Effects of Non-Tariff Measures on Seafood Exports from Sri Lanka: A Gravity Approach

Seafood exports are an attractive market, which has globally grown over time. However, access to the international seafood market is difficult as seafood is highly regulated by Non-Tariff Measures (NTMs). A better understanding of NTMs is needed to conquer the global seafood market. The objective of this study is to investigate the changes in the structure of NTMs imposed by importing countries on Sri Lankan seafood products and to determine the effects of NTMs on seafood exports from Sri Lanka. A gravity model was estimated using a panel dataset consisting of NTMs at 3-digit level, tariffs, gross domestic product, distance, and population for 107 countries covering 144 seafood products between 2001 and 2017. Results revealed that the most critical NTM types of Sri Lankan seafood exports are Sanitary and Phytosanitary Measures (SPS), Technical Barriers to Trade (TBT), and Pre-Shipment Inspections (PSI). Growing trends of NTMs and decreasing trends of tariffs indicate a substitution of NTMs in place of tariffs. Country-wise analysis of NTMs showed that developed countries imposed a higher frequency of NTMs than developing countries. Results of the gravity model suggested that NTMs, tariffs, and distance to the importer have a negative effect, and the GDPs of the importers and Sri Lanka have a positive effect on seafood exports. Tariff equivalent values were calculated based on the elasticities obtained from the gravity model. Results depict that the total NTMs, SPS, TBT, and PSI increase the price of seafood by 62%, 48%, 15%, and 13% respectively. This implies that different NTMs have different impacts on seafood exports from Sri Lanka. Hence, the impact of each NTM type warrants separate attention during policy formulation.