1. WTO WORKSHOP ON RECENT ANALYSES OF THE DOHA ROUND
The OECD Indicators on Trade Facilitation: What is the Impact of TF Measures on Trade Flows and Trade Costs ?
WTO WORKSHOP ON RECENT ANALYSES OF THE DOHA ROUND
Geneva, 2 November 2010

2. OECD measurements of trade facilitation costs and benefits
A quantitative assessment of the benefits of trade facilitation, focussing on the distribution of gains among groups of countries
An analysis of the costs of introducing and implementing TF measures, seeking to understand “the cost implications of proposed measures” in the future agreement
Trade facilitation indicators, focussing on the impact of specific TF measures included in the draft agreement
Benefits analysis– completed in 2003
Costs analysis – completed in 2006
Indicators - ongoing

3. TF indicators - a close connection to the WTO negotiations
Following the structure of the Draft Consolidated Negotiating Text;
Aiming to provide a basis for prioritizing trade facilitation actions by governments
Helping mobilise technical assistance by donors in a targeted way.

4. Eleven Families of measures (plus one)
Information availability
Involvement of the trade community
Advance rulings
Appeal procedures
Fees and charges
Formalities – Documents
Formalities – Automation
Formalities – Procedures
Internal Cooperation
External Cooperation
Consularization
Governance and Impartiality*
Difficult to catch « governance and impartiality », that’s why this component is taken apart.

5. Expanding coverage
Currently including the 30 “old” OECD countries and Hong Kong, China
Seeking to expand to recently acceded OECD countries, OECD’s “Enhanced Engagement” partners and any other country interested in participating, on a voluntary basis.
Database and methodology adapted to developing country concerns
Recent experts workshop with participation of several non-OECD delegates

6. Relative impact on trade flows
These figures are the elasticities (the coefficients) of regression 3 of our gravity model. Only significant coefficients are reported here.
They should be understood as follows : 1% variation of the indicator (a, b…) causes a x% increase of trade flows.
Ex: 1% variation of TFI(a) brings a 0,664% increase in trade flows for manufactures.
The gravity model follows the framework by Anderson and Van Wincoop (2003), integrating the « classical » values of a gravity model together with our indicator.
In order to avoid problems of bias and loss of information, « zero trade » has been replaced by minimal values of 0,

7. Total Economy
Same as previous slide but for total economy

8. Contribution to the reduction of costs
Aggregate TFIs
The decomposition of the variance illustrates the quantitative contribution of each factor (in%) in explaining the variation of trade costs.
Methodology based on Fields (2003) and Chen and Novy (2009). Pmem Instead of collecting direct data on trade costs, trade costs inferred indirectly from trade data (using the gravity framework pioneered by Anderson and van Wincoop (2003) and applying it to industries with heterogeneous trade costs and heterogeneous elasticities of substitution). The model yields a micro-founded measure of bilateral trade integration that controls
for time-varying multilateral resistance and that can be applied to disaggregated panel data.
Results are based on Regression 4 with all indicators.
Here Aggregate TFIs account for 9% of the variation of trade costs.

9. Comparison to other variables
TFIs composition
Aggregate TFIs
These results are quite significant, especially if viewed against estimates (Chen and Novy 2009) that improvements regarding technical barriers to trade taken as a whole would account for 4.5% of trade cost reductions. (However the specification is not the same, different variables are included in the regression)
As a comparison, the “classical” control variables of the regressions account for 0.5% (languages), 2.7% (contiguity) and 8% (distance, which incorporates all transport costs) of cost reduction.
Figures coming from Annex6, TableB, Manufacture.

10. Country, sector & trader diversity
Welfare effects of trade facilitation (million USD and per cent of total)
Uniformity
Country, sector & trader diversity
OECD-only
World-wide welfare gains
38454
43259
14053
- due to direct cost reduction
6041
8250
2650
- due to indirect cost reduction
32413
35009
11402
OECD
69%
35%
103%
OECD Asia-Pacific 8% 7%
22%
OECD Europe
43%
17%
45%
OECD North America
18%
11%
36%
Non-OECD
31%
65%
-3%
Former Soviet Union 2%
-1%
Middle East & North Africa 5% 0%
Latin America & Caribbean
13%
Non-OECD Asia-Pacific
16%
24%
Sub-saharan Africa
Rest of World 1%
Source: OECD Secretariat.
Quick reminder of the 2003 benefits work based on an assumption of 1% trade costs reduction NOT 9%
Effort to understand who would benefit, under what circumstances:
Several scenarios tested, reflecting a hypothetical 1% reduction in worldwide TTCs :
Uniformity scenario (TTCs assumed to fall by 1 % of the value of traded goods in all countries, sectors or types of traders
Diversity scenario, More is done by those behind in order to “close the gap” to best practices by a common percentage
Outcome :
Under uniformity, 69% of gains accrue to OECD,
Diversity leads to a marked shift of the benefits towards non-OECD countries (because they have more room to improve less efficient procedures, have larger share of SME traders and larger part of their trade in agro-food);
So the benefits of trade facilitation accrue primarily to those countries that actively engage in it.

11. Thank you www.oecd.org/trade/facilitation evdokia.moise@oecd.org
OECD Trade Policy Studies Overcoming Border Bottlenecks The Costs and Benefits of Trade Facilitation