Key messages

4 Regulatory Cooperation:

Reducing the Trade Costs of Nontariff Measures

Ana Fernandes and Kevin Lefebvre, with inputs from Hiau Looi Kee and Anabel González

KEY MESSAGES

• Nontariff measures (NTMs)—such as sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT)—have gained importance as obstacles to trade. • Although Latin American and Caribbean countries impose fewer

SPS measures and TBT on imports than other regions, they face such measures in destination markets. Preferential trade agreements (PTAs) that integrate SPS and TBT rules play a key role in reduction of NTM costs. • Th e inclusion of certain SPS and TBT provisions in Latin American and Caribbean PTAs promotes regulatory convergence, which boosts bilateral exports, particularly of intermediate inputs by the region’s countries. • Firm-level evidence for Chile, Colombia, and Peru shows that the boost to exports from including SPS and TBT provisions in PTAs is largest for small fi rms because such PTAs reduce the fi xed entry costs of exporting created by NTMs, which are especially onerous for small exporters. • Some PTAs have been more successful than others in implementation of

SPS and TBT provisions, but some countries have found other innovative approaches for regulatory cooperation.