Publication: It’s Not (Just) the Tariffs: Rethinking Non-Tariff Measures in a Fragmented Global Economy
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2025-10-22
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2025-10-24
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KEE, Hiau Looi
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Abstract
As tariffs have declined, non-tariff measures (NTMs) have become central to trade policy, especially in high-income countries and regulated sectors like food and green technologies. Although NTMs may serve legitimate goals, they could also sort countries and firms into or out of markets based on compliance capacity and differences in product mix. Documenting recent advances in the estimation of ad valorem equivalents (AVEs), this paper uncovers new patterns of use and exposure of NTMs. High-income countries rely more heavily on NTMs relative to tariffs, while low- and middle-income countries face steeper AVEs on their exports. Firm-level evidence shows that NTMs disproportionately affect smaller firms, leading to market exit and concentration. Poorly designed NTMs can harm productivity and welfare, while coordinated, capacity-aware use can deliver inclusive outcomes. Policy design, transparency, and diagnostics must evolve to reflect the growing role—and risks—of NTMs in a fragmented global trade landscape.
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“Taglioni, Daria; KEE, Hiau Looi. 2025. It’s Not (Just) the Tariffs: Rethinking Non-Tariff Measures in a Fragmented Global Economy. Policy Research Working Paper; 11236. © World Bank. http://hdl.handle.net/10986/43892 License: CC BY 3.0 IGO.”
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