Synthesis report
I. Overview of the related literature
Research on trade facilitation and its impact is generally scant, particularly in
developing countries.5 In the WTO context, “Trade facilitation” is generally defined as “the
simplification and harmonization of international trade procedures”, where trade procedures
are the “activities, practices andformalities involved in collecting, presenting, communicating
andprocessing data required for the movement ofgoods in international trade”.6 However,
the definitions used in the literature vary widely and many trade facilitation studies use
broader concepts and definitions of trade facilitation covering, for example, quality of port
infrastructure and services.
Quantification of the economic benefits associated with trade facilitation represents
a major challenge due to the lack of reliable and precise data and the complexity of the
underlying issues. A recent review of the literature in this area was conducted by OECD
(2005). Quantitative studies generally show that reductions in trade transaction costs
(resulting from implementation of TFMs at the border) may result in global welfare gains of
the same or larger magnitude than those expected from tariff liberalization (e.g., APEC,
2002). These studies also generally show that no, or very few, countries would lose from
global trade facilitation and that developing countries have the most to gain from
implementation of TFMs, although important variations can be expected across countries,
sectors, and types of traders (Francois et al., 2005; OECD, 2003).
Different approaches and methodologies have been used to measure/study the
impact of trade facilitation, including the following:
• Estimation of the effect of improvement of trade facilitation modelled as
technical progress in trading/transport activities (i.e., improvement in the
productivity of the transport sector) on income/welfare in classic Computable
General Equilibrium (CGE) models. Recent models also incorporate a logistic
tax modelled as a reduction in import and export charges/duties, which results
in adjustments in the government sector (because of loss of duty), as in
OECD (2003).
• Estimation of the effect of changes in selected trade facilitation indicators
(e.g., Port Efficiency Index) on trade flows using gravity models. For example,
Wilson et al. (2004) develop a gravity model that accounts for bilateral trade
flows in manufactured goods in 2000-01 between 75 countries, using traditional
factors (such as GDP, distance, language, and trade areas) and augmented
by the TFMs/indicators for each country. This method allows examination of
the impact of categories/groups of TFMs on trade (e.g., TFMs related to port
efficiency).
5 Please refer to the relevant ARTNeT country studies in Part II and the accompanying CD-ROM for
reviews of the local/national literature on trade facilitation.
WTO (1998) G/L/244; UNESCAP (2002).