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Technical measures to trade in Central America : incidence, price effects, and consumer welfare (English)

Despite the widespread tariff reductions sparked by the Dominican Republic-Central America Free Trade Agreement, borders in the region remain thick, with many hurdles standing in the way of regional trade. Although anecdotal evidence suggests that nontariff measures raise trade costs and inhibit trade in the region, little is known about the magnitude of these economic effects. This paper uses a newly collected data set to quantify the incidence of sanitary and phytosanitary measures and technical barriers to trade in the region and benchmarks it with other parts of the world. The results indicate that the Central American region has the lowest prevalence of technical nontariff measures in the world. However, there is significant heterogeneity of trade-related regulations in Central America; for instance, 48 percent of Salvadoran imports are subject to at least one nontariff measure, compared with just 16 percent of Honduran imports. The paper estimates the impact of these technical measures on border prices and finds that the price impact of sanitary and phytosanitary measures is equivalent to an ad-valorem tariff of 11.6 percent. This price-rising effect is further investigated by looking in detail at the impact of sanitary and phytosanitary measures on the prices of beef, chicken meat, bread, and dairy products in Guatemala. The impact is estimated to be equivalent to an ad-valorem tariff of 68.4 percent, 51.4 percent, 22.0 percent, and 5.0 percent, respectively. The paper shows that efforts to streamline key sanitary and phytosanitary measures affecting these products by, for example, reducing the cost and time required to obtain sanitary registries, would likely reduce the Guatemalan urban extreme poverty rate from 5.07 percent to 4.91 percent.

Details

  • Author

    Kelleher,Sinead Patricia, Reyes,Jose Daniel

  • Document Date

    2014/05/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS6857

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Central America,

  • Region

    Latin America & Caribbean,

  • Disclosure Date

    2016/04/20

  • Disclosure Status

    Disclosed

  • Doc Name

    Technical measures to trade in Central America : incidence, price effects, and consumer welfare

  • Keywords

    Poverty Reduction & Economic Management;coverage ratio;Sanitary and Phytosanitary Measures;international trade in good;reduction in transaction cost;Technical Barriers to Trade;Cost of Doing Business;registration requirement;domestic price;agricultural and food;law and regulation;import value;protection of human;country fixed effect;cost of production;impact on price;regional trading partners;freight on board;ad valorem equivalent;cost of compliance;international trade agenda;trade policy instrument;liberal trade policy;composition of import;impact on poverty;physical capital stock;general equilibrium model;average tariff rate;degree of autonomy;series of meetings;cost of goods;enforcement of regulation;availability of data;household survey data;label requirement;border price;product registration;dairy product;chicken meat;notification requirement;tariff equivalent;certification requirement;point estimate;Intra-regional Trade;confidence interval;price effect;economic sector;regional coverage;common colonizer;small country;import product;low prevalence;simple average;inspection requirement;nontariff measure;trade effect;tariff reduction;trade datum;product quality;import good;authorization requirement;trade costs;anecdotal evidence;mutual recognition;customs tariff;partner country;product category;negative externality;econometric technique;arable land;consumer price;agricultural product;trade legislation;poverty impact;basic price;microbiological criterion;restricted use;baseline regression;estimation equation;missing data;product level;scatter plot;trade price;tolerance limits;tariff line;common language;total trade;Disease Risk;world price;cross-country comparison;adjustment factor;trade regulation;marking requirement;geographic region;positive externality;household expenditure;standard error;product specific;aggregate welfare;international harmonization;market structure;standards harmonization;trade flow;administrative procedure;logistical difficulties;international classification;empirical literature;price gap;world trade;global welfare;Trade Policies;public demand;reducing uncertainty;content requirement;regressive tax;edible oil;Trade Restrictiveness;development policy;informational asymmetry;business community;export procedure;regional competitiveness;cost burden;basic consumption;import price;extreme poverty;classification code;empirical study;nontariff barrier;data availability;open access;price impact;multilateral reduction;protectionist intent;domestic interest;plant health;university college;negative effect;high frequency;cross-country regression;urban household;estimate impact;equal weight;Regulatory Bodies;regulatory environment;regulatory body;

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Citation

Kelleher,Sinead Patricia Reyes,Jose Daniel

Technical measures to trade in Central America : incidence, price effects, and consumer welfare (English). Policy Research working paper,no. WPS 6857 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/452311468015026987/Technical-measures-to-trade-in-Central-America-incidence-price-effects-and-consumer-welfare