found that international harmonization of EU standards has a negative effect on imports, although milder than the effect exerted by the EU standards that are not internationally harmonized. A possible explanation for this differentiated effect resides on the benefits of the information that standards convey, regarding industrial requirements, interoperability, or consumer tastes in the importing country (informational effect), which are likely to be higher the more complex a good is. In the case of standards for electronic products, the informational benefits seem to outpace the costs of complying with standards.

The paper is structured as follows. Next section briefly explains the standards development system in Europe as it relates to electronics products. It also provides an overview of the literature on standards harmonization and trade. The third section describes the new World Bank database on electronic standards. We present our empirical model and estimates in section four. Finally, we conclude by providing a summary of questions for further research and policy implications for consideration based on our results.

# **2. Product Standards, Harmonization and the Electronic Sector**

Product standards and technical regulations set out product characteristics, related processes and production methods. The World Trade Organization (WTO) differentiates <mark>them by its compliance degree: a technical regulation is mandatory, while a product standard is voluntary. In practice, this distinction is blurred,</mark> as public agencies often use standards to achieve regulatory goals (Hanson 2005). Standards affecting electronic products cover a wide range of product specifications. They include for example, safety requirements for sewing machines (EN 60204-31) and measures of electromagnetic emissions from integrated circuits (EN 61967)<sup>5</sup> . This paper aims at evaluating whether harmonization of electronic standards with international norms has an impact on trade flows. To our knowledge, this question has not yet been empirically explored.

The following section describes the institutional setting of product standardization in Europe, including reference to the international system for standardizing electronic products. We also summarize the literature on the effects of internationally harmonized standards on trade flows.

# **2.1. Institutional Standard-Setting Processes**

Product standards have been part of trade policy forums for several decades. Since its creation in 1947, the General Agreement on Tariffs and Trade (GATT) contained general provisions relevant to technical regulations and standards. At the conclusion of the Tokyo Round in 1979 thirty-two GATT contracting parties signed the Agreement on Technical Barriers to Trade (TBT Agreement). In the Uruguay Round members elaborated on these rules in 1995 to create a revised TBT Agreement which is binding on all WTO members.

> 5 Even though standards pursue an important number of benefits, such as facilitating exchange of information between producers and consumers, interoperability of products, and promotion of environmental protection and safety, they can also be means of hidden protection. Matutes and Regibeau (1996), Blind (2004), and Swan (2000) provide a discussion on the positive and negative effects of product standardization.

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