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Quantitative Assessment of the Benefits of Trade Facilitation

Author

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  • Peter Walkenhorst

    (OECD)

  • Tadashi Yasui

    (OECD)

Abstract

Trade transaction costs (TTCs) related to border procedures vary depending on the efficiency and integrity of interacting businesses and administrations, the characteristics or kind of goods, and the size and type of businesses. Total costs may be seen as being composed of directly incurred costs, such as expenses relating to supplying information and documents to the related authority, and indirectly incurred costs, such as those arising from procedural delays. Empirical studies suggest that directly and indirectly incurred TTCs each amount to 1-15 per cent of traded goods’ value. Moreover, empirical evidence suggests that TTCs for agro-food products are higher than those for manufactured goods, as agro-food shipments are subject to special border procedures, such as sanitary and phyto-sanitary controls. Also, small and medium-sized enterprises face cost-disadvantages. In light of this diversity in TTCs, the potential for the realisation of benefits from trade facilitation varies across countries, sectors, and types of traders. In cases where best practices are already applied, further efficiency gains will be difficult to achieve. But if border clearance costs are substantially above those encountered under best practices, room for improvement through suitable measures of trade facilitation will tend to exist. The model-based analysis of the economic impacts of trade facilitation carried out in this study differs from earlier research by taking several salient features of import and export procedures into account. In particular, the differing characteristics of direct and indirect TTCs are represented, and country-specific differences in trade facilitation potential are reflected according to empirical information on border waiting times and survey-based evidence on the quality of border processes. In addition, the higher TTCs for agro-food products and small and medium-sized enterprises are incorporated into the analysis. The analysis does not evaluate the economic and trade impact of specific trade facilitation measures or instruments, such as those that might result from a possible future WTO agreement on trade facilitation. Instead, the aim of the assessment is to better represent empirical characteristics of the border process in model-based analysis and to identify those features that crucially affect the results and that, therefore, deserve to be further explored in future analysis. Several scenarios of hypothetical, multilateral trade facilitation efforts are evaluated, focusing on the comparison of scenarios rather than the overall welfare gains that might result from trade facilitation.

Suggested Citation

  • Peter Walkenhorst & Tadashi Yasui, 2004. "Quantitative Assessment of the Benefits of Trade Facilitation," International Trade 0401008, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpit:0401008
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    References listed on IDEAS

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    Cited by:

    1. Matthias Helble & Catherine Mann & John Wilson, 2012. "Aid-for-trade facilitation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(2), pages 357-376, June.
    2. Roberto Miranda, 2012. "Central American Economic Integration - The Impact of a Customs Union with Guatemala on El Salvador’s Economy," Competence Centre on Money, Trade, Finance and Development 1208, Hochschule fuer Technik und Wirtschaft, Berlin.
    3. Prabir De, 2009. "Enhancing Asia's Trade: Transport Costs Matter," STUDIES IN TRADE AND INVESTMENT, in: United Nations Economic & Social Commission for Asia & the Pacific (ESCAP) (ed.), Impact of Trade Facilitation on Export Competitiveness: a Regional Perspective, volume 66, chapter 2, pages 19-70, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    4. Alan Matthews & Keith Walsh, 2006. "The Economic Consequences of the Doha Round for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 37(1), pages 47-69.
    5. Wilson, John S. & Otsuki, Tsunehiro, 2007. "Regional integration in South Asia : what role for trade facilitation ?," Policy Research Working Paper Series 4423, The World Bank.
    6. Peng Bin, 2009. "Enhancing Export Competitiveness through Trade Facilitation in Asia," STUDIES IN TRADE AND INVESTMENT, in: United Nations Economic & Social Commission for Asia & the Pacific (ESCAP) (ed.), Impact of Trade Facilitation on Export Competitiveness: a Regional Perspective, volume 66, chapter 1, pages 1-17, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    7. Bagai, Shweta & Wilson, John S., 2006. "The data chase : what's out there on trade costs and nontariff barriers ?," Policy Research Working Paper Series 3899, The World Bank.
    8. Roumeen Islam & Gianni Zanini, 2008. "World Trade Indicators 2008 : Benchmarking Policy and Performance," World Bank Publications, The World Bank, number 6334, July.
    9. Shepherd, Ben & Wilson, John S., 2009. "Trade facilitation in ASEAN member countries: Measuring progress and assessing priorities," Journal of Asian Economics, Elsevier, vol. 20(4), pages 367-383, September.
    10. Yue Li & John S. Wilson, 2009. "Trade Facilitation and Expanding the Benefits of Trade: Evidence from Firm Leval Data," Working Papers 7109, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..

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    More about this item

    Keywords

    Trade facilitation; customs procedures; documentary requirements; waiting times; CGE modelling;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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