Trade Facilitation and Tariff Evasion

Cosimo Beverelli () and Rohit Ticku
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Cosimo Beverelli: Economic Research and Statistics Division, World Trade Organization

Working Papers from Chapman University, Economic Science Institute

Abstract: This paper investigates the extent to which trade facilitation measures included in the WTO Trade Facilitation Agreement affect tariff evasion. In a dataset covering 121 countries and the whole set of HS6 product categories in 2012, 2015, and 2017, the paper shows that trade facilitation measures that improve legal certainty for traders moderate tariff evasion. Holding tariff rate constant at its mean, one standard deviation improvement in trade facilitation measures related to legal certainty reduces tariff evasion, as measured by missing imports in trade statistics, by almost 12%. In a counterfactual with full trade liberalization, countries with higher scores on facilitation measures related to legal certainty experience larger reductions in tariff evasion than countries with lower scores on these measures, even for similar initial tariff rates. We investigate potential channels and show that improving legal certainty is effective in reducing tariff evasion due to under-reporting of import prices and under-reporting of import quantities, as well as in countries with weakest control of corruption.

Keywords: Tariff; International Trade Agreements; WTO; Tariff Evasion (search for similar items in EconPapers)
JEL-codes: F13 F14 H26 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-int and nep-iue
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:20-24

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