Effects of Technical Barriers to Trade on Vietnam’s Export Performance and Global Value Chain Participation

Abstract

This study investigates the effects of Technical Barriers to Trade (TBTs) on Vietnam’s exports, with a focus on participation in Global Value Chains (GVCs). Utilizing panel data on product-level exports from 2007 to 2019 and employing a modified gravity model, we assess the impact of TBTs by considering its way to participate GVC. We find that TBTs are positively associated with Vietnam's export performance. Nonetheless, in sectors where Vietnam is deeply engaged in backward GVC participation, in low value-added activities such as assembly, TBTs incur additional compliance costs, which mitigate the positive effects on exports. Moreover, TBTs implemented by OECD member countries raise compliance costs for Vietnam due to stringent TBT requirements, thereby reducing Vietnam’s exports regardless of the sectors in which Vietnam is highly involved in GVCs. However, TBTs from non-OECD countries in sectors where Vietnam participates in forward GVC stimulate import demand by providing positive signals regarding quality, which enhances Vietnam’s exports.