The Impacts of Tariff and Non-Tariff Barriers on Manufacturing Trade in Iran

Although free trade will leads to development of comparative advantages, increases efficiency of production factors and creates wealth in the society, but trade barriers remain to use, partially in developing countries. Trade barriers can be divide in two forms of Tariff and non-tariff barriers. Which non-tariff barriers are low transparent and cause more restricting effects. Since Iran is about to join the world trade organization (WTO), it is necessary to evaluate the effects of these barriers on Iran’s trade flow. Due to the growing global demand for industrial goods, in this study the effects of trade barriers on export and import of manufacturing industries have been tried to evaluate. For this purpose, by providing a theoretical framework, first by using of Johanson – Juselius method long-term relationship of import demand and the supply of industrial exports of Iran in the period of (1359-1389) (1978-2010) are estimated. And then by using of error correction model, short-term relationship of import demand and the supply of industrial exports of Iran in the same period are estimated too. The result show that in the long term. Tariff and non-tariff barriers effect on Iran’s industrial trade. However, in the short-term these barriers have no effects on the import and export sector of Iran’s industry.