Enforcement of non-tariff measures: does it matter?

Abstract

We show, theoretically and quantitatively, that the way non-tariff measures (NTMs) are enforced matter for trade and welfare. If enforcement entails a per shipment cost, in equilibrium NTMs take the form of an implicit an-valorem tariff and affect both the intensive and extensive margins of trade. Per shipment costs resulting from NTMs are particularly damaging for smaller, less productive exporters. We argue that NTMs should be enforced in ways that do not create per shipment costs.