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Enhancing Public Availability of Customs Information

In the Islamic Countries

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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.

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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.

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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

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Helble, M., B. Shepherd, and J. Wilson. 2009. “Transparency and Regional Integration in the Asia Pacific.”

The

World Economy

, 32(3): 479-508.

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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.