# **Section I.  Introduction**

Each year hundreds of millions of dollars of development aid are spent supporting trade facilitation reforms.<sup>1</sup> Despite the enormous scale of the spending, relatively few of the specific reforms undertaken so far have been subject to scrutiny via formal impact evaluations. Those evaluations that have been undertaken have primarily concerned reforms involving national customs agencies.<sup>2</sup> As far as we know, this paper is the first impact evaluation of a border management reform undertaken by a “technical agency,” in this case the Food and Veterinary Agency (FVA) of the Former Yugoslav Republic of Macedonia (hereafter “FYR Macedonia”). The FVA is responsible for oversight of food safety and animal health laws in FYR Macedonia. In that capacity the FVA is responsible for oversight of imported products related to this mandate.

The reform we study is the introduction of a risk-based approach to sampling goods for laboratory testing that was undertaken by the FVA in 2014. The reform is similar in spirit to the introduction of riskbased inspection procedures undertaken by customs agencies, and it attempts to better target sampling and laboratory testing activities toward the import shipments with the highest risks while reducing the overall rate of sampling and testing activity. The reform of inspection regimes in customs agencies has been subject to some formal study.<sup>3</sup> But the operational capabilities and the mandates of technical agencies like the FVA are usually quite different from those of a customs agency. Typically, the technical agencies are not as well funded as customs. They also have important oversight responsibilities in the domestic sphere, which means that they are often not as focused on managing imports as are customs agencies. These differences are important, and mean that a study of reform in a technical agency provides new knowledge about the effectiveness of trade facilitation reforms in a very different setting.

We face a number of data challenges related to the organizational structure of the FVA’s control procedures and its data collection mechanisms. Because the mandate of the FVA differs from that of a standard customs agency we also have an opportunity to ask new questions. As in past studies of risk management in customs, we study changes in the frequency of oversight and (to the extent possible) the effects of the reform on trade flows. In this study, we also have access to planned rates of product sampling, so we are able to study the degree to which sampling activities in the field match those outlined in the _ex ante_ sampling plan. We also have data on the outcomes of laboratory tests, which allows us to study the

> 1 The Organization for Economic Cooperation and Development (OECD) maintains an Aid for Trade Facilitation database, which reports $505.9 million disbursed in 2013 and $480.8 million disbursed in 2014 (both figures in constant 2013 dollars). Data available at http://www.oecd.org/dac/aft/Aid%20for%20Trade%20facilitation%20database%202%200.pdf 2 See Fernandes et al. (2015), Fernandes et al. (2016), Carballo et al. (2016b) and Carballo et al. (2016d).  Carballo et al. (2016c) looks at the effects of postal trade reform using customs data, while Carballo el al. (2016a) investigate a multi-agency reform using customs data. 3 Fernandes et al. (2015) conduct an evaluation of the introduction of risk management by the Albanian customs and study its effects on imports.

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