Abstract
Can tighter cargo security measures lead to higher trade costs and increased trade frictions? This paper examines the impact of the Container Security Initiative (CSI), implemented by the United States in several foreign ports after the September 11 terrorist attacks. It analyzes monthly data for all containerized U.S. imports from 1999 to 2006, by foreign port and country of origin. The analysis exploits these longitudinal data at the port-level and the varying starting dates across CSI ports to identify the causal effect of the initiative. While higher import charges over time are observed, the results find no significant evidence of a “CSI effect” on either import costs or import flows.
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