sectors, and types of traders.<sup>6</sup> Therefore, instead of measuring overall welfare impacts of trade facilitation, their study focuses on looking at the distribution of gains among groups of countries and comparing the income effects of trade facilitation in various scenarios determined by different combinations of countries, sectors, and types of traders.

There are a number of other empirical studies which have addressed specific policy changes related to trade facilitation. A study by APEC (1999) finds that “shock” reduction in trade costs from trade facilitation efforts vary from 1 percent of import prices for industrial countries and the newly industrializing countries of Korea, Chinese Taipei and Singapore, to 2 percent for other developing countries. The study estimates that effects of APEC trade liberalization and facilitation would increase the volume of APEC merchandise exports in 1996 by 3.3 percent by 2010. A study by Maskus, Wilson, and Otsuki (2001) evaluates the gains to trade facilitation related to harmonized regulations and standards. Moenius (2004) looks at how bilaterally shared standards and country-specific standards impact on trade respectively, and finds that the former standards raise trade volume, and therefore, harmonization of standards promotes trades. Against author’s hypothesis, the results show that country-specific standards also promote trade on average. To be specific, country-specific standards promote trade in the manufacture sector while they have negative impacts on trade in nonmanufacture sector. This is so because institutional standards like ISO would lower information gathering costs which are particularly high in the manufacture sector.

By employing a general equilibrium model, several studies assess the impact of reduced transaction costs on trade flows. For instance, Baier and Bergstrand (2001) examine the impacts on the trade growth of transport-cost reductions, trade liberalization, and income convergence. The authors find that 8-9 percent of the average growth in real bilateral trade flows among 16 OECD countries during the late 1950s-the late 1980s is explained by transport-cost reductions. A study by United Nations Conference on Trade and Development (UNCTAD 2001) shows that a 1 percent reduction in the cost of maritime and air transport services could increase Asian GDP by some US $3.3 billion. If trade facilitation is considered in a broader sense to include an improvement in wholesale and retail trade services, a 1 percent improvement in the productivity of that sector would lead to an additional gain of US$3.6 billion.

With respect to the impacts of improved customs clearance, Hummels (2001) concludes that each day saved in shipping time in part due to a faster customs clearance is worth 0.5 percent reduction of ad-valorem tariff. In order to analyze the significance of border delays in measuring the welfare impacts of trade liberalization, Cudmore (2004) compares results of a conventional equilibrium model with the one that incorporates border delays. While the former model shows that trade liberalization would result in a welfare gain by 0.044 percent, the latter model indicates that trade liberalization would

> 6 For instance, the authors mention that trade transaction costs (TTCs) range from 1-15 percent of traded goods depending on country’s pre-trade facilitation condition. Furthermore, border costs for agro-food products are 50 percent higher than those for manufacturing products, and that TTCs for small medium enterprises are 50 percent higher than those for big enterprises.

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