Trade Facilitation, the Authorized Economic Operator and the Single Window: a Gravity Model Approach

Abstract

This paper was presented at the Inaugural INCU Global Conference “Trade Facilitation Post-Bali: Putting Policy into Practice” 21–23 May 2014 in Baku, Republic of Azerbaijan. The authors analyze the impact of trade facilitation measures on international trade flows. For that purpose a gravity model such as in Wilson, Mann and Otsuki (2005) was used. The authors used a more recent dataset, a panel that included trade data from 2011 and 2012 for 75 countries. In order to measure the impacts of trade facilitation measures, the authors included dummy variables for the presence of an Authorized Economic Operator program, for the existence of a Single Window program in the countries of the sample and for the existence of a Mutual Recognition Arrangement between pairs of countries in analyzed sample. Those three variables were used as a proxy for trade facilitation. The authors discuss the results which show that the presence of an Authorized Economic Operator program and the existence of a Single Window program will improve countries’ trade performance. By contrast, the existence of a Mutual Recognition Arrangement will not necessarily improve the countries’ trade performance. These results suggest that in general trade facilitation measures as a whole will help countries improve their trade performance.