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GTAP Resource #4359

"Competitiveness and Macroeconomic Impacts of Reduced Wait Times at U.S. Land Freight Border Crossings "
by Avetisyan, Misak, Nathaniel Heatwole, Adam Rose and Bryan Roberts

The gains from free trade are well established. Most studies on interference with it focus on tariffs, quotas, or subsidies. However, various costs of regulation to support the orderly flow and safety of trade also interfere with achieving efficient outcomes. These include direct costs of administering and monitoring trade, as well as unintended spillover effects resulting from delays. Ideally, these transactions costs would be minimized.

Freight transportation coming into the U.S. is subject to inspections by officials of the U.S. Customs and Border Protection (CBP) agency for contraband and for national security purposes. These inspections cause delays that translate into an increased cost of doing business for shippers and their customers directly and for international trade indirectly. Although the border wait times are relatively short, the sheer volume of trade translates into potentially large impacts. Inspection delays are thus an important non-tariff barrier to trade.

In this paper we analyze the macroeconomic and trade impacts of adding one CBP inspection staff member at each of the twelve major land freight crossings of the U.S. Increased staffing by CBP will reduce the cost of transporting imports from Canada and Mexico into the U.S., and benefit the export industries of these countries, with the U.S. incurring all of the cost. The change in wait time stemming from staffing changes is first estimated on the basis of primary data and then translated into changes in freight costs through a logistical model. The transportation cost changes are then fed into the multi-country GTAP computable general equilibrium model. We find that adding one inspection agent at each land border crossing would, on average per crossing, generate an increase in U.S. GDP of $250 thousand and 2.55 additional jobs....

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Created: Rose, A. (4/6/2014)
Updated: Avetisyan, M. (10/23/2015)
Visits: 2,295
- Multilateral trade negotiations
- Non-Tariff barriers
- North America

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