Effects of NTMs on the Extensive and Intensive Margins to Trade: The Case of Tunisia and Egypt

Abstract

The last thirty years have witnessed a general liberalization process of merchandize trade flows. Indeed, tariffs have sharply decreased thanks to the multilateral, regional and/or bilateral trade integration agreements. However, concerns have been raised about the use of Non-Tariffs Measures (NTMs) as trade restriction policies. This paper aims to investigate the impact of NTMs on Tunisian and Egyptian imports. In addition to the distinction between different categories of NTMs (Sanitary and Phytosanitary, Technical Barriers to Trade, Export Related measures…), we study the impact of NTMs on the extensive and intensive margins to trade. The extensive margin has two dimensions: the number of varieties imported from each supplier and the number of supplying countries for each product. Using a traditional gravity model of international trade, we show that NTMs have been used more in Egypt than in Tunisia as a trade restriction measure. Moreover, they act on the intensive rather than the extensive margin.

Keywords: Non-Tariffs Measures, International Trade, Extensive and intensive margin

JEL Classification: F12, F13