that import procedures in many PAFTA countries involve fewer documents and signatures today than in 2001. The improvement reflects customs reforms and the greater use of electronic transmission of documents, which both speeds the clearance of goods and may reduce the scope for additional informal payments (Table A-6).

The majority of interviewed companies in Egypt, Syria, Tunisia and the UAE consider that difficulties in dealing with customs and other trade officials are less today compared to 3 years ago. In contrast, the majority of respondents in Jordan, Lebanon, Morocco, Saudi Arabia and Yemen are of the view that the difficulties in dealing with customs are about the same as 3 years ago (Table A-7).

Informal payments to customs officials (bribes) are another form of real trade costs. The questionnaire addressed questions about informal payments by traders to Customs officials and other trade related officials when companies deal with import clearance and inspection. About 31 percent of the respondents report they do not pay at all. Another 33 percent pay no more than 1 percent of the value of imports as “informal payments” to Customs officials. Relative to the 2001 survey this is an improvement of 8 percentage points. About 14 percent of the interviewed companies in Lebanon note that “informal payments” can be in kind. Although matters have clearly improved, there is widespread agreement among the interviewed companies that additional payments remain a common practice in many PAFTA countries (e.g., Egypt, Lebanon, Morocco, Syria, Tunisia, and Yemen) (Table A-8).

# **3.4. Respondents’ Estimates of Trade Costs**

Estimates of the costs of trading (excluding statutory customs duties and para-tariffs such as import surcharges) are around 6 percent, on average, ranging from 2 to 11 percent of the value of imports. The estimated trading costs in the UAE are 3.5 percent, on average, compared to 7 percent in Morocco and 11 percent in Egypt. Here also there has been improvement since 2001, on the order of a 4 percentage point decline on average. The 2001 survey found that trade costs estimates averaged about 10.6 percent of the value of trade (Table A-9).

The surveyed companies were asked in a summary question to rank the most costly obstacles encountered in their trading activities. The results suggests that costs associated with road transit and maritime transport are the most important, followed by domestic taxes on imports and procedural requirements for imports (customs clearance, inspection and other bureaucratic trade control procedures). This ranking contrasts with the results obtained in the 2001 survey which ranked customs duties as the most important factor, followed by domestic taxes and customs clearance, and then public sector corruption (Table A-10).

# **3.5. Traders’ Assessment of Bilateral (Pair-wise) Trade Barriers**

Respondents were asked to rank the extent of restrictiveness of seven categories of regulatory and administrative measures affecting road transportation to and from neighboring countries. Road transportation is an important mode of freight transport in many PAFTA countries. Countries with limited access to the sea, such as Jordan and Iraq, rely mainly on road transportation for trade. Moreover, some countries are transit hubs for intra-regional trade by road – e.g., Jordan and Saudi Arabia are hubs for goods going to Iraq and the Gulf.

The most binding constraints for shipping or transiting via road to reach PAFTA markets are considered to be customs and inspection procedures, in particular frequent changes in paperwork requirements at a border without prior notification, followed by border closures and blocked roads for political and security reasons, and entry visa restrictions (Table A-11).

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