The Effect of non-tariff measures on international trade

Abstract

In recent years, advanced countries, especially the US, have sought to reverse the cause of income inequality problems and unstable economic condition to the trade with emerging countries, which enjoy trade surpluses. Since 1990s, trade liberalization has come into being, and international organizations such as the WTO have been launched. Meanwhile, from 2000s, trade agreements have been concluded in many countries. In this context, developed countries have tried to make trade barriers through various kinds of non-tariff measures. In this process, Korean steel products have also been subject to trade remedies by the US, and based on the fact that Korean export market and products are concentrated, not diversified, it is expected that non-tariff measures by the US or China will have a negative impact on Korean exports. Therefore, in this paper, regression analysis was conducted to figure out that the implementation of such non-tariff measures could have a negative impact on exports despite the fact that tariff barriers were relaxed due to the current RTA conclusion. Prior to the empirical analysis, literature review about the implications of the border effects, more specifically, non-tariff and tariff barriers were explored and prior studies on regional trade agreements were also examined. Sample data utilized 15 developed and 15 emerging countries among the major trading partners with Korea from 2002 to 2015. In addition, in order to derive more precise empirical analysis results, export data is limited to processed foods and steel products. This empirical analysis has led to the conclusion that non-tariff measures still cause exports to decline despite trade liberalization.