The Impact of Non‐tariff Barriers on Trade and Welfare. (13th November 2022)

• Record Type: Journal Article
• Authors: Dhingra, Swati; Freeman, Rebecca; Huang, Hanwei
• Is Part Of: Economica. Volume 90:Number 357(2023)
• Page Start: 140
• Page End: 177
• Publication Date: 2022-11-13
• Subjects: Economics -- Periodicals; 330.05
• DOI: 10.1111/ecca.12450
• Languages: English
• ISSNs: 0013-0427

Abstract

Abstract : Deep trade agreements (DTAs) are widespread and have taken the world beyond tariff liberalization in goods trade. As the importance of global supply chains and the services sector has increased across the world, shallow tariff reductions have given way to deeper commitments that address non‐tariff barriers and behind‐the‐border barriers to trade. This paper shows that DTA commitments undertaken since the Uruguay Round have increased trade in goods and trade in services by over half in the long term. Taking reduced‐form trade elasticity estimates to a general equilibrium quantitative model, DTAs contributed over 40% to the welfare gains from trade globally and even more for advanced economies. China, India and the Eastern European bloc benefited the most from trade agreements. While most of the gains in China and India came from tariff reductions, the gains to Eastern Europe came largely from deep commitments during its accession to the EU. Applying the DTA estimates to ex ante analysis of Brexit, the losses to the UK from its departure from the deepest trade agreement in the world would not be offset by new deep trade deals with key non‐EU trade partners. Abstract : This paper is part of the Economica 100 Series. Economica, the LSE "house journal" is now 100 years old. To commemorate this achievement, we are publishing 100 papers by former students, as well as current and former faculty. Swati Dhingra is an Associate Professor of Economics at the LSE. Rebecca Freeman is a Senior Economist at the Bank of England and a Trade Associate at CEP, LSE. Hanwei Huang is a an Assistant Professor at the City University of Hong Kong. He received his PhD in Economics from the LSE.