No Double Standards: Quantifying the Impact of Standard Harmonization on Trade

Schmidt, Julia; Steingress, Walter

doi:10.2139/ssrn.3449148

Cited by 7 publications

(11 citation statements)

References 36 publications

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“…It could also be that fixed costs, which we argue increase with regulations, are correlated with variable costs (though, in column (2), we control for all importerexporter determinants). Although it is difficult to find valid instruments for country-specific regulations, we follow the strategy in Kee and Nicita (2016) and Shmidt and Steingress (2018), and use TMs of related countries. For each destination, we take the average number of regulations imposed in the same sectors by countries that either share a border, a common language, or a common legal origin.…”

Section: Robustnessmentioning

confidence: 99%

“…Furthermore, negative consumption externalities are hard to quantify, which makes a welfare comparison between private solutions and a centralized government solution difficult to examine concretely.9 Swann et al(1996) find that standards raise exports for UK firms Chen and Mattoo (2008). find that trade flows increase with EU/EFTA harmonization Shmidt and Steingress (2018). confirm the rise in export flows, at the intensive and extensive margin, across a broad set of standards and across countries Parenti and Vannoorenberghe (2019).…”

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confidence: 99%

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Quality Misallocation, Trade, and Regulations

Macedoni

Weinberger

2021

SSRN Journal

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Recent trade agreements have shifted their focus to non-tariff barriers such as regulations and product standards, which have been traditionally treated as pure domestic policies. The imposition of such standards reallocates production from small to large, high quality firms. We model regulations as a fixed cost that any firm selling to an economy must pay, consistent with stylized facts that we present. The fixed cost improves allocative efficiency, by reallocating production towards high-quality firms, who under-produce in the market allocation. Furthermore, the fixed cost generates a positive externality on the rest of the world as it induces entry of high-quality firms, but unilateral regulation lowers the terms of trade of the imposing country. The result justifies international cooperation based on the fact that such cooperation can improve welfare, rather than preventing negative consequences of tariff wars. We estimate our model and apply its gravity formulation to quantify the welfare consequences of imposing the optimal regulation, the extent of the positive externalities across countries, and the effects of cooperation.

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Section: Robustnessmentioning

confidence: 99%

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confidence: 99%

Quality Misallocation, Trade, and Regulations

Macedoni

Weinberger

2021

SSRN Journal

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“…Kehoe and Ruhl () and Dutt, Mihov, and Van Zandt () provide empirical evidence that trade agreements increase trade flows mainly through new product entry by reducing primarily the fixed rather than the variable costs of trade. Schmidt and Steingressm () find evidence of significant product entry after countries harmonize existing product standards. In the light of this paper, the presence of spillover effects may be one explanation why new product entry is an important margin in export growth after a trade agreement or standard harmonization.…”

Section: Introductionmentioning

confidence: 99%

Market size and entry in international trade: Product versus firm fixed costs

Steingress

2019

Rev International Economics

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This paper develops a theoretical framework to infer the nature of fixed costs from the relationship between entry patterns in international markets and destination market size. If fixed costs are at the firm level, firms take advantage of an intrafirm spillover by expanding firm‐level product range (scope). Few firms enter with many products and dominate international trade. If fixed costs are at the product level, an interfirm spillover reduces the fixed costs to export for all firms producing the product. The resulting entry pattern consists of many firms exporting different varieties of the same product. Using cross‐country data on firm and product entry, I find empirical evidence consistent with product‐level costs. More firms than products enter in larger markets offering their consumers lower prices and a greater variety of goods within the product category.

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“…The General Agreement on Trade in Services (GATS) and the Agreement on Subsidies and Countervailing Measures are other important WTO agreements that have deep integration elements Staiger & Sykes (2019). andBagwell & Staiger (2006) analyze these agreements, and we will come back to these papers below.3 An interesting fact about standards is that many of them are actually voluntary Schmidt & Steingress (2020). provide a novel database on such voluntary standards and an estimation of their impact on international trade.4 The Economist (2008), for example, noted in a commentary on the failure of the Doha Round over a seemingly minor issue that "the shadow of the Uruguay Round arguably extended beyond this nettlesome detail.…”

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confidence: 99%

The Political Economy of Deep Integration

Maggi

Ossa

2021

Annu. Rev. Econ.

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Modern trade agreements no longer emphasize basic trade liberalization but instead focus on international policy coordination in a much broader sense. In this review we introduce the emerging literature on the political economy of such deep integration agreements. We organize our discussion around three main points. First, the political conflict surrounding trade agreements is moving beyond the classic antagonism of exporter interests who gain from trade and import-competing interests who lose from trade. Second, there is a more intense popular backlash against deep integration agreements than there was against shallow integration agreements. Finally, the welfare economics of trade agreements has become more complex, in the sense that the goal of achieving freer trade is no longer sufficient as a guide to evaluating the efficiency of international agreements.

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No Double Standards: Quantifying the Impact of Standard Harmonization on Trade

Cited by 7 publications

References 36 publications

Quality Misallocation, Trade, and Regulations

Quality Misallocation, Trade, and Regulations

Market size and entry in international trade: Product versus firm fixed costs

The Political Economy of Deep Integration

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