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Product standards, trade disputes and protectionism

By Daniel Sturm

Abstract

Trade disputes over national product standards are a growing source of tension in the international trading system. The usual pattern is that a country introduces a new product standard for all sales of a good in its local market, which is justified as necessary for consumer or environmental protection. Importers into the local market, however, challenge the standard as a ''disguised barrier to trade'' or ''green protectionism''. The paper develops a two country political economy model to explain such disputes. It is shown how the political process can lead to a ''political failure'' which takes the form of either too many or too few product standards and disagreement between politicians in different countries over the optimal policy. In a second step the model is used to evaluate whether two common proposals to settle or avoid such disputes, mutual recognition of standards and harmonization, can improve the political process

Topics: HF Commerce
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 2002
OAI identifier: oai:eprints.lse.ac.uk:20901
Provided by: LSE Research Online

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