Estimating Non-Tariff Barriers on International Fresh Apple Trade: An Application of Stochastic Frontier Gravity Model

This thesis evaluates the impact of non-tariff barriers on the trade of fresh apples using a stochastic frontier specification of the gravity model. The empirical analysis is based on the transactions between twenty major fresh apple trading countries during the period 2001 to 2013. The estimation results suggest that trade flows of fresh apple are mainly affected by total productions of exporter countries, GDP per capita of importer countries, populations in importer countries, and signing status of FTAs. The stochastic frontier gravity model allows us to identify the efficiency of fresh apple trades of each country. The value of trade efficiency determines the deviation of actual trade from the frontier estimated. The average export and import efficiency of fresh apples are 9.27% and 8.80%, respectively, which are considered to be ineffective. This result suggests that non-tariff barriers are taken an important role in trade restrictions of fresh apple. Furthermore, average values of export and import efficiency of fresh apples for developed countries are 10.72% and 9.45%, respectively. But developing countries only contain 6.57% of export efficiency and 7.59% of import efficiency. This indicates that the impact of non-tariff barriers on developing countries is greater than on developed countries. In addition, fresh apple trade of each country has suffered varying extent of influence from non-tariff barriers. For example, the average import efficiency of United Arab Emirates is 23.83% but it’s only 0.18% in Argentina. This may due to the measurement criterions of non-tariff barriers are different among each country. Thus for sustainable development in agricultural trade, further integration and developing uniform standards for non-tariff barriers should be considered.