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