Tariffs and Non-Tariff Frictions in the World Wine Trade

Abstract

This article empirically investigates the impact of trade barriers on the world wine trade, focusing on trade costs impeding exports, including transport, tariffs, technical barriers and sanitary and phytosanitarystandards. A gravity model is estimated using data from the main importing and exporting countries for the years 1997 to 2010. The Poison Pseudo-Maximum Likelihood (PPML) estimator accounts for heteroskedasticity and the presence of zero trade flows. Our results identify which regulations can adversely affect trade, providing useful information to policy-makers involved in negotiations on trade frictions. While sanitary and phytosanitary measures do not seem to obstruct exports, technical barriers have a varying impact on trade. A decreasing trend for tariffs has largely been compensated by more stringent technical barriers. The overall result is that frictions in the world wine trade have not changed during the past fifteen years.

Keywords: tariffs, technical barriers to trade, sanitary and phytosanitary regulations, gravity model, PPML

JEL Classification: F13, Q17, Q18