Using Supply Chain Analysis to Examine the Costs of Non-Tariff Measures (NTMs) and the Benefits of Trade Facilitation

32 Pages Posted: 19 Jan 2012

See all articles by Michael J. Ferrantino

Michael J. Ferrantino

World Bank - Trade and Competitiveness Global Practice

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Date Written: January 19, 2012

Abstract

It has become increasingly common to produce goods in a number of geographically dispersed stages linked by international trade. This tendency, known by names such as “production fragmentation,” “processing trade,” and “vertical specialization,” has important implications for the analysis of non-tariff measures (NTMs) and trade facilitation. First, different types of NTMs or trade facilitation issues are naturally associated with different stages in the movement of goods. Different price gaps can be assigned to these stages, making it possible to decompose the overall amount of distortion and to prioritize the policies with the largest potential efficiency gains. Second, NTMs may accumulate in long supply chains, implying that their trade-distorting effects are greater for goods produced in a fragmented manner than for goods with simple production processes. There is evidence that trade costs are more important for high technology goods or goods undergoing several stages of processing. Issues with product standards may be particularly important for goods with long supply chains. The link between NTMs and supply chains also has implications for economic development and for the relationship between liberalization in services and goods.

Keywords: trade costs, non-tariff measures, standards, intermediate goods

JEL Classification: F13, F15, F29

Suggested Citation

Ferrantino, Michael J., Using Supply Chain Analysis to Examine the Costs of Non-Tariff Measures (NTMs) and the Benefits of Trade Facilitation (January 19, 2012). Available at SSRN: https://ssrn.com/abstract=1988245 or http://dx.doi.org/10.2139/ssrn.1988245

Michael J. Ferrantino (Contact Author)

World Bank - Trade and Competitiveness Global Practice ( email )

Washington, DC
United States

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