The Effect of Non-Tariff Measures on Trade in Medical Products During the COVID-19 Pandemic

Countries have responded to the COVID-19 pandemic with different combinations of export controls and import liberalization measures, using non-tariff measures (NTMs). This study aims to understand the effects of NTMs on trade in medical products during the Covid-19 pandemic by obtaining their ad valorem equivalents (AVEs), comparing AVEs for pre-pandemic and pandemic years, and comparing AVEs with tariffs. We consider 59 key Covid-19 medical products listed by the World Customs Organization at the HS six-digit level for 15 countries selected based on their trade volume in Covid-19 medical supplies. We use a panel data set of 15 countries over the period 2002 to 2019 to estimate import demand elasticities for 59 commodities using 3 alternative methods: fixed effects, fixed effects instrumental variables, and system GMM. After estimating import demand elasticities, we estimate two sets of gravity-type import models for each commodity, one for the pre-pandemic year of 2019 and one for the pandemic year of 2020. We use the coefficients to obtain ad valorem equivalents of NTMs for each commodity and country in 2019 and 2020. We then compare the AVEs for the 2 years and with tariffs. We find that NTM AVEs increased during the pandemic, surpassing average tariffs in most countries and across most medical products. Our results show that NTMs were more heavily used during the pandemic and were more effective than tariffs on medical commodities during this period. JEL Classification: F01, F13, F14, F19