WHO BEARS THE BURDEN OF U.S. NONTARIFF MEASURES?
DON P. CLARK and DONALD BRUCE*
This article provides evidence on the incidence of U.S. nontariff measures (NTMs)
by investigating the relationship between per capita income and various indicators of
NTM use. Collectively, NTMs are found to bear heavily on products of export interest to the poorer countries. Antidumping duty actions and voluntary export restraint agreements primarily target newly industrializing and industrial nations in
the middle third of the income scale. The overall protection pattern suggests poorer
countries will find it difficult to escape NTMs by attaining higher levels of economic
development. Results also provide insight into country and industry-level determinants
of NTM use. (JEL F0, F1)
I. INTRODUCTION
NTMs are applied to the trade of countries that
have widely different levels of economic wellbeing.1
This article provides evidence on the differential incidence of NTMs on products of
export interest to developing countries by investigating the relationship between per capita
income and various indicators of NTM use.
Included here are import-licensing schemes,
antidumping duty actions, tariff-rate quotas,
price actions, import quotas, and voluntary export restraints (VERs). Results are used to determine whether advanced or poorer countries
are the primary targets of trade restrictions
used by the United States. Findings will also
determine how the use of newer measures
(e.g., VERs, antidumping duty actions) is
influencing the overall pattern of protection
faced by developing countries. Differences in
incidence patterns displayed by voluntary
Considerable attention has been devoted to
the study of industrial nations’ trade policies
and their impacts on developing countries.
Tariffs used by industrial nations have been
found to bear more heavily on products of export interest to developing countries than on
imports from other industrial nations (see,
for example, Balassa 1967; Clark 1981; Deardorff and Stern 1998; Laird and Yeats 1990).
Successive rounds of multilateral trade negotiations have lowered tariffs facing developing
countries in markets of industrial nations. As
tariff barriers have fallen, industrial nations
have used nontariff measures (NTMs) to provide relief from import competition. Some
NTMs have been applied against technologically unsophisticated and unskilled labor intensive products of export interest to
developing countries, and others have been
aimed at exports from the newly industrializing
countries. Although several studies have
shown that NTMs tend to bear more heavily
on products of export interest to developing
countries than on imports from other industrial nations, they have not given adequate
recognition to the disparate manner in which
1. Studies that compare simple average NTM trade
coverage ratios for industrial nations and developing
countries include Walter (1971), Laird and Yeats
(1990), and Clark (1993). Clark (1998) investigates the relationship between NTM trade coverage and the level of
economic development. None of these studies identified
country or industry-level determinants of NTM use. Per
capita GDP and the NTM trade coverage ratio display
a significant correlation coefficient of –0.1028 in the
present study.
*The authors are grateful to the referees for providing
many helpful comments and suggestions.
Clark: Professor, Department of Economics, University
of Tennessee, Knoxville, TN 37996-0550. Phone 1865-974-1706, Fax 1-865-974-4601, E-mail dclark3@
utk.edu
Bruce: Associate Professor, Center for Business and
Economic Research and Department of Economics,
University of Tennessee, Knoxville, TN 37996-4170.
Phone 1-865-974-6088, Fax 1-865-974-3100, E-mail
dbruce@utk.edu
ABBREVIATIONS
GDP: Gross Domestic Product
NTM: Nontariff Measure
SIC: Standard Industrial Classification
VER: Voluntary Export Restraint
274
Contemporary Economic Policy (ISSN 1074-3529)
Vol. 24, No. 2, April 2006, 274–286
Advance Access publication October 5, 2005
doi:10.1093/cep/byj001
Ó Western Economic Association International 2005
No Claim to Original U.S. Government Works
CLARK & BRUCE: THE BURDEN OF U.S. NONTARIFF MEASURES
export restraints and import quotas will be
highlighted.
Several features of the present study represent improvements over earlier attempts to
identify the intercountry pattern of NTM incidence. First, NTM trade coverage ratios are
used to assess the incidence of NTMs imposed
by the United States on imports from countries that span the entire range of per capita
incomes. Previous studies compare simple
average NTM trade coverage ratios for industrial nations and developing countries. Second, the present study of the relationship
between NTM use and the level of economic
development identifies both country- and industry-level determinants of NTM use. Earlier
studies focus only on industry-level determinants. A third improvement pertains to the
scope of country and industry coverage. The
present study is based on 72 countries and
includes more than 370 four-digit U.S. Standard Industrial Classification (SIC) industries.
Other studies use far fewer observations and
a much higher level of industry aggregation.
Fourth, unlike previous studies, the authors
provide estimates for all NTMs and for individual categories of trade control measures,
such as antidumping duty actions, quantitative restrictions, import quotas, and voluntary
export restraints. Finally, the data pertain to
1992 and account for newer trade control
measures such as antidumping duties and
VER agreements. Previous studies use data
from the early 1980s.
II. DETERMINANTS OF NONTARIFF MEASURES
The purpose here is to empirically examine
the incidence of U.S. NTMs on imports from
countries that span the entire per capita income distribution. The authors focus on a regression approach that specifies NTM trade
coverage as a function of per capita income.
For such an approach to yield unbiased estimates, other important determinants of
NTM coverage must be included in the model.
The authors examine a broad array of country
and industry-level determinants of NTM use.
Variable definitions and measurement issues
are discussed in the appendix.
Country-Level Determinants
NTMs are expected to bear more heavily
on products of export interest to developing
275
countries than on imports from other industrial
nations. According to the Heckscher-Ohlin
theorem, each country will export the good
that uses its abundant factor intensively and
import the good that is intensive in its relatively
scarce factor. The abundant factor gains from
trade and the scarce factor loses. Unskilled labor, the true scarce U.S. productive factor, will
have an incentive to secure protection from
foreign competition. As a result, many technologically unsophisticated and unskilled
labor-intensive products of export interest to
developing countries have been targets of protectionist actions. The most restrictive barriers
apply to certain agricultural products and textiles and apparel. Developing countries are not
in a position to retaliate against discriminatory
trade practices of developed countries and do
not have bargaining power to win major concessions in multilateral trade negotiations.
Some forms of protection are product and industry-specific. The export composition of
countries tends to vary as higher levels of economic development are attained. Although the
exact nature of the intercountry pattern of incidence might vary from one trade restriction
to another, the authors expect overall NTM
use will be negatively correlated with per capita
incomes of U.S. trade partners.
Other country-level determinants are not
well established in the empirical literature.
The authors use country characteristics that
can be expected to influence the export potential of foreign countries under the assumption
that import surges will be countered with trade
restrictions. Gross domestic product (GDP) of
trading partners measures production and reflects export capabilities of countries. For example, newly industrialized countries enjoyed rapid
growth in the 1980s and became major targets
of U.S. protectionist actions. NTM use is expected to be positively correlated with the GDP
of trading partners.
Geographical characteristics are expected
to exert important influences over trade. These
characteristics include size and proximity to
other countries, and whether they share a border with the United States. Frankel and Romer
(1999) found countries that encompass large
areas tend to engage in more within-country
trade and less external trade. This suggests
NTM use and area will be negatively correlated. Leamer (1984) argues that area might
also serve as a proxy for resource availability
that would stimulate exports and protectionism
276
CONTEMPORARY ECONOMIC POLICY
in the importer. Costs associated with overcoming distance lead us to expect that countries
in close proximity to the United States will account for more imports than distant countries.
These effects will be most pronounced for border countries. Proximity to trading partners
reflects such factors as seasonal trade, border
trade, regional economic integration, cultural
and language differences, and general market
familiarity. NTM use is expected to be negatively correlated with distance from the trading
partner and higher for border countries. The
authors do not hypothesize a sign for the coefficient on the area measure.
It is widely recognized that countries will
grow and industrialize faster by adopting outward-oriented trade strategies than by using
import-substitution industrialization policies
(see Clark et al. 1993; Dollar 1992). Economies that are open to trade use export-oriented
strategies. Export surges will be countered
with trade restrictions in the United States.
NTM use is expected to be positively correlated with trade orientation of a trading partner.
Major petroleum-exporting countries supply petroleum and related products. They have
not traditionally specialized in the production
and export of manufactured goods. These countries occupy all positions on the income scale.
A dummy variable is used to identify major
petroleum countries. NTM use is expected to
be lower for major petroleum exporters.
Industry-Level Determinants
Considerable research effort has been
devoted to identifying industry-level determinants of trade barrier use.2 Analyses have been
conducted using a wide variety of protectionformation models.3 These studies have emphasized determinants of protection structure
relating to pressure-group formation incentives, group voting strengths, equity considerations, international bargaining positions,
comparative advantage, the economic theory
2. See Pincus (1975), Caves (1976), Helleiner (1977),
Clark (1980, 1987), Ray (1981a, 1981b, 1987), Finger
et al. (1982), Ray and Marvel (1984), Herander and
Schwartz (1984), Feinberg and Hirsch (1989), Trefler
(1993), Lee and Swagel (1997), Gawande (1998), Goldberg
and Maggi (1999), and Gawande and Bandyopadhyay
(2000).
3. See, for example, Olson (1965), Caves (1976), Brock
and Magee (1978), Baldwin (1982), Marvel and Ray
(1983), and Grossman and Helpman (1994).
of regulation, strategic retaliation, endogenous
protection, and historical protection patterns.
Protection-formation models have a common goal. They seek to explain who will have
an incentive to secure protection from import
competition and who will bear the burdens.
Protection is valuable to import sensitive industries. Benefits of trade restrictions are concentrated in politically powerful domestic
industries, and the costs are dispersed throughout the entire economy. Winners and losers
from protection are identified by focusing on
measures of constituent political power which
influence an industry’s ability to secure protection.
Imports serve the same economic purpose
as entry. When market structure characteristics enable firms to enjoy profits at home but
do not deter foreign competition, these firms
will have an incentive to restrict market entry
by foreign rivals (see Stigler 1971; Trefler
1993). Their ability to accomplish this objective will depend on the levels of political influence they possess. Several market structure
characteristics serve as domestic entry barriers.
These include the degree of scale economies,
degree of product differentiation, and the extent of market concentration. Industry size
conveys political power. Comparative disadvantage activities will be candidates for protection, whereas industries insulated from import
competition by high transportation charges
will have less need for trade restrictions.
Scale economies restrict entry by domestic
firms. Industries that enjoy scale economies
are quite susceptible to import growth (see
Clark et al. 1990). Protection will be more
valuable to industries that enjoy benefits associated with large-scale production. Scale economies also lead to industry size and more
political power. NTM use is expected to be
positively correlated with the degree of scale
economies.
The relationship between industry concentration and political power is rooted in Olson’s
(1965) theory of collective goods. Seller concentration determines political power of an
industry’s special interest groups by influencing their ability to mobilize members and by
lowering incentives to free ride. When a few
firms account for a large share of industry
sales, they will find it easier to mobilize support for a common goal, such as securing trade
restrictions. Gains from protection will be
concentrated among members of a small
group rather than being dispersed over many
CLARK & BRUCE: THE BURDEN OF U.S. NONTARIFF MEASURES
firms. NTM use is expected to be positively
correlated with the degree of industry seller
concentration.
Product differentiation serves to restrict
both domestic and foreign entry. Industries
that produce differentiated products will require less protection to compete with foreign
rivals than will industries that produce homogenous goods. Product differentiation is
proxied by the advertising-sales ratio.4 Advertising is intended to differentiate products, exploit quality differences, shift the demand curve
rightward, and/or reduce the price elasticity
of demand for a product. Increased product
differentiation is expected to make it difficult
for foreign producers to penetrate the U.S.
market. As such, NTM use should be negatively correlated with the degree of advertising
intensity.
Industry size or importance translates into
political power. Large industries will be more
successful in securing protection than smaller
ones. Industry size is measured by an industry’s share in total manufacturing employment. NTM use is expected to be positively
correlated with industry size.
Downstream consumers will influence an
industry’s ability to secure trade restrictions.
The sales dispersion index reflects the diversity
of industry consumers. Lower values of the
index are associated with industries that serve
a wide range of industrial consumers who will
exert political opposition to the demand for
trade restrictions. When industries sell to a narrow range of downstream activities, political
opposition from industrial consumers will go
unnoticed or be deemed unimportant. NTM
use should be positively correlated with the
sectoral dispersion index.
Comparative disadvantage industries will
have an incentive to restrict import competition. Two variables are used to measure the cost
disadvantage of an industry. Unskilled labor,
the true scarce U.S. factor, has an incentive
to secure protection from foreign competition.
The average wage serves as a measure of
unskilled labor intensity. Following Finger
et al. (1982), the authors assume the U.S. comparative disadvantage is also pronounced in
physical capital–intensive industries. Physical
4. Clark et al. (1990) found that product differentiation, measured by the advertising-sales ratio, is an effective
deterrent to import growth.
277
capital intensity is measured by the capitalto-labor ratio. NTM use is expected to be
negatively correlated with the average wage
and positively correlated with the measure of
capital intensity.
A natural trade barrier is also expected to
affect an industry’s need for trade restrictions.
International transportation charges influence
tradability of an industry’s products. Bulky
products of relatively low unit values will tend
to incur high ad valorem international shipping charges that tend to reduce the volume
of trade. NTM use should be negatively correlated with ad valorem international transport charges.
III. EMPIRICAL STRATEGY AND RESULTS
Given the fact that the present measures
of NTM coverage are restricted to the interval
between 0% and 100% (inclusive), the multivariate econometric strategy must be able
to account for clustering at the endpoints.
All of the measures of NTM coverage have
observed minima at 0 and maxima at 100
(summary statistics in the appendix). Consequently, the authors use two-limit tobits for
multivariate analysis that pertain to NTM
coverage.
Because the focus is on the incidence of
nontariff trade barriers across the per capita
income distribution, it is useful to begin with
an in-depth investigation of the importance of
using an appropriate set of control variables.
Table 1 presents the first set of tobit results,
using the measure of all NTMs. These results
illustrate the importance of including both industry and country characteristics in a model
explaining NTM coverage.
Column (1) presents a pared-down specification that includes only GDP and a quadratic
of per capita GDP, in addition to a constant.
In the absence of both industry and country
effects, per capita GDP exerts an increasingly
negative influence on the NTM coverage rate.
However, including the country effects, as
shown in column (2), changes the curvature
of the effect of per capita GDP from increasingly negative to decreasingly negative (i.e.,
U-shaped). Interestingly, including industry
variables in the absence of country effects,
as in column (3), reverts to the increasingly
negative influence. The baseline specification,
presented in column (4), suggests a more
278
CONTEMPORARY ECONOMIC POLICY
TABLE 1
Tobit Analysis: All Nontariff Measures
Variable
GDP ($b)
Per capita GDP ($th)
Per Capita GDP Squared ($m)
(1)
0.041
(0.004)
1.997
(0.859)
0.070
(0.031)
(2)
***
**
**
ln(Area)
ln(Distance)
Borders U.S.
Trade orientation
Major petroleum exporter
0.048
(0.004)
6.082
(0.935)
0.042
(0.032)
5.690
(1.212)
22.381
(3.294)
164.684
(19.046)
15.344
(5.632)
32.477
(11.054)
(3)
***
***
***
***
***
Advertising-sales ratio
Employment share
Sales dispersion index
Average wage
Capital-labor ratio
Transport Charge
SE
N
***
346.666
(28.812)
169.874
(4.724)
15,167
***
***
Seller concentration ratio
189.207
(7.078)
172.024
(4.789)
15,167
***
***
Scale economies
Constant
0.041
(0.004)
1.059
(0.834)
0.087
(0.030)
(4)
***
114.844
(31.814)
0.418
(0.146)
10.589
(132.633)
5060.884
(682.740)
14.124
(9.417)
0.007
(0.000)
0.481
(0.031)
165.228
(26.919)
21.733
(11.751)
162.421
(4.499)
15,167
***
***
***
***
***
***
*
0.047
(0.004)
4.668
(0.902)
0.013
(0.031)
3.891
(1.185)
22.083
(3.197)
149.070
(18.224)
16.979
(5.514)
31.298
(10.824)
117.007
(31.446)
0.399
(0.145)
1.931
(131.751)
5190.687
(678.277)
15.913
(9.355)
0.007
(0.000)
0.478
(0.031)
151.671
(26.832)
191.310
(28.922)
160.462
(4.440)
15,167
***
***
***
***
***
***
***
***
***
***
*
***
***
***
***
Note: Entries are tobit coefficients with SEs in parentheses. Asterisks denote statistical significance at the 1% (***),
5% (**), and 10% (*) levels.
U-shaped relationship between per capita GDP
on NTM coverage.5
Figure 1 is based on results in column (4) of
Table 1. It illustrates the relationship between
per capita GDP and NTM coverage. This figure shows the average predicted value of NTM
coverage for each level of per capita GDP in
the data set. The authors have superimposed
a cubic trend line to provide a more detailed
5. Joint significance tests reveal the coefficients representing the quadratic effect of per capita GDP are highly
statistically significant in all specifications. Experimentation with alternative functional forms (i.e., higher-order
polynomials), yielded qualitatively identical results.
analysis of this relationship. NTM coverage
is above 8% for industries in the poorest countries. Trade coverage falls gradually through
the first third of the distribution, falls less
gradually for the middle portion of the distribution, and then falls more rapidly for countries with the very highest per capita GDP
levels. This pattern of NTM use cannot be determined from a simple comparison of average
NTM trade coverage ratios pertaining to industrial nations and developing countries. Collectively, NTMs are found to bear heavily
on products of export interest to the poorer
countries. This finding is not necessarily an
CLARK & BRUCE: THE BURDEN OF U.S. NONTARIFF MEASURES
279
FIGURE 1
All Nontariff Measures
16
14
Coverage Rate (%)
12
10
8
6
4
2
0
0
5000
10000
15000
20000
25000
30000
35000
Per Capita GDP
indication of deliberate action on the part of
the United States to harm these countries.
The United States’ comparative disadvantage
is most pronounced in unskilled labor–intensive and technologically unsophisticated manufactured goods and agricultural products
that are exported by poorer countries. Import
quotas, tariff-rate quotas, price actions, and
import-licensing schemes restrict trade in agricultural and manufactured products of export
interest to these countries. The finding that
NTM coverage falls less gradually over the
middle portion of the distribution may be
due to the offsetting effects of antidumping
duty actions and VERs that are primarily targeted at the higher-income newly industrializing countries and industrial nations.
Fortunately, the general patterns of both
sign and significance for the remaining variables, with the exception of the advertisingsales ratio, seem to be unaffected across the
various specifications. Looking first at the
country characteristics in column (4) of Table
1, one can find that NTM coverage increases
with GDP of a trading partner. Exports from
countries that encompass smaller geographic
areas tend to face higher levels of NTM coverage in the U.S. market. This finding supports
the contention of Frankel and Romer (1999)
that geographically large countries tend to
engage in more within-country trade and less
external trade. It does not support Leamer’s
(1984) view that area might serve as a proxy
for resource availability that would stimulate
exports.
The finding pertaining to the distance variable counters the authors’ expectations. NTM
coverage is found to increase as the distance
between the United States and a trading partner increases. The U.S. border countries of
Canada and Mexico have much higher levels
of NTM coverage. Outward-oriented trade
strategy, as reflected in the trade orientation
measure, exerts a positive influence on NTM
coverage, whereas major petroleum exporters
face lower NTM coverage in the U.S. market.
Coefficients on industry-level variables,
with one exception, are statistically significant
and have the expected signs. Two domestic entry barriers exert significant influences on the
pattern of NTM use. NTM coverage is higher
for industries that enjoy both scale economies
and high seller concentration.6 Protection is
6. Trefler (1993) and Gawande (1998) found significant negative relationships between a measure of NTM
use and scale economies. Significant negative relationships
between NTM use and seller concentration are reported in
Ray (1981a, 1981b) and Marvel and Ray (1983). Trefler
(1993) found a significant positive relationship between
NTM use and seller concentration.
280
CONTEMPORARY ECONOMIC POLICY
more valuable to industries that exhibit these
characteristics. Scale economies and seller
concentration also convey political power.
Seller concentration preserves gains from
protection for a smaller number of domestic
firms. Advertising intensity is not found to
exert a significant effect on NTM coverage.
NTM use is also higher for large, politically
important industries, as measured by the industry’s share in total manufacturing employment.
The significant positive coefficient on the
sectoral dispersion index shows industries
serving a wide range of downstream industrial
consumers will face more political opposition
to their demands for protection. NTM use
is higher for U.S. industries that have a pronounced comparative disadvantage, as reflected in lower average wage levels or higher
capital intensity.7 Ad valorem international
transportation charges, a natural trade barrier,
exert a negative impact on NTM trade coverage ratios.
Although the results in Table 1 provide
key insights into the general incidence of
NTMs, our data permit a similar assessment
for various categories of NTMs.8 Included
here are antidumping duty actions and quantitative restrictions. The latter is largely comprised of import quotas and VERs. Table 2
presents full specifications for these NTM
categories.
The authors begin the discussion of Table 2
by focusing on the per capita GDP results,
which vary dramatically across the four categories. Antidumping duty actions and VERs
display similar incidence patterns. Per capita
GDP exerts an inverted U-shaped effect on
NTM coverage in each of these cases. In other
words, NTM coverage increases with per
capita GDP up to some maximum point, and
then falls as per capita GDP increases beyond
this maximum. Conversely, quantitative restrictions and import quotas display more of a
U-shaped relationship between per capita income and NTM coverage.
Figures 2 through 5 illustrate relationships
between per capita GDP and NTM coverage
for antidumping duties, quantitative restric7. Lee and Swagel (1997) established a significant positive relationship between NTM use and the average wage.
Ray (1981a, 1981b) found a significant positive relationship between NTM use and capital intensity.
8. The number of country-industry observations for
automatic and nonautomatic licenses, tariff-rate quotas,
and price actions is too small to permit an assessment
of their separate incidences.
tions, import quotas, and VERs. Each figure
shows the average predicted values of NTM
trade coverage for each level of per capita
GDP. The authors have superimposed a cubic
trend line to provide a more detailed picture
of the incidence of these measures across the
entire per capita income scale.
Over the years, industrial nations have increased their reliance on bilateral or discriminatory measures, such as antidumping duty
actions and VERs to counter import surges
from specific supply sources that are not covered by import quotas, licensing schemes, price
actions, or tariff-rate quotas. Because antidumping duty actions can be focused on a specific product from a particular supply source,
they are often referred to as made-to-measure
protection. The mere threat of antidumping
duty actions and the potential harassment
involved in the investigative procedures can
lead foreign exporters to raise prices and restrict shipments (see Herander and Schwartz
1984). Antidumping duty actions and VERs
display an inverted U-shaped relationship with
per capita GDP in Figures 2 and 5. NTM coverage of these measures appears to rise with per
capita income of trading partners, reaching
a peak at relatively high per capita income levels and falling with per capita GDP thereafter.
These measures appear to be primarily targeted at countries in the middle and upper
portions of the income scale. Japan, Canada,
Taiwan, and Thailand have the most trade subject to U.S. antidumping duties. VERs cover
trade in certain motor vehicles, machine tools,
various electronics products, primary and fabricated metal products, and some footwear.
The United States negotiated VER agreements
with 27 countries. Japan and Korea were primary targets. Comparing Figure 1 with Figure
4 provides an indication of how antidumping
duties and VERs influence the overall NTM
incidence pattern. Trade coverage for all
NTMs falls less gradually than trade coverage
for import quotas throughout the middle and
high-income parts of the per capita income
scale due to the offsetting effects of antidumping duties and VERs that primarily target
newly industrializing countries and industrial
nations.
Figures 3 and 4 show that quantitative
restrictions and one major component, import
quotas, are heavily biased against products of
export interest to the poorer countries. Trade
coverage in each of these cases falls more
CLARK & BRUCE: THE BURDEN OF U.S. NONTARIFF MEASURES
281
TABLE 2
Tobit Analysis: Individual Nontariff Measure Categories
Variable
GDP ($b)
Per capita GDP ($th)
Per capita GDP squared ($m)
ln(Area)
ln(Distance)
Borders U.S.
Trade orientation
Major petroleum exporter
Scale economies
Seller concentration ratio
Advertising-sales ratio
Employment share
Sales dispersion index
Average wage
Capital-labor ratio
Transport charge
Constant
SE
N
Antidumping Duty
Actions (AD)
0.049
(0.006)
2.335
(1.189)
0.171
(0.047)
2.508
(1.492)
22.815
(4.343)
107.951
(20.534)
6.570
(6.573)
55.895
(21.932)
270.112
(118.669)
0.221
(0.189)
761.106
(209.217)
4010.740
(632.422)
71.282
(12.848)
0.0003
(0.000)
0.061
(0.035)
258.309
(59.465)
399.012
(43.753)
110.475
(5.849)
15,167
***
**
***
*
***
***
**
**
***
***
***
*
***
***
Quantitative
Restrictions (QR)
0.045
(0.007)
7.306
(1.350)
0.0263
(0.048)
5.056
(1.664)
24.528
(4.547)
166.547
(26.875)
31.621
(7.923)
40.059
(14.831)
273.897
(41.314)
0.355
(0.220)
128.818
(187.172)
4303.239
(1090.914)
33.617
(13.324)
0.0120
(0.001)
0.458
(0.054)
158.127
(38.310)
131.908
(41.105)
198.767
(7.067)
15,167
***
***
***
***
***
***
***
***
***
**
***
***
***
***
Import Quotas
(IQ)
0.036
(0.008)
10.508
(1.498)
0.1010
(0.053)
7.573
(1.771)
33.647
(4.858)
233.155
(28.801)
37.852
(8.495)
43.809
(15.612)
331.997
(42.774)
1.131
(0.244)
310.692
(196.303)
2155.153
(1331.611)
10.900
(14.659)
0.0169
(0.001)
0.578
(0.062)
198.464
(42.525)
73.880
(43.571)
194.030
(7.389)
15,167
***
***
***
***
***
***
***
***
***
***
***
***
*
Voluntary Export
Restraints (VER)
0.051
(0.013)
16.267
(3.753)
0.504
(0.128)
20.781
(5.901)
40.073
(13.810)
244.210
(83.902)
0.560
(19.825)
1.831
(42.312)
989.604
(662.344)
4.679
(0.864)
595.527
(606.232)
3096.337
(2024.164)
132.382
(34.286)
0.009
(0.002)
0.166
(0.109)
53.364
(54.857)
592.415
(127.398)
233.142
(24.040)
15,167
***
***
***
***
***
***
***
***
***
***
Note: Entries are tobit coefficients with SEs in parentheses. Asterisks denote statistical significance at the 1% (***),
5% (**), and 10% (*) levels.
rapidly throughout the per capita income scale
than is the case for all NTMs. Agricultural,
textile and apparel products face import quotas in the U.S. market. Import quotas apply
to milk, cheese, peanuts, cotton, some sugarcontaining products, and other agricultural
products. Textile and apparel quotas apply
to imports from many developing countries.
Trade subject to import quotas is highly concentrated among the lower-income countries.
The primary targets of import quotas include
China, India, Thailand, Taiwan, Korea, and
Hong Kong.
Patterns of NTM incidence for import quotas and quantitative restrictions (including
import quotas, nonautomatic import licensing
schemes, and VERs) are quite similar. This finding suggests that import quotas play a major
role in shaping the overall pattern of NTM
use across the entire per capita income scale.
Comparing Figure 3 with Figure 4 shows how
VERs influence the country incidence pattern
associated with all quantitative restrictions.
Trade coverage for quantitative restrictions
falls more gradually than trade coverage for
import quotas throughout the middle and
282
CONTEMPORARY ECONOMIC POLICY
FIGURE 2
Antidumping Duty Actions
6
Coverage Rate (%)
5
4
3
2
1
0
0
5000
10000
15000
20000
25000
30000
35000
Per Capita GDP
upper-middle portions of the per capita income
scale. The middle and upper-middle income
bias associated with VERs is illustrated in
Figure 5.
Turning to other covariates in Table 2, it is
interesting to note that only two of the control
variables are found to have consistent effects
on NTM coverage across the various catego-
ries. Specifically, country-level GDP and the
industry-level employment share are both associated with higher degrees of NTM coverage
regardless of the NTM category. All other
factors have different effects by NTM type,
revealing the importance of conducting analysis of determinants of NTM coverage at a
disaggregated level.
FIGURE 3
Quantitative Restrictions
16
14
Coverage Rate (%)
12
10
8
6
4
2
0
0
5000
10000
15000
20000
Per Capita GDP
25000
30000
35000
CLARK & BRUCE: THE BURDEN OF U.S. NONTARIFF MEASURES
283
FIGURE 4
Import Quotas
18
16
Coverage Rate (%)
14
12
10
8
6
4
2
0
0
5000
10000
15000
20000
25000
30000
35000
Per Capita GDP
IV. CONCLUSIONS
This study examines the relationship
between per capita income of U.S. trade partners and various indicators of NTM use. Collectively, NTMs are found to bear heavily
on products of export interest to the poorest
countries. This finding is not necessarily an
indication of deliberate action on the part
of the United States to harm these countries.
The U.S. comparative disadvantage is most
FIGURE 5
Voluntary Export Restraints
2.5
Coverage Rate (%)
2
1.5
1
0.5
0
0
5000
10000
15000
20000
Per Capita GDP
25000
30000
35000
284
CONTEMPORARY ECONOMIC POLICY
pronounced in unskilled labor–intensive and
technologically unsophisticated manufactured goods and agricultural products
exported by these countries. Trade coverage
for all NTMs falls gradually throughout
the first third of the per capita income distribution, falls less gradually for the middle of
the distribution, and then falls more rapidly
for the countries with the highest per capita
income. Quantitative restrictions and import
quotas display an incidence pattern similar to
that associated with all NTMs.
The finding that NTM coverage falls less
gradually over the middle portion of the per
capita income distribution is due to the offsetting effects of antidumping duty actions and
VERs that primarily target newly industrializing countries and industrial nations in the middle and upper-middle portions of the per capita
income scale. This incidence pattern suggests
poorest countries will not be able to escape
NTMs by attaining higher levels of economic
development.
Results also provide insight into country
and industry-level determinants of the overall
incidencepatternofNTMs.Exportsfromcountries with higher GDPs, outward-oriented
countries, and those sharing a border with
the United States face higher levels of NTM
coverage. Distance between the United States
and a trading partner also increases NTM
use. Geographical area and specialization in
petroleum exports exert negative effects on
NTM coverage. Country characteristics have
more diverse effects on protection patterns displayed by the various NTM categories than do
industry-level characteristics.
Industry-level results are consistent with
predictions of political economy models. Scale
economies, seller concentration, manufacturing employment share, and capital intensity
exert positive impacts on the overall pattern
of NTM incidence. The average wage and
ad valorem international transport charge
lower NTM coverage. Industry characteristics
have similar effects on protection patterns
exhibited by tariffs and all NTMs.
APPENDIX: DATA DEFINITIONS AND SOURCES
Nontariff Measures
The incidence of NTMs on imports is assessed by using
the trade coverage ratio, which measures the share of
imports (by value) subject to a given NTM. The value
of imports covered by a given NTM was determined by
matching imports at the tariff-line level from each supply
source with information on product and country-specific
NTMs applied in 1992, recorded in the United Nations
Conference on Trade and Development (UNCTAD)
database on Trade Control Measures. Trade coverage
figures were aggregated to the four-digit SIC level, and
trade coverage ratios were calculated for all NTMs and
various NTM categories. Shortcomings inherent in the
use of trade coverage ratios are discussed in Clark and
Zarrilli (1992).
The ‘‘all NTMs’’ category includes all NTMs applied
at the border by the United States for which information is
included in UNCTAD’s database. Included here are paratariff measures such as tariff-rate quotas, import licensing
schemes, antidumping duty actions, price actions, import
quotas, and VERs. Quantitative restrictions restrict the
quantity of imports of a particular good from all sources
or from a single supply source. Nonautomatic licenses,
import quotas, and VERs are included in this category.
Antidumping duty actions include investigations to determine whether imports are sold at less-than-fair value, imposing duties to offset dumping, and measures taken by
importers to counter effects of dumping. Trade coverage
ratios are also calculated for individual NTMs such as antidumping duty actions, import quotas and VERs.
Country-Level Determinants
Figures on GDP and per capita GDP pertain to 1992
and are taken from United Nations (1997). Area in thousands of square miles is from Frankel and Romer (1999).
Distance in kilometers is from Fitzpatric and Modlin
(1986). The border country dummy variable equals 1 for
Canada and Mexico and 0 otherwise. Following Stone
and Lee (1995) and Balassa and Bauwens (1987), trade orientation is proxied by the residuals from a regression of
per capita merchandise trade (exports plus imports) on
per capita income and population. Data are from United
Nations (1997). Major petroleum exporters are identified
in United Nations Conference on Trade and Development
(2001).
Industry-Level Determinants
The 1987 four-firm seller concentration ratio is
reported in U.S. Bureau of the Census (1992). Minimum
efficient scale, the scale economy measure, is defined as
average sales per firm for firms in the midpoint class size
(defined by product shipments) as a percent of shipment
values. The capital-to-labor intensity ratio is expressed
in millions of U.S. dollars of capital per worker. The
average wage is total employee compensation per worker.
The employment share is the share of total manufacturing
employment accounted for by an industry. These figures
pertain to 1992 and are from the U.S. Bureau of the
Census (1995). Ad valorem international transport
charges are from the U.S. Bureau of the Census (1993).
The sectoral dispersion index DSPHi ¼ Rnk¼1 s2i;k ;
where si,k is the share of industry i’s sales to two-digit
consuming industry k. See Lustgarten (1975). This variable and the advertising-sales ratio pertain to 1987 and
are calculated from a U.S. Department of Commerce
(1994) publication.
CLARK & BRUCE: THE BURDEN OF U.S. NONTARIFF MEASURES
285
TABLE A1
Summary Statistics
Variable
All nontariff barriers
Antidumping duty actions
Quantitative restrictions
Import quotas
Voluntary export restraints
GDP ($m)
Per capita GDP ($)
ln(Area)
ln(Distance)
Borders U.S.
Trade orientation
Major petroleum exporter
Scale economies
Seller concentration ratio
Advertising-sales ratio
Employment share
Sales dispersion index
Average wage
Capital-labor ratio
Transport charge
Mean
SD
6.356
0.838
5.046
4.529
0.495
363,387
11,935
4.367
8.637
0.049
0.033
0.054
0.026
37.641
0.019
0.002
0.462
32,940
68.685
0.086
22.634
7.776
20.638
19.624
6.610
666,740
10,588
2.398
1.214
0.215
0.522
0.226
0.073
19.436
0.018
0.003
0.265
9,947
89.468
0.121
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