Enhancing Public Availability of Customs Information
In the Islamic Countries
11
1. CONCEPTUAL FRAMEWORK AND METHODOLOGY
This section describes the conceptual framework and methodology for the report. It first
addresses the use of data, looking at the key databases that are available on public availability
of Customs and trade information. It then moves to the methodologies applied for analyzing the
data, moving from descriptive statistics to an econometric model relating these data to bilateral
trade flows. Finally, there is a discussion of the methodology adopted for the country case
studies in Section 4.
The rationale for the public availability of information was set out in the Introduction, but is
repeated here for easy reference. Trade costs tend to reduce bilateral trade by introducing
frictions that drive a wedge between producer and consumer prices. If information is not freely
available, then there is a cost to traders in obtaining information, which applies over and above
any relevant compliance costs. In other words, the lack of easy access to information can itself
constitute a source of trade costs. As noted above, quantitative simulation evidence based on a
standard gravity model of global trade suggests that full implementation of the first four articles
of the TFA, which focus on public availability of trade-related information, could boost global
trade by just over 13%. This estimate represents the only published incidence of an economic
impact assessment of increased public information availability in the context of the current
trade facilitation climate. There is only a very small literature that deals at all with information
availability in trade, typified by Helble et al. 10 While the thrust of that literature is to show that
information costs indeed affect the trading system, it was written prior to the TFA taking its
present form, and so does not have the concrete impact evaluation sense of the quantitative
information presented in the Introduction. The applied international trade literature has not yet
dealt adequately with the issue of information costs, in large part due to lack of comprehensive
data.
From an economic point of view, producers and consumers are the primary beneficiaries of
measures that reduce frictions like information costs. The reason is that information costs
represent a pure use of economic resources. When information is freely available, those
resources can be used elsewhere in the economy. Information costs are therefore a type of
frictional barrier, as that term is used on the literature on non-tariff measures.11 Based on the
standard analysis of removing frictional barriers to international trade, the benefits primarily
accrue to the private sector, specifically consumers through lower prices and increased
consumption possibilities, and producers through higher output. Intuitively, it is likely that
small businesses have the most to gain from improved trade facilitation, including in the area of
information availability. Large firms can employ specialized freight forwarders who are experts
in trade procedures, but small firms cannot: they face the costs of information search directly,
and in some cases may be unable to overcome it, which means that they cannot engage in trade.
So reducing information-related trade costs is one way of helping small businesses engage more
fully with the trading system. Quantitative research shows that small businesses stand to gain
10 Helble, M., B. Shepherd, and J. Wilson. 2009. “Transparency and Regional Integration in the Asia Pacific.” The
World Economy, 32(3): 479-508.
11 De Melo, J., and B. Shepherd. 2018. “The Economics of Non-Tariff Measures.” In J. De Melo and A. Nicita (eds).
Non-Tariff Measures: Economic Assessment and Policy Options for Development. Geneva: UNCTAD.