Heterogeneity effect of technical measures: Evidence from the Vietnam seafood trade

Abstract

The free trade movement sweeping across the globe has destabilized the role of tariffs and emphasized the importance of technical measures as the main tool for regulating trade. The effect of technical measures on trade flow is both controversial and ambiguous despite their undeniable popularity in both theoretical and empirical literature. Empirical evidence shows both a positive and negative relationship between technical measures and trade volume which raises the question of “what determinants create and dictate the heterogeneity associating with the effect of technical measures on trade”. This paper aims at constructing a theoretical foundation that explains the mechanics by which technical measures affect trade flow and identifies the existence of the heterogeneity effect of SPS and TBT measures on Vietnam’s seafood exports by using a gravity model with a combination of PPML and moderator estimation. Accordingly, an additional SPS measure boosts the export of Vietnam’s seafood by 0.3% but an additional TBT measure decreases Vietnam’s seafood export by 1.9% on average. Furthermore, the results of this study also confirm the moderating role of firms’ efficiency and consumers’ preferences in determining the impact of technical barriers on trade. This paper also recommends some solutions for the Vietnamese government and enterprises to enhance their ability to comply with TBT and SPS measures to promote seafood export.