Effect of Non-Tariff Measures (NTMS) on cinnamon exports of sri Lanka

Abstract

Spices are among the major agricultural and food products exports which have burdensome Non-Tariff Measures (NTMs). Non-compliance with those had shifted Sri Lanka spices exports including Cinnamon to more regional markets where quality regulation was less stringent. The overall obiective of this research st.,dywis ro analyze effect of NTMs on Cinnamon IHS 090610, HS 090611, HS 090619and HS 090620) exports of Sri Lanka over the period of 2001 to 2015.Trade data and non-tariff data from 2001 to 2015 were obtained from ITC: Trade map and information on NTMs was extracted from United Nations Conference on Trade and Deveiopment IUNCTAD] data base on NTMs. The research employed gravity estimate technique. As per the results of the gravity model estimations GPD of the exporting country, GPD of the importing country, distance among trading partners and NTMs have statistically significant negative effects on value of trade of Cinnamon. Further, 1 %o increase in importer country enforcement of NTMs on Cinnamon decreases Sri Lanka Cinnamon value of trade by 0.005%. Sri Lankan Cinnamon occupies highest market share in Peru (96.8%J, Ecuador (96.7J and Mexico [94%]with reiatively less number of NTMs employed and less trade share in the world. Since, it is particularly important for developing county like Sri Lanka, to compliance with NTM simposed by irnporting county, as countries market access depends to a great extent on compliance with trade regulatory measures such as NTMs.