sification System (NAICS6). Details of the construction of the variables can be found in appendix 2.

The empirical analysis concentrates on the Electronic sector (SIC 36). This sector was chosen because of the availability of EU product standards data. This sector consists of 36 SIC4 Industries that ranges from vehicular lighting equipment and electric lamps to semiconductors and transformers. Table 1 provides a description of the relative level of detail between industries. U.S. exports to the EU in this sector represents roughly 15.0 percent of total exports to the EU between 1992 and 2002.

Table 2 shows firms’ characteristics by exporting and non-exporting firms for 1992 and 1997.<sup>13</sup> Exporting firms are further divided into the set of firms that exports to the EU and those that export to other markets. As expected, exporters —nearly half of the firms— are bigger than nonexporters in terms of average value of shipments and average employment. Around half of exporting firms are multi-plant firms. Interestingly, and consistent with the theoretical model presented in section 2, exporters’ characteristics differ in terms of the market destinations. Exporters to the EU are bigger and export more than exporters to other markets. Finally, there is firm entry into export markets across years, which —I argue— can be partially explained by the role of European product standards harmonization.

# **3.2 Trade Costs Across Industries and Time**

Measuring the extent of product standardization across export market destinations is not an easy endeavor. I used The World Bank EU Electrotechnical Standards Database (EUESDB) to gauge this effect and to assess the degree of harmonization of EU standards with international norms. The EUESDB provides the first catalog of European standards in the electrotechnical sector<sup>14</sup> and their relationship with worldwide standards. The database provides an inventory of the “stock” of active standards<sup>15</sup> issued by the European Committee for Electrotechnical Standardization (CENELEC) and their link with standards issued by the International Electrotechnical Commission (IEC). Product standards are classified according to the International Classification of Standards (ICS) and the database covers the period 1990-2007.<sup>16</sup> See Portugal-Perez et al. (2010) for a full description of the EUESDB and its construction.

An important contribution of my analysis is the creation of a new set of industry level measures of EU product standards for the Electronic sector. There is currently no official concordance

> 13I do not present data for 2002 because the change in industry classification does not allow me to observe entry of new firms into sic4 industries for that year. This issue is not problematic for the empirical application since the model does not predict any role for product standard harmonization in domestic firm entry and exit.

> 14This sector refers to electrical, electronic and related technologies. More information can be found at www.iec.ch.

> 15The primary variable of interest is the total number of standards with which an exporter should comply during a particular year.

> 16A list of the ICS codes can be found at www.iso.org/iso/ics6-en.pdf

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