Policy and Performance in Customs: Evaluating the Trade Facilitation Agreement

43 Pages Posted: 20 Apr 2016 Last revised: 30 Apr 2018

See all articles by Russell H. Hillberry

Russell H. Hillberry

University of Melbourne - Department of Economics; World Bank - Development Research Group (DECRG)

Xiaohui Zhang

University of Exeter Business School - Department of Economics

Russell Henry Hillberry

Purdue University

Date Written: March 10, 2015

Abstract

The 2013 World Trade Organization ministerial in Bali produced a comprehensive framework agreement on trade facilitation. If fully implemented, the agreement should increase the speed and reduce the cost of moving goods across international borders. But which reforms are most likely to improve these outcomes, how much improvement should be expected, and what might such improvements be worth? This paper adopts the Organisation for Economic Co-operation and Development's trade facilitation indicators as quantitative descriptions of trade facilitation policy. It estimates the impact of the indicators and other variables on the time necessary to clear customs, the associated cost, and a customs performance index. Of the 12 policy bundles, the good governance and impartiality indicator is most clearly related to customs clearance time. A move to best practice in all policies by all World Trade Organization members would reduce the predicted time spent in customs by an average of 1.6 days for imports and 2 days for exports. Using a conservative estimate of the value of time in trade, such comprehensive reforms imply a mean tariff equivalent reduction of 0.9 percentage points on imports and 1.2 percentage points on exports. The same estimates are used to calculate welfare gains of policy reform by World Trade Organization members. Reform in China alone accounts for roughly one-fourth of the global benefits from the Trade Facilitation Agreement.

Keywords: International Trade and Trade Rules, Trade Facilitation, National Governance, Government Policies, Youth and Governance, Governance Indicators, Transport Services, Ports & Waterways

Suggested Citation

Hillberry, Russell H. and Zhang, Xiaohui and Hillberry, Russell Henry, Policy and Performance in Customs: Evaluating the Trade Facilitation Agreement (March 10, 2015). World Bank Policy Research Working Paper No. 7211, Available at SSRN: https://ssrn.com/abstract=2576527

Russell H. Hillberry (Contact Author)

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Xiaohui Zhang

University of Exeter Business School - Department of Economics ( email )

Streatham Court
Exeter, EX4 4RJ
United Kingdom

Russell Henry Hillberry

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

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