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

Abstract

(1) Background: As countries with troubled histories, China, Japan, and Korea have, in recent times, attempted to overcome political and economic differences in a bid to forge strong trade relationships. However, Non-Tariff Measures (NTMs) have emerged in recent times, which has the potential to complicate matters. (2) Method: Our study analyzes the impact that two forms of NTM, technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS), have on Japanese and Korean exports to China. In order to effectively measure their impact, we utilize a modified version of the Gravity model and the Poisson Pseudo Maximum Likelihood method (PPML). Using three measures (coverage ratio, frequency index, and the dummy variable) to determine their impact, our study displayed a range of findings. (3) Results: The key results from our study showed that from a coverage ratio perspective, our research clearly demonstrates that Chinese TBT measures, reduce Japan and Korea’s manufacturing and total exports as a whole, while Chinese SPS measures encourage Korean agricultural exports. Moreover, the frequency index results and dummy variable estimations in the main also supported the coverage ratio findings with SPS measures promoting Korean agricultural goods exports. (4) Conclusions: Our research highlights the important role the TBT measures have played to shelter China’s emerging industrial sector from the rigors of highly competitive Korean and Japanese exporters. In doing so, the Chinese government is able to actively pursue some of its key sustainable development strategies such as “Made in China 2025” and “Industrial 4.0”.

Sustainable Production, Non-Tariff Measures, and Trade Performance in RCEP Countries

“…However, these results contradict those of Santeramo et al [37], who found that INSP and TBT encouraged wine imports for China. In addition to Santeramo et al [37], several other researchers have proved that NTMs do not necessarily harm trade; they can also have positive impacts on trade [20,23,38]. Ghodsi and Stehrer [23] found that SPS measures imposed by the EU significantly increased dairy trade values and quantities.…”

“…The increasing significance of NTMs as trade policy measures has attracted policymaker and researcher attention to NTM implementation and the impact on international trade flows [4,[12][13][14][15][16][17][18][19][20]. Most authors have focused on the impact of NTM liberalization through free trade agreements (FTAs), as NTMs are commonly assumed to distort trade [12,15,[31][32][33].…”

“…For example, Ferro et al [35] and Karemera et al [36], who used the maximum residual level of pesticides as a proxy for NTMs, found a negative impact on exports. Wood et al [20] proved that technical-barrier-to-trade (TBT) measures implemented by China reduce manufacturing and overall exports for Japan and South Korea, while sanitary and phytosanitary (SPS) measures encourage agricultural sector exports to South Korea.…”

“…This possibility has motivated policymakers and researchers to seek to understand how NTMs affect trade performance [12,13]. A sizeable literature has been published on the impacts of NTMs on trade [4,[14][15][16][17][18][19][20]. Most research has tended to focus on the implications of NTMs in general, and hence, several current studies have shifted attention to NTMs with specific purposes: improving supply chains [21,22], enhancing quality [23,24], and increasing export competitiveness [25,26].…”

Performane and Competitiveness of Indonesian Nutmeg in Export Market

“…Thus, the added value formed can be distributed to domestic economic actors. In the world trade system, the SPS (sanitary and phytosanitary) instruments and customs procedures applied in world trade have become obstacles (obstacles) to the flow of trade between countries [13]. This condition caused a decline in demand for Indonesian nutmeg in the European market in 2011-2012 [14].…”