Enhancing Public Availability of Customs Information
In the Islamic Countries
8
With the entry into force of the WTO Trade Facilitation Agreement (TFA) on February 22nd,
2017, the issue of transparency has gained new impetus. In particular, the first four articles of
the TFA deal with different aspects of transparency, focusing on information availability. It is
widely recognized in different fields of economics that accessing information can imply a
transaction cost, which means that some actors do not fully investigate a situation and as a
result, have to deal with an increased level of uncertainty. That is one factor that can increase
trade costs, and reduce bilateral trade. The objective of the first four articles of the TFA is to
reduce this source of trade costs by promoting a basic, shared structure for the types of
information that are made public, and promoting technology solutions as a way both of realizing
that goal, and doing so in a way that reduces access costs as far as possible.
While the TFA is important, it by no means covers the field in terms of information availability.
The focus of the TFA is largely on customs, but information costs also arise in many other trade
related areas, not only other border procedures, like SPS and TBT measures, but also deeper
regulatory measures that affect the ability of firms to move goods across borders. Countries that
intend to be ambitious in this area therefore need to take the TFA as a basic benchmark for
reform, not an end point. There is a strong case for going beyond the TFA, andmaking the trading
environment in a broad sense as transparent as possible.
Against this background, all countries are interested to know how they perform in comparative
perspective in terms of trade and customs information availability. This process can help
identify potentially simple interventions that could help improve the situation on the ground.
OIC countries are no exception to this general trend. This report is intended to support
discussions within the OIC whereby experience sharing can help promote a shared approach to
improving the availability of customs and trade-related information.
To give an idea of the extent to which improved information availability can affect bilateral trade
flows, it is possible to adapt the structural gravity model of Kumar and Shepherd.5 Those authors
adapt a standard approach due to Anderson et al.6 to look at the impact of implementing the
TFA. By limiting consideration to data on the first four articles of the TFA, which deal with
information availability, it is possible to obtain a simple estimate of the extent to which a
movement to full implementation of those articles could help boost global trade. Data
requirements mean that only 53 countries can be included in the model, but they include all of
the world’s main trading economies, so results are meaningful for excluded countries as well.
Taking results from this model shows that full implementation of the first four articles of the
TFA could boost global trade by just over 13%. Results of this modeling exercise for OICmember
countries, expressed in terms of percentage changes in exports, imports, and real output (real
GDP in gross shipments terms in goods sectors only) are in Annex 2. Given that information costs
associated with trade have received relatively little attention from academics, this finding is
important: the number is clearly of major quantitative significance. Moreover, many of the
interventions required to improve public information availability are relatively low cost, as will
be seen later, which means that the benefit-cost ratio of reform is very strongly positive.
5 Kumar, U., and B. Shepherd. Forthcoming. “Implementing the WTO Trade Facilitation Agreement: From Global
Impacts to Value Chains.” Working Paper, Asian Development Bank.
6 Anderson, J., M. Larch, and Y. Yotov. 2018. “GEPPML: General Equilibrium Analysis with PPML.” The World
Economy, 41(10): 2750-2782.