Poverty Reduction through Regional Integration: Technical Measures to Trade in Central America

Abstract

Despite the widespread tariff reductions sparked by the Dominican Republic-Central America Free Trade Agreement, anecdotal evidence suggests that borders in the region remain thick, with many hurdles standing in the way of regional integration. This paper uses a newly collected dataset to quantify the incidence of sanitary and phytosanitary measures and technical barriers to trade in the region. The results indicate that Central America has the lowest prevalence of technical non-tariff measures in the world. However, substantial heterogeneity is observed among countries. The paper estimates that the impact of sanitary and phytosanitary measures on border prices is equivalent to an ad-valorem tariff of 11.6%. This effect is further investigated by looking in detail at the effect on the prices of beef, chicken meat, bread, and dairy products in Guatemala. Acknowledgements:The authors thank Oscar Calvo, Jasmin Chakeri, Mariem Malouche, Michael Ferrantino, Sebastian Saez, Olivier Cadot, Magaly Clavijo, Mayra Del Carmen Alfaro De Moran, and Ana Paula Cusolito for helpful comments and discussions. We also benefitted from constructive comments from anonymous referees. We also thank participants at the workshop on Non-Tariff Measures in Central America, held in San José, Costa Rica on September 2013. All remaining errors are our responsibility. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not represent the view of the World Bank, its Executive Directors, or the countries they represent. Kelleher acknowledges funding by the Irish Research Council. 645The impact is estimated to be equivalent to an ad-valorem tariff of 68.4%, 51.4%, 22.0%, and 5.0%, respectively. The paper shows that efforts to streamline key sanitary and phytosanitary measures affecting these products by, for example, reducing the cost and time required to obtain sanitary registries, would likely reduce the Guatemalan urban extreme poverty rate from 5.07% to 4.91%. JEL Classifications: F13, F15, I32

Reforming Non-Tariff Measures: From Evidence to Policy Advice

“…In its simplest formulation, where S m is a skilled-unskilled dummy variable and Γ is a vector of workers' characteristics, such as age, age squared, education, gender, marital status, and religion. Applying this methodology, Reyes and Kelleher (2015) explore the poverty impact of streamlining SPS regulations affecting beef, bread and pastries, chicken meat, and dairy products in Guatemala. 7 The authors consider a scenario where AVEs get halved, reflecting a policy aimed at rationalizing the use and operation of SPS measures affecting these products.…”

“…Mapping NTM data with consumption patterns from household surveys readily provides an overview of the measures that are closely related to the well-being of the poor and that, therefore, should be prioritized in any streamlining exercise. See Reyes and Kelleher (2015).…”

“…7. Due to the lack of production data in the Guatemalan household survey data, Reyes and Kelleher (2015) looked only at the change in the poverty line.…”

Building food security and resilience through intraregional trade in Latin America and the Caribbean

“…Sanitary and phytosanitary standards are a type of nontariff measure that can improve product safety but also can act as a barrier to trade Reyes and Kelleher (2015). estimated the ad valorem equivalent (AVE) of sanitary and phytosanitary standards in five Central American countries and found that they added 11 percent to the cost of imported Central American products.…”