Non-tariff Measures on the Production Network: Analysis on the Forward and Backward Participation in Global Value Chains

Unlike the sound purposes of the NTMs to shape the necessary protection to ensure consumers and environmental safety, the majority of the past literature often addressed the adverse impact of NTMs on international trade. Among the past literature, only a handful of studies dealt with the relationship between non-tariff measures and participation in global value chains. We address two research questions. First, what are the impacts of technical regulations on participation in global value chains? Second, does the impact of technical regulations differ across the sectors? With the recently published non-tariff measures data from UNCTAD-TRAINS, this study constructs the Additional Compliance Requirement Indicator to test whether technical regulations facilitated or sabotaged the backward and forward participation in global value chains. The results indicate that additional burdens for exporters hamper global value chain participation through both backward and forward participation. Moreover, technical regulations in the agriculture sector seem to be more harmonized compared to the manufacturing sector. As technical regulations often serve as sound measures to shape the necessary protection for consumers and environmental safety, harmonization of the technical regulations is preferred rather than mere eradication.