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Implementation in Pakistan of the US Integrated Cargo Container Control program: Trade‐facilitating or not?

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  • Salamat Ali
  • Richard Kneller
  • Chris Milner

Abstract

Using novel firm‐level data, we examine the trade effect of the changed security arrangements for Pakistan's exports to the US following 9/11. The pre‐shipment scanning facility introduced by the Integrated Cargo Container Control (IC3) program, following the 100% scanning requirement, affected the beyond‐the‐border and behind‐the‐border costs of exporting. We exploit the exogenous nature of this shock and its specificity to one export market in the identification strategy. The estimates show Pakistan's exports dropped by between 8% and 11% because of IC3 but that the effect was heterogeneous across firms depending upon their pre‐IC3 port of departure and whether they switched following IC3. We also show that the export fall would have been even greater if 100% scanning had been introduced without a pre‐shipment scanning facility. Mise en place du Programme de contrôle intégré des conteneurs de fret au Pakistan : aide ou inconvénient au commerce? Dans le sillage des événements du 11 septembre 2001, et grâce à de nouvelles données d'entreprises, nous examinons les conséquences commerciales liées aux modifications sécuritaires s'appliquant aux exportations pakistanaises à destination des États‐Unis. Le dispositif de scannage préalable avant expédition, introduit par le Programme de contrôle intégré des conteneurs de fret (programme IC3) et respectant les exigences de scannage intégral, eut des conséquences sur les coûts d'exportation en amont et en aval des frontières. Afin d'établir une stratégie d'identification, nous exploitons la nature exogène de ce choc ainsi que sa spécificité propre à un marché d'exportation particulier. Nos estimations montrent qu'en raison de la mise en place de l'IC3, les exportations pakistanaises diminuèrent de 8 à 11 %. Néanmoins, l'effet s'est avéré hétérogène pour les entreprises en fonction de leur port d'expédition avant l'IC3, et le cas échéant, de leur nouveau port d'expédition après l'IC3. Nous montrons également que les exportations auraient chuté davantage si le scannage intégral avait été introduit sans un système de scannage préalable avant expédition.

Suggested Citation

  • Salamat Ali & Richard Kneller & Chris Milner, 2021. "Implementation in Pakistan of the US Integrated Cargo Container Control program: Trade‐facilitating or not?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(3), pages 1136-1167, November.
    • Handle: RePEc:wly:canjec:v:54:y:2021:i:3:p:1136-1167
    DOI: 10.1111/caje.12533
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