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The Impact of Technology Gaps between Countries and Technical Barriers to Trade

Author Ryu Han-eol, Cho Jae-han, Sung Eol-yong Date 2017.12.14 Page
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Both a continuous decline in applied tariff rates and increases in non-tariff measures have been observed since the General Agreement on Tariffs and Trade (GATT) was established in the mid-1990s. In accordance with its rules, the WTO has strictly prohibited the use of non-tariff measures with policy-related motives to further protectionist aims. However, such measures are permitted when necessary, and within reason, to protect a country’s citizens and domestic industries. And so bilateral and multilateral trade agreements involve negotiations on not only tariff reduction but also issues related to non-tariff barriers. It is believed that some countries have implemented non-tariff measures with policy-related motives, but have insisted that such measures are reasonable. Yet even if such measures pass muster, they often impose restrictions on trade that serve as a bigger impediment than tariffs themselves. Technical barriers to trade (TBTs), which are a type of non-tariff measure, are defined as unnecessary trade barriers between countries. Those barriers are manifest in conformity evaluations, which assess compliance with local technicalities, rules and standards. TBT notifications submitted to the WTO account for the largest proportion of reported non-tariff measures. Thus, the Korean government needs to understand the TBTs imposed by its trading partners and devise ways of overcoming those barriers. Importantly, TBTs in industries where there are technology gaps between countries are highly likely to hinder trade in numerous ways. Therefore, an analysis of the characteristics and economic ripple effects of TBTs in industries where there are technology gaps would be helpful in responding to the various and divergent barriers imposed by technologically superior countries. Such analysis would also be helpful in establishing policies for solving various issues related to the barriers mentioned above. 

 

The purpose of this study is to analyze the economic impacts of TBTs in relationships between countries with a technology gap in one or more industries in order to derive implications for policymaking. Toward this end, this study examines the current status of TBTs and the technology levels of industries in major countries. It also analyzes the impact of technology levels on TBTs and the economic aspects of TBTs resulting from the differences in technology levels in countries and industries based on quantitative methods. Furthermore, this study uses the results of qualitative analyses to build theoretical models for better understanding how trading partners establish TBTs and the economic aspects of such TBTs. Finally, this study suggests ways of tackling issues related to TBTs in industries where technology gaps exist.?