A Perspective on the Impact of Trade Friction on Customs Performance

Abstract

International trade contributes significantly to economic growth. Yet, increasing cases of trade friction have emerged as one of the main issues undermining international trade. Indeed, the WTO-OECD-UNCTAD Reports on G20 trade and investment measures state that ‘at a time of continuous economic difficulties, trade frictions seem to be increasing’. The most frequent measures associated with trade friction continue to be trade remedy actions, in particular the initiation of anti-dumping investigations, followed by more stringent customs procedures. Customs administrations are mandated to control the cross-border movement of goods and thereby safeguard national interests. However, with increasing cases of trade friction, where certain forms of trade are perceived by one country to have negative economic consequences, Customs face a conflicting situation between the desire to manage their performance effectively and efficiently and the political inference that inefficient customs procedures can actually be a desirable objective in instances where two countries are mired in trade friction. This paper analyses the impact of trade friction on customs performance and suggests a number of indicators that may be useful in analysing trade friction.