DP8767 North-South Standards Harmonization and International Trade

Author(s): Olivier Cadot, Anne-Célia Disdier, Lionel Fontagné
Publication Date: January 2012
Keyword(s): harmonization, Regional trade agreement, South-South trade, technical regulations
JEL(s): F13, F15
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=8767

Recent years have seen a surge in regional trade agreements (RTAs) and the development of non-tariff measures (NTMs). As a consequence, a growing number of RTAs include provisions on NTMs. This paper investigates the effect of standards-harmonization clauses contained in many North-South Agreements on international trade. Using a gravity equation, we find that (i) North-South harmonization of technical regulations reinforces a hub-and-spoke trade structure potentially detrimental to the development of South-South trade and (ii) harmonization on regional standards hurts Southern exports to the North. Thus, standards-harmonization provisions included in many recent North-South RTAs miss their target and contribute to marginalize Southern countries in the world economy.