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Aid for Trade and the Trade Facilitation Agreement: What they can do for LDCs

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Listed:
  • Jaime DE MELO

    () (Ferdi)

  • Laurent WAGNER

    () (Ferdi)

Abstract

The Aid for Trade (AFT) initiative, launched in 2005 to help developing and especially the Least Developed (LDCs) countries integrate the rules of the World Trade System adopted in the Uruguay Round turned out to be more about mobilizing support for the stalled Doha Round negotiations. A decade later, a broadened AFT agenda has eluded effective evaluation. The recently concluded Trade Facilitation Agreement (TFA) provides an ideal opportunity to narrow the scope of AFT activities to heed the call for “managing for Development results” (MfDR). The paper reviews the evidence on trade costs distinguishing between Least Developed Countries (LDCs) and Landlocked LDCS (LLDCs). The paper also includes new estimates of time in transit for international parcel data that is measured relatively accurately. New estimates provide support for allocating a greater share of AFT funds towards LDCs and particularly towards LLDCs, both groups showing higher trade costs than comparators and less progress in reducing trade costs since 1995. On average, time in customs for imports and exports are also significantly higher for both groups than for their respective comparators. LDCs and LLDCs have systematically lower scores for the components in the new OECD Trade Facilitation Indicator (TFI). These new estimates suggest that a successful implementation of the TFA, defined as moving halfway towards the frontier value of the TFI for the respective country grouping could reduce trade costs for imports of LDCs by 2.5% and by 4.5% for LLDCs. Even though there is more to trade costs than customs management, monitoring implementation of the TFA would be part of the IPoA and a stepping stone towards the concrete trade performance targets that have lacked in AFT activities so far.

Suggested Citation

  • Jaime DE MELO & Laurent WAGNER, 2016. "Aid for Trade and the Trade Facilitation Agreement: What they can do for LDCs," Working Papers P153, FERDI.
  • Handle: RePEc:fdi:wpaper:2959
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    References listed on IDEAS

    as
    1. Sequeira, Sandra & Djankov, Simeon, 2014. "Corruption and firm behavior: evidence from African ports," LSE Research Online Documents on Economics 60833, London School of Economics and Political Science, LSE Library.
    2. Sequeira, Sandra & Djankov, Simeon, 2014. "Corruption and firm behavior: Evidence from African ports," Journal of International Economics, Elsevier, vol. 94(2), pages 277-294.
    3. Beverelli, Cosimo & Neumueller, Simon & Teh, Robert, 2015. "Export Diversification Effects of the WTO Trade Facilitation Agreement," World Development, Elsevier, vol. 76(C), pages 293-310.
    4. Markus Brückner, 2013. "On the simultaneity problem in the aid and growth debate," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 126-150, January.
    5. Jaime DE MELO & Laurent WAGNER, 2016. "Aid for Trade and the Trade Facilitation Agreement: What they can do for LDCs," Working Papers P153, FERDI.
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    Cited by:

    1. Jaime DE MELO & Ben SHEPHERD, 2018. "The Economics of Non-Tariff Measures: A Primer," Working Papers P212, FERDI.
    2. Jaime DE MELO & Laurent WAGNER, 2016. "Aid for Trade and the Trade Facilitation Agreement: What they can do for LDCs," Working Papers P153, FERDI.

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    Keywords

    aid for trade;

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