**<u>Panel C. Reform period only 2</u>**<sup>**nd**</sup> **<u>semester of 2014</u>**

|||Dep|endent varia|ble: indicat<br>|or for import<br>Sample perio|shipment s<br>d: 2013-201|ampled being<br>5<br>Excluding sam|non-compl<br>pling rates|iant<br>larger than 1||
|---|---|---|---|---|---|---|---|---|---|---|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|(10)|
|Sampling rate|-0.016***|-0.007*|-0.017*|-0.015*|0.005|-0.017***|-0.007*|-0.018*|-0.016*|0.006|
||(0.005)|(0.004)|(0.010)|(0.009)|(0.008)|(0.006)|(0.004)|(0.010)|(0.009)|(0.008)|
|Post-reform indicator (2<sup>nd</sup>semester|||||||||||
|of 2014)||||0.020**|0.047***||||0.020**|0.047***|
|||||(0.009)|(0.018)||||(0.009)|(0.018)|
|Sampling rate * Post-reform|||||||||||
|indicator (2<sup>nd</sup>semester of 2014)|||||-0.038***|||||-0.039***|
||||||(0.015)|||||(0.015)|
|Broad product group fixed effects|No|Yes|Yes|Yes|Yes|No|Yes|Yes|Yes|Yes|
|Country fixed effects|No|No|Yes|Yes|Yes|No|No|Yes|Yes|Yes|
|Semester-Year fixed effects|No|No|Yes|No|No|No|No|Yes|No|No|
|Observations|2,259|2,259|2,259|2,259|2,259|2,244|2,244|2,244|2,244|2,244|
|R-squared|0.007|0.047|0.081|0.080|0.087|0.008|0.047|0.081|0.080|0.087|

Notes: Robust standard errors clustered by broad product group-country of origin in parentheses. ***, **, and * indicate significance at the 1%, 5%, and 10% confidence levels, respectively. The sample covers import shipments of food of animal origin (license N853) and animal feeds (license I047).

One potential endogeneity problem in these estimates is the feedback from observed noncompliance to higher rates of sampling and laboratory testing. Evidence of non-compliant shipments might invite more scrutiny. Alternatively, news of non-compliance elsewhere in Europe might trigger increased sampling activity even in the absence of direct evidence of non-compliance on imports into FYR Macedonia. These possibilities could bias the estimated coefficient on sampling rates in either direction. We are not able to address such problems fully, but for purposes of robustness it is useful to exclude from the estimating sample milk and milk products in 2014-2015 (because these were products in which feedback effects were most likely) as well as pet food in 2015 (as the number of planned samples increased substantially likely due to feedback effects). The estimates shown in Appendix Table B1 are similar to those in Table 6, despite a smaller number of observations (since most shipments that are sampled are of milk and milk products and pet food, as seen in Table 3). We also estimate Equations (2) and (3) using lagged rather than contemporaneous sampling rates, as an alternative to mitigate potential endogeneity. The estimates shown in Appendix Table B2 are also similar to those in Table 6.

# **_V.3 Estimates of trade effects_**

We estimate the impact of the FVA reform on trade via D-i-D regressions with corresponding pre-treatment common trend testing regressions relying on the Makstat data set’s import values at the HS 4-digit productcountry of origin-semester-year level.<sup>52</sup>

> 52 While the data are available at a more disaggregated HS 6-digit product-country of origin-month-year level, we decided against using that level of aggregation because the many zero observations at that very low level of aggregation made it nonsensical to estimate pre-treatment trends.

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