Heterogeneous impact of non-tariff measures on import margins through global value chains: Firm-level evidence from China

Technical measures, such as sanitary and phytosanitary measures and technical barriers to trade were prevalent in the past decades and have induced an increasing number of trade disputes among countries. This paper investigates the impact of technical measures on Chinese firms' import margins and trade unit values by focusing on how these impacts vary across firms with different positioning in the global value chains (GVCs). The analysis relies on panel data of Chinese firm-level imports over 2008-2013 and an original dataset on non-tariff measures provided by the United Nations Conference on Trade and Development (UNCTAD). The results show that the impact of technical measures differs across importer positioning in the GVC. While importers with a small downstreamness are negatively impacted by both intensive and extensive margins, technical measures benefit the firms located further downstream in the global input market at the expense of new entrants. Further, I find evidence that products subjected to more technical measures are imported at a higher price, while firms with larger downstreamness are able to mitigate a rise in prices.