ABSTRACT
This chapter provides an analysis and practical suggestions to move forward with a deep-integration agenda in the association of southeast Asian nations focused on ‘soft’ regulatory convergence. It analyses the effects of non-tariff measures (NTMs) and standardisation on market structure and trade. The chapter describes various components of the cost-raising effect of NTMs and assesses conceptually their channels of influence using the heterogeneous-firms perspective of modern trade theory. It proposes a new approach to measuring the ‘regulatory distance’ between countries to be bridged by convergence. The stringency effect is the trade-reduction effect that is attributable to the increased cost of doing business due to the presence of NTMs. The fragmentation effect of NTMs is the barrier between markets created by differing NTMs, irrespective of their stringency. The assessment is constrained by key data limitations, including the absence of price data, replaced by trade unit values, and the current state of NTM data collection.
