EU green trade barriers on China's export of home appliances Empirical Analysis

[Abstract] EU replaced the United States in 2004, to become China's largest home appliance export market. As the EU countries, especially focusing on product safety and environmental protection, the introduction of green regulations and more stringent green standards, the Chinese home appliance exports to the EU caused by barriers to effect this paper used the gravity model and panel data analysis of the EU green trade barriers on China's household electrical appliances export volume effects.

[Keywords] green trade barriers; appliances, the European Union

1 Introduction

The context of globalization, free trade has become the trend of the times, however, trade liberalization has brought many negative economic externalities, which is particularly prominent point is that the environment breaking outside. In environmental protection and free trade under the dual pressure, through the development of a series of complex and demanding standards of environmental protection systems to limit his country trade barriers on imports of green trade protection in developed countries has become the latest and effective means.

In 2004 the EU replaced the United States to become China's largest home appliance export market. Since then, China's home appliance exports to the EU's continued strong growth, with exports accounting for the same period total exports remained at more than 23%. As the EU countries, especially focusing on product safety and environmental protection, the introduction of green technology more stringent regulations and standards, the Chinese home appliance exports to the EU caused by barriers to effect.


2 Model Construction

Gravity model is based on both the import and export trade flows as the dependent variable, while the analysis of the EU green paper on China's home appliance trade barriers affecting the export trade, this paper uses a gravity model is more appropriate.

This build gravity model equation as follows:
This paper introduces an index variable as a proxy for green trade barriers, not only that the intensity of the green trade barriers, trade barriers and highlight the dynamics of the green this paper defines the green trade barriers index ranges from 0 to 1, assuming that each Directives the weight of the same, since the EU are 0.2.1992 and released a total of five home appliance-related directives, instructions, respectively, for the CE Mark, EMC Directive, Low Voltage Electrical Equipment Directive on Waste Electrical and Electronic Equipment directive on the restriction of electrical and electronic equipment is prohibited in the use of certain hazardous substances directive. green trade barriers index based on EU changes in the implementation of this Directive five years, ignoring the specific implementation instructions for each month and date. Table 1:
As our country and the geographical distance between EU member states is a fixed value, and will not vary over time change, so this variable in the gravity model to explain the exclusion of the distance between the two countries.

In summary, the objective of this article for more empirical analysis to test through the green trade barriers on exports of home appliances in China, China's home appliance exports to the EU in the design of the gravity model of the explanatory variables, not only takes into account the traditional gravity model of export trade factors, namely trade in both per capita GDP, but also highlighted the factors of green barriers, while also taking into account China's home appliance exports to the EU can affect other factors, such as household electrical appliances exported to the EU's tariffs and the exchange rate of RMB against the U.S. dollar.


3 Sample Selection

Data of this study period 1992-2009, the cross-section of Chinese home appliance exports of the ten most important European destinations, were Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Portugal, Spain and the UK.

Explanatory variables being set, the paper chose to microwave ovens, air conditioners, electric fans, televisions, cookers and vacuum cleaners as the object of empirical research in China's home appliance exports to the EU structure, belong to the six major household appliances exports, and only by these five green trade barriers.


4 panel data model of choice

This paper uses panel data structure, because the panel data contains large amount of Information, reducing the possibility of collinearity between variables, is estimated to increase the effectiveness of the first of six home appliances using Eviews6 the equation for the fixed effects regression, and then use the redundant I fixed effect likelihood ratio test is the estimation model or mixed with variable intercept model test results in Table 2:
Then the six random effects regression appliance, use the Hausman test to determine the effect should be fixed or random effects panel data model. Six kinds of household appliances variance of the cross-sectional test is invalid, resulting Hausman statistic set to zero. According to the Hausman test results can not be used to determine the fixed effects model or random effects model. I believe that in 1992-1993 China's home appliance parts for export to the EU member states, resulting in the corresponding year of missing data, resulting in the Hausman test is invalid, usually apply a fixed effects model mother in a small sample, random effects model for a large sample matrix, and this sample matrix for the EU ten Member States are small sample matrix, so this choice of a fixed effects model analysis.


5 Regression results

As the regression results show some multicollinearity, DW value is generally low, the model by adding the AR term correction, in addition to model very significant variable is removed correction model regression results in Table 3:
Table 3 shows the revised gravity model as a whole works well, six appliances gravity model's overall goodness of fit is better. Cookers and vacuum cleaners of the goodness of fit R  2 and the adjusted goodness of fit achieved 0.95. six kinds of home appliance products, large volume statistics F value, corresponding P values ​​are 0, show the revised gravity model regression is significant. revised model compared to the previous DW values ​​increased, that model a reduced-order autocorrelation by adding AR items, rice cooker model DW is 2.0779, very close to 2, indicating that the revised model does not exist in order autocorrelation.

The following explanatory variables for each regression analysis of the results.

First of all, air conditioning, TV, rice cookers and vacuum cleaners, model EU per capita GDP is significantly positive, indicating that the EU economy as the level of development, per capita income of China's imports of air-conditioning, TV, rice cookers and vacuum cleaners demand will also rise, so as to promote the export of the four appliance products. microwaves, and fans of the regression results in the EU per capita GDP of the regression coefficient is negative, but the number is small and not significant. With the growth of the EU economy , consumers of different types of household electrical appliances, especially for high-end appliances increases, China's exports of air-conditioning, TV, rice cookers and vacuum cleaners to choose from more types and higher levels of technology to meet the EU consumer those who demand high-end appliances, microwave and fan the other hand, products are mostly low value-added products, unable to meet the needs of consumers, is caused by the above reasons for the differences.

Second, China's per capita GDP in the air-conditioned model is removed, the other five kinds of home appliance products PGDPjt regression coefficients were significantly positive, indicating that China's per capita GDP growth, to effectively enhance the appliances of production and export capacities, so as to promote China's EU export growth in the number of appliances. China's per capita GDP for every 1% increase in exports of microwave ovens to increase the number of 7.4535 percent. Clearly, as the economic strength of China's home appliance exports to China has a significant role in promoting the EU.

Links to free download http://www.hi138.com again, the EU import tariffs on China's air-conditioning, televisions and cookers have a negative effect of exports to the EU, a significant model in the air-conditioning, TV and power in pot model does not significantly effective in the microwave oven and vacuum cleaner model Tariffjt are positive, whether the European Union import tariffs on exports of home appliances in China is positive or negative impact, Tariffjt the regression coefficient is generally small, which indicates that with the liberalization of global trade process of deepening of tariff has been continuously reduced its impact on International Trade is also growing recession.

Then focus the exchange rate of RMB against the U.S. dollar, in addition to the TV model is removed, the other five kinds of home appliances in its coefficient of regression results are positive. RMB every 1% appreciation against the dollar, China's EU microwave ovens, air conditioners, electric pot and vacuum cleaners export volume will be reduced by 24.7743%, 2.8227%, 5.4520% and 11.1179%. visible appreciation of the renminbi a direct result of China's home appliance export price increased accordingly, for China's microwave ovens and vacuum cleaners, export volumes inhibition effect is very significant, but also confirms China's exports to the EU in the microwave and fan products are mostly low value-added products, once the RMB appreciation, China's microwave oven and the fan in the EU market price advantage will be greatly reduced, the number of direct exports dropped.

Finally, this study is the core of the green barriers in six appliances regression results are significantly negative, indicating that the green trade barriers for EU exports of these six the number of appliances inhibitory effect is very significant. Specific performance: EU green trade barriers for every 1% increase in strength, China's EU microwave ovens, air conditioners, electric fans, televisions, cookers and vacuum cleaners, export volume will decrease 4.8403%, 3.4280%, 4.4833%, 4.4833%, 1.9183% and 1.1389% in the study in this paper six appliances in microwave ovens, air conditioners, fans and TV decline in export volume more than 3.4 percent, the decline in microwave oven close to 5%, and rice cookers and vacuum cleaners are not to decline 2%, vacuum cleaner the smallest decline in export volume is close to 1%. The reason I think this and green trade barriers on the EU classification of household electrical appliances there is a direct link. WEEE Directive electronic and electrical products will be divided into large household appliances, small household appliances, the user equipment and other 10 products.

This paper analyzes the six household electrical appliances, microwave ovens, air conditioners, fans are large household appliances, television sets are user equipment, rice cookers and vacuum cleaners, small household appliances are part of Table 4 shows the WEEE directive for large household appliances parts, materials material recycling rate and recovery, including energy recovery, including self-use rate is the highest, respectively, 75% and 80%, while rice cookers and vacuum cleaners, these two indicators in Table 4 is the product of three the lowest, lower than the large household appliances 25% and 10%. Thus, rice cookers and vacuum cleaners in the regression model results, although the green trade barriers coefficient is negative, but the values ​​are smaller due to the different categories of the WEEE Directive The impact of household electrical appliances are different, and this is EU green trade barriers on a large number of household appliances inhibitory effect is most obvious, and the impact of small household appliances is less reason.


6 Conclusion

In this paper, the gravity model and panel data analysis of the EU green trade barriers on China's microwave ovens, air conditioners, electric fans, televisions, cookers and vacuum cleaners, export volume effects using the index variable of the green trade barriers for the quantification, highlighting the dynamic effects of the green trade barriers of green barriers in six appliances regression results in significantly negative from the decline in the number of household appliances export point of view, the green trade barriers on EU exports of microwave ovens in China the most significant negative impact, followed by are air conditioning, TV, fans, rice cookers and vacuum cleaners. microwaves and rice cookers and vacuum cleaners there is a big decline in export volume difference is due to the EU green barriers on different categories of home appliances differences in the degree of influence caused by .

Green trade barriers with the EU's growing strength, its impact on China's home appliance export trade will also be increasing, companies must pay attention to China's export of home appliances and other major developed countries of the European Union set up the green trade barriers on home appliances, as well as its development dynamic, in order to better adapt to and across the green trade barriers.

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