Effect of non-tariff measures on international tea trades

Abstract

Purpose The purpose of this paper is to analyze the impacts of differences in sanitary and phytosanitary measures as non-tariff measures (NTMs) in the tea trade between importing and exporting countries. With the progress of trade liberalization, there has been a shift of focus to NTMs as alternative or potential trade barriers. Design/methodology/approach In order to quantify an NTM on tea trade and implement its empirical application, this study designed an index of differences in maximum residue levels (MRLs) for the pesticide endosulfan and introduced it into a gravity trade model. The estimation challenges in the presence of heteroscedasticity and many zero-trade flows are resolved by taking the Heckman and Poisson pseudo-maximum likelihood estimators. Findings This study found that differences in MRLs, arising from the stricter standards in importing countries lead to a significant decrease in tea trade value. This negative impact of differences in MRLs is found to be slightly less than that of tariffs, implying that in this case, the NTM acts as a policy substitute for import tariffs in the global tea trade. Originality/value The main contribution of this study is to suggest and quantify the differences in MRLs across countries as a substantial NTM on the global tea trade and provide its empirical application.

Non-Tariff Measures Impact on Indonesian Fishery Export

“…The high level of production of a country will cause exports to experience enhancement. This estimation is consistent with previous research which states that exporter's GDP has a positive effect on exports (Diesdier et al 2008;Bao and Qiu 2012;Shepotylo 2016;Hwang 2017) The GDP of importers in this study statistically has a positive and significant effect on Indonesian fishery exports. According to the theory of the gravity model, high GDP importers indicate the level of consumption in the country is high.…”

“…High country consumption levels indicate high levels of demand in the country. The importer GDP variables that show a positive relationship in accorandce with previous research which states when the GDP of importers increases, exports also increase (Diesdier et al 2008;Bao and Qiu 2012;Wei et al 2012;Nugroho 2014;Shepotylo 2016;Hwang 2017).…”

“…The estimation results obtained in this study shows that Indonesia's geographical distance with its trading partner countries has a negative and significant impact on Indonesian fishery exports. The distance variables indicate that the further the distance between the destination country and the exporting country, the greater the cost of transport for the trade to be carried out by both countries (Diesdier et al 2008;Nugroho 2014;Shepotylo 2016;Thu Thuong 2017;Hwang 2017;Wood et al 2017).…”

“…Several previous studies have shown results that GDP exporters and GDP importers have a positive relationship to trade (Diesdier et al 2008;Bao and Qiu 2012;Nugroho 2014;Shepotylo 2016;Hwang 2017). The distance variables used as transportation cost proxies indicate that there is a negative relationship between distance and trade (Diesdier et al 2008;Bao and Qiu 2012;Wei et al 2012;Nugroho 2014;Shepotylo 2016;Thu Thuong 2017;Hwang 2017;Wood et al 2017).…”

“…As a result of such use more than 60 percent of food-related products are found to be affected by at least one of the forms of SPS policy (UNCTAD 2013). Research conducted by Thu Thuong (2017) and Hwang and Lim (2017), suggests that SPS policies can act to preclude or precisely reduce the amount of trade in agricultural and food products.…”