TBT and SPS impacts on Korean exports to China: empirical analysis using the PPML method

Abstract

Since diplomatic relations were established between China and Korea, the two countries have expanded their relationships, especially in trading commodities and services. However, in recent years, as tariff levels have fallen, China has sought to implement other protectionist mechanisms. The use of non-tariff measures has added another dimension to international trade activities that need to be better understood. The paper analyses the impacts that two forms of non-tariff measures, technical barriers to trade (TBT) and sanitary and phytosanitary measures, have on Korean exports to China. To measure the impacts, we use an adapted version of the gravity model and the Poisson pseudo-maximum likelihood method. The results show that Chinese sanitary and phytosanitary measures, estimated using both the coverage ratio and the frequency index, have positive correlations with Korean agricultural exports; however, Chinese TBT measures, when estimated by the coverage ratio, were found to depress Korean manufacturing exports and exports as a whole. However, using the frequency index, Chinese TBT measures were found to have a statistically insignificant negative impact on Korean exports to China.

The Impact of TBT and SPS Measures on Japanese and Korean Exports to China

“…With several studies emerging that have a key role in helping model [12]) and measure [6]) the impacts of non-tariff measures. There are of course a myriad of other related studies, which have helped to improve our understanding of these forms of policy initiatives [8,9]). An assessment of the literature shows that our understanding of non-tariff instruments has evolved significantly over time.…”

“…Part of this assessment has had various methodological approaches adopted, ranging from large econometric studies using panel and cross sectional data [13]), large computable general equilibrium models [14]) or sector-or policy-specific econometric studies [15]). Moreover, from an empirical perspective, different proxies have been used to measure NTMs such as frequency indexes and coverage ratios [8,9,16], which have shown mixed results as to the impact the measures have on trade flows. While the findings tend to be negative if NTMs are proxied by ad-valorem equivalent (AVE) [17].…”

“…As mentioned above, with the general reduction in global tariff levels, NTMs have become an increasingly important trade policy tools. As such, Researchers also pay more attention to the impact of NTMs on trade flows [5,8,9,15,25]. On the basis of these previous studies, the following empirical model is constructed to explore the impact of TBT and SPS measures on Japanese and Korean exports to China.…”

“…As a WTO member, China is legally able to implement a range of protective measures, under the WTO TBT/SPS Agreement, that can protect not only human, animal and plant health but also deal with environmental, wildlife, and human safety factors. However, despite having the authorization to implement such measures, their rapidly growing use has caught the eye of international trade scholars with several important empirical studies being developed by [6][7][8][9][10][11]. These studies, while providing a comprehensive overview of the key economic issues relating to their modelling and measurement, have also created ample room for further discussion with results differing depending on the objects, time frames, and methodological parameters used.…”

A Gravity Model for Indonesian Canned Tuna Exports to the European Union Market: An Application of PPML Estimator

“…In this study, we performed PPML as suggested by Silva & Tenreyno (2006) to examine the effect of key macro-economic variables on the export of Indonesian canned tuna from the last 10 years. The applications of this method to the analysis of international trade have been carried out by Wei, Huang & Jun (2012), Ehrich & Mangelsdorf (2018), Wood, Wu, Li, & Kim (2017), Jayasinghe, Beghin, & Moschini (2010), Bojnec & Fert (2015), and Braha, Qineti, Cupák, & Lazor áková (2017). However, most of the empirical applications were applied to food commodities, while the applications in fisheries commodities are still limited.…”