EFFECTS OF NON-TARIFF MEASURES ON BRAZIL'S PARTICIPATION IN GLOBAL VALUE CHAINS: 2012-2020.
Global Value Chains, Non-Tariff Measures, Brazil, PPML, Trade Policy.
Economic literature shows that many developing economies have benefited from Global Value Chains (GVCs). However, regarding Brazil, its participation in GVCs is relatively lower compared to other global economies and even to those in the Latin American region. Concerning tariff and non-tariff measures (NTMs), Brazil has focused on both trade defense measures and export support measures. This dissertation sought to analyze the effects of non-tariff measures on Brazil's participation in GVCs. To this end, the Poisson Pseudo Maximum Likelihood (PPML) econometric methodology was used, analyzing 18 sectors in a set of 75 countries from 2012 to 2020. The main results reveal a positive effect of the bilateral regulatory distance between Brazil and its partners, measured by the BIRD index, on Brazil's traditional trade. This may reflect the fact that, as Brazil's export basket is predominantly composed of primary goods, non-tariff measures, especially sanitary and phytosanitary ones, can play a competitive differentiating role between Brazilian exporting companies that meet these compliance requirements and foreign companies. However, when viewed through the lens of GVCs, the results were ambiguous, as the regulatory distance indicator showed a positive effect on Brazil's forward participation in GVCs and the opposite effect on its backward participation. Thus, this research suggests that Brazil should make efforts to harmonize its NTMs toward international regulatory standards.