withdraw any national standard that might conflict with them. If a manufacturer chooses to produce a product according to these standards, the product carries the CE mark, which implies compliance with the “essential requirements”. On the other hand, manufacturers may use other technical specifications when manufacturing a product provided there is documentation certifying that the product meets the “essential requirements” formulated in the Directives. Nevertheless, anecdotal evidence suggests that the prohibitive costs of the latter option push exporting companies to favor compliance with CENELEC standards (see, for instance, Hanson (2005) and the 2010 U.S. Report on Technical Barriers to Trade). At the global level, the International Electrotechnical Commission (IEC) is the organization that prepares and publishes international standards for the electronic sector.

To examine the impact of the trade liberalization in this NTB, I use the CENELEC-IEC agreement to harmonize European product standards to international norms as a policy experiment. The Lugano Agreement, signed in 1991, and the Dresden Agreement, signed in 1996, sought to expedite the adoption of international standards in the EU as well as to facilitate the adoption of EU standards internationally. This synergy has taken the number of purely European standards as a share of all standards published by CENELEC from 50 percent in the early-1990s to 25 percent in 2008. In this context, the decrease in the share of idiosyncratic standards is a liberalization in an NTB to international trade.

Product standards are an important, albeit often overlooked, actor in the international trade arena. Swann (2010) and WTO (2005) present an excellent overview of product standards in the multilateral system and its impact on trade. The literature regarding the effect of harmonization of standards on international trade is relatively recent. Moenius(2004) provides the first valuable contribution by challenging the commonly held view that country-specific standards act as a barrier to trade whereas harmonized standards encourage trade.<sup>2</sup> In a gravity framework, the author uses a panel data set with data on country-specific and bilaterally standards for 471 industries in 12 OECD countries during the period 1980-1995. He finds that bilateral share standards are favorable to trade while country-specific standards tend to hinder trade in simple goods (including agricultural products, food, beverages, and mineral fuels) and promote trade in complex goods (like machinery and electronics). The author then offers an explanation for the divergent effect of country-specific standards based on the dual impact of standards in production and trade costs: While standards may impose additional costs on exporters as it maybe necessary to adapt products for specific markets (cost-effect), they also can reduce exporter’s information cost if they convey relevant market information which would be costly to gather in the absence of the standard (informational-effect). Moenius (2004) results imply that the cost-effect outweighs the informational-effect for simple products while the opposite is true for complex products. In

> 2Moenius’ work focuses mostly in bilateral harmonization of standards rather than in international harmonization of standards.

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