Trade Fraud and Non-Tariff Measures
46 Pages Posted: 27 Jan 2022
Similar to tariffs, non-tariff measures (NTMs) may induce trade fraud when they are restrictive. This paper examines whether discrepancies observed in the official trade statistics of importing and exporting countries are partly due to trade fraud associated with evading border NTMs. To capture the restrictiveness of NTMs, this paper estimates the ad valorem equivalent (AVE) with importer-exporter-product variations. This paper presents a theoretical model and empirical evidence showing that discrepancies increase with AVEs, consistent with the trade fraud due to traders intentionally mis-declaring countries of origin and product classifications in order to evade border NTMs. The results are driven by homogeneous products and the trade between developed and developing countries.
Keywords: trade discrepancies, non-tariff measures, ad valorem equivalent of NTMs, tariff evasion, trade fraud
Suggested Citation: Suggested Citation