Pulling back the curtain on ‘behind the border’ trade costs: The case of EU-US agri-food trade
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Date
2017
Authors
Sanjuán López, Ana IsabelPhilippidis, George
Resano Ezcaray, Helena
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Abstract
With the rise of anti-free-trade sentiment on both sides of the Atlantic, there is a growing urgency by trade negotiators to conclude the
Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations. The harmonisation of non-tariff restrictions is a key component
of the talks, whilst global modelling databases typically lack a price compatible representation of these measures, which lends a degree
of bias to ex-ante modelling assessments. In the gravity literature, there is (limited) evidence of non-tariff ad-valorem equivalent (AVE)
estimates of agriculture and food, although disaggregated agri-food activities and/or bilateral EU-US route specific estimates are still in
relatively short supply. Using panel data, this study consolidates both of these issues, whilst also proposing an ‘indirect’ gravity method
as a basis upon which to provide econometric non-tariff AVE estimates compatible with the degree of sectoral concordance typically
found in global modelling databases. On a general note, the results revealed the presence of significant 'behind the border' trade costs
on both sides of the Atlantic, which exceed their tariff counterparts. Using simple aggregated averages, our estimates are comparable
with ‘direct’ gravity method studies. Furthermore, rigorous qualitative and quantitative comparisons on a sector-by-sector basis showed
that a number of bilateral non-tariff AVEs are also found to be plausible, although in some cases, with recourse to relevant policy
documents and expert opinion, it is debatable whether the EU or the US is more restrictive. Further work could focus on refining the
sector specificity of each gravity equation to improve the model’s predictive capacity
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AGROVOC subjects
Modelos econométricosComercio internacional
Aranceles
Sponsorship
The authors would like to thank two anonymous
reviewers for providing a thorough review on an initial
draft submission. We would also like to thank the Joint
Research Centre Seville (JRC) European Commission,
for providing assistance on this project. Special thanks
go to Robert M’barek for supporting this initiative,
whilst we are also indebted to Pavel Ciaian and Ignacio
Pérez Domínguez for reading and providing insightful
feedback on an earlier version of this work. The views
expressed are purely those of the authors and may not
in any circumstances be regarded as stating an official
position of the European Commission.