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Trade Facilitation and the EU-ACP Economic Partnership Agreements: Who Has the Most to Gain?

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Abstract

The aim of the paper is to assess the potential benefits from trade facilitation in terms of increased trade flows both on average and specifically for the six regional groupings of ACP countries negotiating Economic Partnership Agreements (EPAs) with the EU. We use data from the World Bank’s Doing Business Database on the time required to export or import as indicators of cross-border transaction costs. A gravity model on two-way bilateral trade between 22 EU countries and 106 developing countries is estimated using a sample selection approach. We find that time delays both on the part of the exporter and the importer on average significantly decrease trade flows. We also find that this relationship is not linear: an extra day of waiting has smaller marginal effects if the time requirements are already high. On average, lowering border delays in the exporting country with one day from the sample mean would yield an export increasing effect of about 1 percent, while the same reduction in the importing country would give an import increase of about 0.5 percent. More specifically, we also find that countries negotiating in the EPA groups for SADC, West Africa, Eastern and Southern Africa (ESA), and the Caribbean have negative and significant effects from export transaction costs, as do EU and non-ACP developing countries. The effects for the SADC, West Africa and ESA groups are the largest. Countries in the Pacific, SADC, West Africa and the EU have significantly negative effects from import transaction costs, with the effects being largest for the two former groups. The results are generally robust to a number of alternative estimation methods such as Poisson estimation, IV estimation and the sample selection approach suggested by Helpman, Melitz and Rubinstein (2007).

Suggested Citation

  • Persson, Maria, 2007. "Trade Facilitation and the EU-ACP Economic Partnership Agreements: Who Has the Most to Gain?," Working Papers 2007:8, Lund University, Department of Economics, revised 01 Oct 2007.
  • Handle: RePEc:hhs:lunewp:2007_008
    Note: This paper has been published under the titel "Trade Facilitation and the EU-ACP Economic Partnership Agreements".
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    References listed on IDEAS

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    1. David L. Hummels & Georg Schaur, 2013. "Time as a Trade Barrier," American Economic Review, American Economic Association, vol. 103(7), pages 2935-2959, December.
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    Cited by:

    1. Chris Milner & Oliver Morrissey & Evious Zgovu, "undated". "Trade Facilitation in Developing Countries," Discussion Papers 08/05, University of Nottingham, CREDIT.
    2. Duc Minh Pham & Deepak Mishra & Kee-Cheok Cheong & John Arnold & Anh Minh Trinh & Huyen Thi Ngoc Ngo & Hien Thi Phuong Nguyen, 2013. "Trade Facilitation, Value Creation, and Competiveness : Policy Implications for Vietnam's Economic Growth, Summary Report," World Bank Other Operational Studies 16786, The World Bank.
    3. Márquez-Ramos, Laura & Martínez-Zarzoso, Inmaculada & Suárez-Burguet, Celestino, 2012. "Trade policy versus trade facilitation: An application using good old OLS," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-38.
    4. Cipollina, Maria & Salvatici, Luca, 2007. "EU and developing countries: an analysis of preferential margins on agricultural trade flows," Working Papers 7219, TRADEAG - Agricultural Trade Agreements.
    5. Prabir De & Abdur Rob Khan & Sachin Chaturvedi, 2008. "Transit and Trade Barriers in Eastern South Asia: A Review of the Transit Regime and Performance of Strategic Border-Crossings," Working Papers 5608, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    6. Martinez-Zarzoso Inma & Márquez-Ramos Laura, 2008. "The Effect of Trade Facilitation on Sectoral Trade," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-46, September.
    7. Duc Minh Pham & Deepak Mishra & Kee-Cheok Cheong & John Arnold & Anh Minh Trinh & Huyen Thi Ngoc Ngo & Hien Thi Phuong Nguyen, 2013. "Trade Facilitation, Value Creation, and Competiveness : Policy Implications for Vietnam's Economic Growth, Volume 1," World Bank Other Operational Studies 16784, The World Bank.
    8. Paras Kharel & Anil Belbase, 2010. "Integrating Landlocked Developing Countires into international trading system through trade facilitaion," Working Papers 8410, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    9. Itzhak Goldberg & Lee Branstetter & John Gabriel Goddard & Smita Kuriakose, 2008. "Globalization and Ttechnology Absorption in Europe and Central Asia : The Role of Trade, FDI, and Cross-Border Knowledge Flows," World Bank Publications, The World Bank, number 6445, June.
    10. Persson, Maria, 2008. "Trade Facilitation and the Extensive and Intensive Margins of Trade," Working Papers 2008:13, Lund University, Department of Economics.

    More about this item

    Keywords

    Trade Facilitation; EU; ACP; Economic Partnership Agreements; Gravity Model; Sample Selection;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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