Regionalism in Standards: Good or Bad for Trade?

37 Pages Posted: 20 Apr 2016

See all articles by Maggie Xiaoyang Chen

Maggie Xiaoyang Chen

George Washington University

Aaditya Mattoo

World Bank - Development Research Group (DECRG)

Multiple version iconThere are 3 versions of this paper

Date Written: November 11, 2004

Abstract

Regional agreements on standards have been largely ignored by economists and unconditionally blessed by multilateral trade rules. The authors find, theoretically and empirically, that such agreements increase trade between participating countries but not necessarily with the rest of the world. Adopting a common standard in a region-that is, harmonization-boosts exports of excluded industrial countries to the region. But it reduces exports of excluded developing countries, possibly because developing country firms are hurt more by an increase in the stringency of standards and benefit less from economies of scale in integrated markets. Mutual recognition agreements are more uniformly trade promoting unless they contain restrictive rules of origin, in which case intra-regional trade increases at the expense of trade with other, especially developing, countries. The authors propose a modification of international trade rules to strike a better balance between the interests of integrating and excluded countries.

Keywords: Labor Policies, Economic Theory&Research, Trade Policy, Environmental Economics&Policies, Health Economics&Finance, Environmental Economics&Policies, TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT, Trade and Regional Integration, Economic Theory&Research, Health Econom

Suggested Citation

Chen, Maggie Xiaoyang and Mattoo, Aaditya, Regionalism in Standards: Good or Bad for Trade? (November 11, 2004). World Bank Policy Research Working Paper No. 3458. Available at SSRN: https://ssrn.com/abstract=625336

Maggie Xiaoyang Chen (Contact Author)

George Washington University ( email )

710 21st Street NW
Washington, DC 20052
United States

Aaditya Mattoo

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
Room MC 3-327
Washington, DC 20433
United States
202-458-8047 (Phone)
202-676-9810 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/amattoo

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