Analysis of the Impact of Non-Tariff Barriers on Foreign Trade Flows in the Russian Economy

There are three main types of external costs associated with international trade flows: transport costs, multilateral tariff regulations and non-tariff restrictions, which include border policies (customs and other controlling procedures) as well as domestic regulations and industry characteristics. This research provides evidence of the role of non-tariff barriers (NTB) in Russian trade within the framework of a gravity model of international trade and the aim of this paper is to show how trade activity depends on non-trade policy factors and the infrastructure quality. The analysis covers Russian Federation’s bilateral trade with foreign countries over the period from 2012 to 2016 and based on Federal Customs Service’s (FCS) panel data on trade among the Russian Federation and other countries, which includes the majority of trade sectors, divided in 5 main aggregated groups – foodstuffs, textile, chemical products, metals and machinery. In general, this paper investigates how the gravity model of trade can be used to account for the presence of NTBs. The empirical evidence from this application show that NTB create significant restrictions and its effects are statistically significant in terms of calculated tariff equivalent.