International trade, non-tariff measures and climate change: insights from Port wine exports

The purpose of this study is to investigate international trade determinants, paying special attention to variables related to climate change and non-tariff measures (NTMs), as they shape more and more world trade flows, with particular incidence on globalised goods, such as wine.

Based on panel data of Port wine exports to 60 countries, between 2006 and 2018, a gravity model has been estimated through Poisson pseudo-maximum likelihood. Explanatory variables include NTMs, mean temperature, temperature anomaly, gross domestic product (GDP), exchange rate, ad valorem equivalent tariffs and home bias.

The findings show that exports are inversely related to both mean temperature and temperature anomaly in importing countries. Regarding NTMs, it is found that only part of them are trade deterrent. Additionally, purchasing power in importing countries is one of the main determinants of Port wine exports.

The results show that, besides traditional economic variables, policymakers and wineries should include in their exports' decisions the impact of variables related to climate change and NTMs.

The novelty of this paper is to incorporate the impact of climatic variability of importing countries as a determinant of international trade of wine. Most former studies inspired of the gravity model consider explanatory variables such as GDP and exchange rate, and more recent ones started to consider NTMs too, however, this study may be the first paper to include the impact of climate change (quantified by mean temperature and temperature anomaly in importing countries) on exports.