact of non-tariff measures (NTMs) in selected food sectors of relevance for Spain, with a special attention on current and potential trade partners. With the increasing protagonism of NTMs in bilateral negotiations, the understanding and the quantification of the NTMs effects become essential in order to assess the impact of such bilateral agreements. Differently from previous literature, we include both, domestic and international trade flows as recommended by recent specialists (Agnosteva, Anderson and Yotov, 2019). In this way, trade frictions in foreign trade are estimated with respect to the assumed frictionless-domestic benchmark. Likewise, the specification of the model relies on a rich battery of fixed effects that control for multilateral resistance terms. Both, domestic trade flows and fixed effects, are requirements of the so-called structural gravity equation. Besides, by using UNCTAD-TRAINS NTMs data, we can isolate the part of international trade frictions ascribed to regulations. The GTAP database is used as it provides a consistent database for production and trade, necessary in the calculation of domestic trade in absence of consistent databases on internal and external trade.