In the current context of a slowdown in the global economy and the rise of trade protectionism, technical trade measures (TBT) have become a key factor restricting international trade. In 2023, under the guidance of the Shanghai Municipal Commission of Commerce, the Shanghai Institute of Quality and Standardization studied the development trend of technical trade measures in recent years. This research aims to deeply analyze the impact of TBT on the export of key industries in Shanghai, and put forward corresponding countermeasures and suggestions to enhance the international competitiveness of enterprises.

(I) Overall situation

Overall trend – Detailed analysis of the number of TBT notifications submitted by WTO members and their changing trends.
In 2022, WTO members submitted a total of 2,298 notifications of technical trade measures (TBT) to the WTO, a decrease of 11.07% compared with 2021. Data from 2012 to 2022 show that the overall number of TBT notifications is on the rise.

2、Products Involved – Food, chemical products, and electromechanical products account for the highest proportion of categories.
Among the notifications from various members in 2022, food, chemical products, and mechanical and electrical products accounted for the highest proportion. There were 541 notifications for food, beverages, and tobacco, accounting for 23.5%; 404 for chemical products, accounting for 17.58%; and 313 for mechanical and electrical products, accounting for 13.62%.

3、Initiating Members – Developing members submit far more TBT notifications than developed members.
The number of TBT notifications submitted by developing members (including least - developed members) exceeds that of developed members. In 2022, the submission proportion of developing members reached 83%.

4、Purposes and Reasons – Protection of human health and safety is the primary reason for notifications.
The main purpose of TBT notifications submitted by members is protection of human health and safety, accounting for 65.2%; other purposes include quality requirements, consumer information and labeling, prevention of deceptive practices, protection of consumer interests, and reduction of trade barriers, promotion of trade.

(II) Current Situation of TBT in Shanghais Main Export Destinations

Internationally - recognized Safety StandardsBasic Situation of TBT in Shanghais Main Export Destinations – Display the number of TBT notifications from Shanghais major export destinations and their growth trends.
From 2002 to 2022, the number of TBT notifications submitted by Shanghais main export destinations showed a rapid growth trend, followed by fluctuating development. It increased from 247 in 2002 to 838 in 2022.

Regional Mandatory CertificationsDistribution of Product Areas Involved in TBT Notifications of Major Countries and Regions – Analyze TBT notifications from the U.S., EU, and Japan.

(1) The United States
In 2022, the United States submitted a total of 139 TBT notifications. The products most involved were mechanical and electrical products (33.1%), transportation equipment (19.4%), and chemical products (18.7%).

(2) The European Union
In 2022, the European Union region submitted a total of 82 TBT notifications. The products most involved were chemical products (41.5%), followed by mechanical and electrical products (14.6%).

(3) Japan
In 2022, Japan submitted a total of 39 TBT notifications. The products most involved were chemical products (30.8%), followed by mechanical and electrical products (20.5%).

(I) Impact Intensity of Technical Barriers to Trade on Industries

Internationally - recognized Safety StandardsCalculation Method of TBT Impact Intensity – Explain how to establish a TBT impact intensity calculation formula.

When analyzing the impact of TBT on industry exports, this report adopts a multi - factor comprehensive consideration method to establish a formula for calculating the impact intensity of TBT. The specific elements include:

(1) Number of TBT Notifications:It reflects the impact of the number of new TBT notifications on export enterprises. The larger the number, the more cumbersome it is for export enterprises to respond.
(2) Difficulty of TBT from Different Initiating Members:The cost impact on enterprises caused by the technical requirements of TBT measures and the complexity of conformity assessment procedures. Generally, the difficulty and requirements of TBT measures in developed countries are higher than those in developing countries.
((3) Industry Export Dependence:It refers to the proportion of a industrys commodity export value in the total industrial output value. The higher this proportion, the greater the industrys dependence on exports, and thus the greater the TBT risk it faces.
(4) Rule Consistency:The difference between the technical regulations and standards followed by export enterprises and those of the export destination. The lower the rule consistency, the greater the impact. In the report, the adoption proportion of international standards is used to measure rule consistency.
(5) Key Industries:The report selects the high - tech industries that Shanghai has focused on developing in recent years as the research objects, and determines nine types of manufacturing industries and their main export commodities according to the “Classification of National Economic Industries”.

Based on the above factors, a formula for calculating the overall impact intensity of TBT (INTt) is constructed, taking all factors into comprehensive consideration to quantify the degree to which each industry is affected by TBT.

Regional Mandatory CertificationsAnalysis of the Impact Intensity of TBT on Exports – Discuss the analysis results of TBTs overall impact intensity on the citys exports and its impact intensity on industry exports.

(1) Overall Impact Intensity on the Citys Exports:Through actual calculation, it is found that the overall impact intensity of TBT on Shanghais exports is divided into two stages. It saw rapid growth from 2014 to 2016 and reached its peak in 2016; it showed a stable state from 2017 to 2022.
(2) Impact Intensity on Industry Exports:Especially the analysis of nine key manufacturing industries shows that in 2022, the industries most affected by TBT were, in order, the manufacturing of computers/communications and other electronic equipment, the manufacturing of measuring instruments, the manufacturing of railway/ship/aerospace and other transportation equipment, and the manufacturing of electrical machinery and equipment. The impact intensity data of these industries are presented as specific values.

(II) Quantitative Calculation of the Impact of Technical Barriers to Trade on Exports

Internationally - recognized Safety StandardsModel Setting for the Impact of TBT on Exports – Explanation of the modified gravity model and its analysis of the impact on TBT.

When attempting to quantify the specific impact of TBT on exports, the report avoids simply regarding the costs brought by TBT as losses. Instead, it uses the trade gravity model as an analysis tool and constructs a modified gravity model. The model takes the following points into consideration:

(1) The impact of TBT as a non - tariff barrier is difficult to quantify.
(2) The costs brought by TBT may be offset by changes in market prices or borne by the purchasers in the importing country.
(3) The impact of supply - demand relationships. Even if there are TBT barriers, the exporting country may increase its export volume through comparative advantages and obtain new market shares.
(4) Losses caused by various reasons (such as product quality problems) may be wrongly attributed to TBT.

Regional Mandatory CertificationsEstimation of the Decrease in Shanghais Exports Caused by TBT – Estimation of the reduction in exports caused by TBT for this city.

Based on the modified gravity model, the impact of TBT on the decrease in Shanghais exports was estimated. The model results show the negative impact elasticity coefficient of TBT on Shanghais current exports and its impact on the next period. Based on this, the report gives an estimated value of the decrease in Shanghais exports due to TBT in 2022.

(I) Main Conclusions

The impact of technical trade measures on exports continues to grow

The report analyzes and points out that in the past decade, the number of technical trade measures (TBT) adopted by World Trade Organization member states has been steadily increasing. The number of TBT notifications in 2022 increased by nearly 44% compared with 2013. The impact is mainly concentrated in key industries such as machinery and electronics, chemicals, and food. Among them, health and safety are the main reasons for TBT notifications.

Technical trade measures have an impact of approximately 13 billion yuan on the citys exports

Through the regression analysis of the modified gravity model, it is estimated that the decrease in Shanghais exports due to TBT in 2022 is approximately 13 billion yuan. In addition, according to customs statistics, the new costs incurred by Shanghai due to TBT in recent years have also reached nearly 3 billion yuan per year. This shows that TBT has become the fourth largest trade barrier after exchange rates, tariffs, and licenses.

The citys key industries face a relatively large threat from technical trade measures

The United States, the European Union, and Japan are not only Shanghais major export markets but also the regions that issue TBT notifications most frequently, and these notifications highly overlap with Shanghais major export products. Therefore, key industries such as communications, network equipment, electrical and mechanical, and transportation equipment are more affected by TBT, and the negative impact on exports is relatively more significant.

(II) Policy Recommendations

In response to the above conclusions, the report puts forward a series of recommendations to help Shanghai cope with the challenges of technical trade measures and promote the stability and development of trade:import and export? Improve compliance capabilities:

Enhance enterprises ability to respond to TBT measures, such as providing training, information, and support services to help enterprises understand and meet the technical regulations and standard requirements of target markets.? Optimize the industrial structure:
Encourage industrial upgrading and technological innovation, strengthen the construction of the industrial chain, and improve the added value and market competitiveness of products.? Strengthen international cooperation:
Negotiate technical standards and rules with trading partners to promote international consistency of standards and reduce unnecessary technical barriers.? Improve the early warning mechanism:
Establish and improve the monitoring and early warning system for technical trade measures, and provide enterprises with policy and market change information in a timely manner.? Actively respond to trade disputes:
When encountering unreasonable technical trade barriers, actively use the WTO dispute settlement mechanism to protect the legitimate rights and interests of enterprises.? Diversify markets:
Encourage enterprises to explore diversified international markets, reduce dependence on a single market, and reduce trade risks.The above content is from Shanghai Fair Trade Service.