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Economic Impact of the European Union’s Removal of Technical Barriers to Trade

Author Ryu Haneol, Kim Jaeduck , Sung Yeolyong Date 2016.12.27 Page
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Expansion of the GATT regime and the consequent liberalization of trade worldwide are making it impossible for governments to resort to conventional barriers to trade, such as tariffs. As a result, nations are increasingly resorting to non-tariff barriers to trade, permitted by the World Trade Organization (WTO), to regulate imports. Technical barriers to trade (TBTs) refer to the discriminatory and overlapping application of technical rules, standards, and conformity assessment procedures across nations, thus presenting unnecessary obstacles to trade. The use of TBTs has been on a significant rise in all countries around the world, with those imposed by countries to which Korean companies export their goods raising the cost of Korean exports and weakening their competitiveness in the end. For South Korea and other similar nations that have achieved economic growth on the strength of their exports, it is critical to gain a good understanding of the TBTs imposed by export destination countries, and craft effective trade policies based on analysis of their economic impact. 

 

The European Union (EU) as a whole represents one of the largest trading partners for South Korea, and also leads the global trend regarding the use of TBTs. It is therefore of paramount importance for Korean policymakers to survey and understand the EU’s TBTs, and come up with effective countermeasures accordingly.  

 

The EU is a bloc of separate nations that enforce certain technical standards and certification criteria differently. The diversity of the TBTs adopted by these individual member states presents a further obstacle to Korean exporting companies. In analyzing the EU’s TBTs, it is thus important to understand the policies implemented by the member states of the EU as a confederation of nation-states and the economic impacts this diversity generates. Such understanding is crucial to developing a strategic plan for countering and managing the EU-imposed TBTs.  

 

In this study, we analyze the impact of decisions by different EU member states to loosen and lift TBTs on South Korea’s exports to the region, with a view to finding and providing information necessary for better related policymaking. To this end, we first survey the current status of the TBTs imposed by the EU on imports from outside countries and regions, and the trend of lifting those TBTs that has been occurring. Next, we conceptualize a theory on the impact of this lifting on the prospects for Korean company exports and the Korean economy as a whole, and analyze the optimal tactics for a mutual recognition arrangement (MRA) between South Korea and the EU. Finally, we use a quantitative method to analyze in detail how this lifting of TBTs will actually affect South Korea’s exports to the region.