World Trade Review

Table of Contents - July 2012 - Volume 11, Issue 03 (Symposium Issue: Standards and Non-Tariff Barriers in Trade)  

Review Article

North–South trade and standards: what can general equilibrium analysis tell us?

IAN SHELDONa1 c1

a1 The Ohio State University

Abstract

The tension between standards being a response to market failures versus creating barriers to trade characterizes much of their economic analysis. This article explores in more detail the link between international trade and standards based on resolution of a public bad(s) problem. Specifically, a general equilibrium setting is sketched out, drawing on existing analysis in the trade and environmental economics literature, and designed to capture some key stylized facts and basic hypotheses concerning North–South trade where standards are targeted at negative externalities in production. The key conclusions to be drawn are that while a clear theoretical foundation exists for the hypothesis of ‘standards as barriers’ to trade, and the likely benefits of aid for trade programs, this is not the case for the hypothesis of ‘barriers as a catalyst’ for trade, pointing to the need for further research on the latter hypothesis.

Correspondence:

c1 E-mail: sheldon.1@osu.edu