Trade Facilitation and Economic Welfare in the Major Trading Regions of Latin America

Border procedures around the globe can act as barriers hindering international trade. Another impact of these procedures relates to their economic resource costs. In this thesis, using a microeconomic framework of international trade, the potential economic gains are estimated for reductions in trade administration costs related to trade in the three Latin American trade blocs as well as for the increase in import and export trades that are stimulated as a consequence of the reduction in trade administration costs. Excess economic cost of the current trade administration procedures is measured in the studied blocs with respect to two benchmark levels of trade administration costs, namely those for Chile and Singapore. International trade policy history and trade facilitation journey of the regions are reported. Our results suggest that improving the trade administration cost levels to match those of the reference countries will enable CAN, CARICOM and MERCOSUR to enjoy substantial economic resource savings, corresponding to a significant amount of their gross domestic product. Given the current trade environment of the studied nations, relevant policy and reform options are suggested. The key policy recommendation is to improve the electronic single window system for trade administration and in particular, the interconnectivity of information flows between the member countries of the blocs. Maintaining the port infrastructure is also critical for the delivery of efficient services for the movement of goods.