ABSTRACT
This paper assesses the determinants of temporary non-tariff measures (NTMs) in response to COVID-19 and their implications for the agricultural and food trade. Using a control function approach, we show that economic and pandemic considerations played an essential role in implementing such NTMs. Relying on variation between treated and untreated varieties, we estimate a dynamic post-event trade response of 5.4% for import facilitating and -27.5% for export restricting NTMs. After revoking them, their trade effects fade away, implying that these temporary trade policies were effective in achieving the set policy goals, causing only a limited degree of long-term trade disruptions.
ABSTRACT
The COVID-19 pandemic resulted in large and varying declines in bilateral trade flows. This study investigates whether these diverse effects can be explained by differences in trade costs as measured by pre-existing trade policies (e.g. tariffs, non-tariff measures and trade agreements). Results indicate that trade flows subject to higher trade costs declined more than average during 2020. The results also show that trade costs have heterogeneous effects depending on the thickness of trade relationships, with small exporters being relatively more affected by the presence of trade costs. We interpret the results as evidence that the fall in demand during 2020 caused higher-cost and less-established suppliers to be squeezed out of international markets. © 2023 John Wiley & Sons Ltd.