Customs Data Research Articles

Digital trade barriers and export performance: Evidence from China

AbstractThis paper investigates how Chinese manufacturing exports respond to destination countries' digital trade barriers. Using Chinese Customs data from 2014 to 2018 and data on countries' digital service trade restrictiveness by the OECD, we find that Chinese total manufacturing exports drop by 2.32%, or $30.92 billion, due to the increase in destination countries' composite digital trade barriers from 2014 to 2018. A further decomposition shows that the reduction is mostly explained by the decrease in export quantity, with export prices remaining relatively unchanged. Moreover, digital trade barriers decrease Chinese exports not only by depressing the exports of surviving products but also by reducing the exporting possibility of new entering products and increasing the risk of products' exiting. The heterogeneity analyses show that a favorable institutional environment helps alleviate the negative effects and that exports of high‐tech products are less sensitive to digital trade barriers.

The Effects of Product Standards on Trade: Quasi‐Experimental Evidence from China

AbstractUsing China Compulsory Certification (CCC) as a case study, we investigate how compulsory certification schemes impact China's imports. A difference‐in‐difference approach is used with China customs data to measure the impact of CCC on imports. Our findings show that the CCC regulation increases China's market access for products requiring certification. The results show that the import‐promoting effects of CCC regulation are due to an increase in the intensive margin effect rather than to an increase in the extensive margin effect. We also find that product quality plays no significant mediation role in the effect of CCC regulation on China's imports.

Import liberalization and export product mix

AbstractThis paper develops a monopolistic competition model of multi‐product firms to explain the effect of trade liberalization on the product mix of multi‐product exporting firms. The model shows that input‐tariff reduction leads to increases in a firm's export values, especially for products that are farther from a firm's core competency. To test the theoretical predictions, we use the merged data built upon the highly disaggregated Chinese firm‐level production data and customs data for 2000–2006. Consistent with the theory, the positive impact of input trade liberalization on export value is found to be more pronounced for peripheral products, and input‐tariff reduction also expands a firm's product scope, affecting firm's average productivity.

Welfare gains through globalization: Evidence from Japan's manufacturing sector

Welfare gains achieved through international trade are a cornerstone of the literature on international economics. However, the data and research methods needed to empirically assess these welfare gains have only recently become available. Building on recently developed methodologies for estimating the elasticity of substitution and computing welfare gains from trade, we estimate Japan's welfare gains from liberalizing trade in the manufacturing sector. To do so, we estimate the elasticities of substitution using Japanese customs data at Harmonized System (HS) 9-digit product codes. The analysis shows that Japan's welfare gains from trade liberalization occurred especially from the end of the 1990s onward, and reached 16 percent vis-à-vis the autarky situation.

Inside the White Box: Unpacking the Determinants of Quality and Vertical Specialization

This paper explores patterns of quality differentiation and specialization relying on model-level panel data of retail sales and prices of refrigerators across 23 countries in the European Union. Unlike customs data aggregated at the product category, typically used in the literature, model-level data allow us to test for the presence of nonhomotheticities by comparing market shares of identical models across different markets. We measure quality at the model level, account for varying willingness-to-pay for quality at different levels of income, and link quality measures to objective model attributes. Using originally assembled data on the country of manufacture of each model, we study patterns of quality specialization by brands with plants in multiple countries. We find that firms locate the production of their higher-quality models in richer countries, and argue that such patterns of quality specialization are driven mainly by a home-market effect linked to nonhomothetic preferences.

How and what kind of cities benefit from the development of digital inclusive finance? Evidence from the upgrading of export in Chinese cities

Employing Chinese customs data and the Peking University Digital Financial Inclusion Index of China, this paper studies the impact of China's digital finance development on the upgrading of export at the city level and further explores the heterogeneity across cities and the mechanisms through which digital finance influences export upgrading. Benchmark results suggest that digital inclusive finance can significantly promote the upgrading of export. The heterogeneity analysis shows that cities with a smaller size, lower wage, higher human capital level, and better location advantage experience greater facilitating effects of digital inclusive finance on promoting export upgrading. It suggests that, compared with ‘icing on the cake’, the digital inclusive finance plays a better role in ‘offering fuel in snowy weather’, whereas full exertion of the inclusiveness of digital finance requires higher human capital and location advantage. Further mechanism analysis shows that innovation effect and market effect are the main channels where digital inclusive finance promotes the upgrading of a city’s export.

Where has the rum gone? The impact of maritime piracy on trade and transport

Despite a general agreement that piracy poses a significant threat to maritime shipping, empirical evidence regarding its economic consequences remains scarce. This paper combines firm-level Chinese customs data and ship position data with information on pirate attacks to investigate how exporting firms and cargo ships respond to maritime piracy. It finds that overall exports along affected shipping routes fall following an increase in pirate activity. In addition, piracy induces firms to switch from ocean to air shipping, while remaining ocean shipments become larger. At the ship-level, the paper provides evidence for re-routing, as container ships avoid regions prone to pirate attacks.

Multichain strategies and economic upgrading in global value chains: Evidence from Kenyan horticulture

• Supplier firms in GVCs are increasingly adopting multichain strategies serving buyers across the global North and South. • We test whether multichain strategies have led to economic upgrading among Kenyan horticulture suppliers in 2006–18 period. • Our mixed-methods approach combines multilevel linear regressions, propensity score matching, system-GMM, and interviews. • Multichain strategies have led to economic upgrading through improved product diversification and higher economic returns. • We highlight the need for GVC research to account for the multichain strategies of suppliers serving multiple value chains. An extensive body of research has examined the prospects for suppliers in the global South to upgrade within global value chains (GVCs) controlled by lead firms from, and oriented towards end-markets in, the global North. However, the expansion of South-South trade has altered the geography of GVCs. Previous studies highlight key differences between North-South value chains (NVCs) and South-South value chains (SVCs). Much less is known about the multichain strategies used by suppliers who participate simultaneously in NVCs and SVCs, and how these affect their prospects for economic upgrading. This article draws on the case of Kenyan horticultural suppliers to explore the implications of multichain strategies for economic upgrading, in terms of value-added tasks (product diversification and product sophistication) and economic returns (unit values). We adopt a mixed-methods approach combining transaction-level customs data for the 2006–2018 period with supplier interviews. We find that suppliers adopting multichain strategies experienced significantly more product diversification and higher economic returns than suppliers operating only in NVCs or SVCs, yet results for product sophistication are insignificant. Our results are robust to the use of multilevel linear regressions (MLRs), propensity score matching (PSM), and two-step system-GMM. The article highlights a critical need for GVC research to account for the multichain strategies of suppliers serving multiple and overlapping value chains, and their implications for economic upgrading.

Internalization of externalities in international trade

Using disaggregated customs data about exporters from nine countries, I demonstrate that informational externalities are determinants of entry, survival, and growth of exporters at the product–destination market level. I show that exporters who optimize entry decisions and internalize informational externalities survive longer and grow faster. Then, I conceptualize why exporters enter certain international markets and why not all exporters from the same origin survive and grow in these markets. I incorporate the interaction between the performance and number of peers in a given market to identify a potential learning externality that exporters may be exposed to. Also, I highlight that, even without the formation of formal networks, the observation of the actions of peers in export markets can deliver implications for export flows: exporters may not need to start small in new markets if the actions of peers in those markets reveal enough information. By helping to explain how export relationships survive and grow, I complement the literature on the determinants of export diversification and signal to export promotion agencies the importance of internalization of informational externalities by exporters.

Exchange rate pass-through and invoicing currency choice between fixed and floating exchange rate regimes: Evidence from Malawi’s transaction-level data

We document comparative evidence on invoicing currency and exchange rate passthrough (ERPT) before and after an importer has switched from a de facto peg to a floating exchange rate regime. Our study utilizes customs data of Malawian imports from across the globe, at Harmonized System (HS) 8-digit level. We demonstrate that: (1) the share of U.S. dollar invoicing increased by 9.4 percent and exchange rate passthrough also increased after the regime switch; (2) a fixed exchange rate regime limits pass-through of the bilateral exchange rate by about 20 percentage points. (3) When invoicing currency is considered however, we find that this difference in the regimes holds and ultimately, the difference in the pass-through of the two regimes is explained solely by the dollar exchange rate. However, the USD exchange rate is in itself not particularly larger than the ERPT of other currencies such as the euro and the South African rand. Given that flexible regimes are usually associated with a greater ability to absorb real external shocks in a small open economy, the policy implication is to for monetary policy to consider these heterogeneities when considering the exchange rate risk and impact on domestic prices in developing countries like Malawi, and to promote competitive market structures in developing countries.

Impact of FTA on Trade in ASEAN and Australia Using Customs Level Data

This study examines the impact of the Association of Southeast Asian Nations (ASEAN)-Australia-New Zealand Free Trade Agreement (AANZFTA) on Australian trade with a particular focus on imports from ASEAN member countries to Australia. We examine the AANZFTA’s utilization by ten ASEAN countries at the six-digit trade classification level from 2012 to 2016 using Australian customs data. We implement Ando and Urata’s (2018) and Hayakawa et al.’s (2014) framework of free trade agreement (FTA) utilization based on preferential tariff margins. We also account for overlapping FTAs that are likely to impact the AANZFTA’s utilization. The results indicate that preferential tariff margins positively impact FTA utilization. However, the results also indicate that the AANZFTA’s utilization rate across ASEAN countries is low relative to Australia’s bilateral FTAs with Malaysia, Thailand, and Singapore. We also find evidence that co-sharing rules of origin positively impact FTA utilization.

A new algorithm for matching Chinese NBS firm-level with customs data

ABSTRACT Combining accounting-type firm data and transactions-type customs data has become increasingly important for research in international and industrial economics. The statistical authorities in several countries such as the United States or France provide such linked data without details on sources, and researchers have to assume that the matching is correct and the firm identifiers are unique and flawless in the source data. For some other countries such as Switzerland or China, firm and customs data contain information which permits such linking ex post using string matching based on firm names and their meta-information like addresses. Due to spelling and typos, such matching is prone to some errors. Obtaining the largest-possible number of high-quality matches helps avoid potential biases while keeping crucial details. We report on a new algorithm which improves considerably the hitherto available linking efforts of the National Bureau of Statistics firm-level and the Customs trade data for China.

An eye for an eye? The trade and price effects of China's retaliatory tariffs on U.S. exports

We analyze the trade and price effects of China's retaliatory tariffs on imports from the United States in the period from January 2017 to May 2019. We apply the difference-in-differences approach to the up-to-date China Customs data on imports disaggregated by eight-digit HS product category and source country. We find large reductions in the value and quantity of imports from the US and an almost complete tariff pass-through onto import prices. These results remain robust to extensive changes in the specification and in data sample and to a variety of placebo tests using processing imports or exempted products that were originally included in the tariff lists but removed before implementation. We also find that the trade and price effects are heterogeneous across products, differing either in the end-use or in the ownership types of the importing firm. Similar to recent findings in the US (Amiti et al., 2019, 2020), our estimates suggest limited terms-of-trade gain due to China's tariff hikes.

The spillover effect of trade policy along the value Chain: Evidence from China's rare earth‐related sectors

AbstractThis study examines the heterogeneous spillover effects of an export control policy from an upstream sector to its related downstream sectors. In 2010, China implemented tough policies on rare earth production and export that created a significant price premium for rare earth in foreign markets, thus offering downstream sectors in China cost advantages over their foreign competitors. This study exploits China's policy as an exogenous shock and performs a detailed examination of Chinese customs data. The results show that the export control policy has increased the export price of rare earth downstream products from China, whereas the effects on export quantity and value have been heterogeneous across sectors: they are significant for sectors in which the rare earth cost share is high, and the elasticity of substitution is low.

Trade, conflict and informality: Evidence from the South Sudanese civil war

AbstractA significant proportion of trade in Africa takes place informally. In this paper we postulate that informal trade is more sensitive to securityrelated trade costs than formal trade. To test this hypothesis, we combine unique aggregated survey data on Uganda's informal crossborder trade with formal customs data and exploit the spatial and time variation of the South Sudanese civil war to causally identify the impact of conflict on different types of trade. Our preferred estimates suggest that the civil war reduced Uganda's informal exports to South Sudan by as much as 80%, compared to an estimated effect of 12% for formal exports. Further, we show that the impact of the conflict on formal exports is driven entirely by a reduction of industrial goods exports while exports of agricultural products continued to flow, presumably reflecting necessities in consumption for which willingness to pay is high. Taken together our results are consistent with the hypothesis that security‐related trade costs have heterogeneous effects on different types of international trade.

Experience and market signals in export entry decisions

AbstractExport entry deterrence is a result of export uncertainty, which inhibits the discovery of new exports and prevents a country from realising its true comparative advantage. This paper examines how firms resolve uncertainty through the combination of two learning channels: learning from others and their own export experience. Using Chilean customs data (2007–2016), I find that early entrants have a short export duration and have little export experience. When combining the two learning channels, I find that less experienced exporters are more responsive to new information. Significantly, when observing a 10% increase in average initial export growth, less experience firms have double the entry probability compared with more experienced firms.

Features of the Development of Russian-Chinese Customs Cooperation

The customs administrations of the countries were called upon to protect national security of the state and life and health of the human and natural world. A study of the foreign economic activities of Russia and China led to the conclusion that the People’s Republic of China was the main trading partner of the Russian Federation. At the current stage of economic development, issues of cooperation between customs administrations of countries that are foreign trade partners are high on the agenda. The advantage of such a partnership between Russia and China is the close proximity of states which provides opportunities for the movement of goods by different modes of transportation. The article analyzed the historical features of the emergence and stability of cooperation between the customs authorities of the Russian Federation and the People’s Republic of China, as well as the foundations of the customs data systems of both countries. We identified current problems of interoperability in Customs control of goods and future directions for the development of Russian-Chinese customs cooperation such as the creation of a single information database that will allow the various government agencies of both countries to work together to quickly obtain information on licenses issued, certificates, permits, which will speed up customs formalities between the countries and reduce the consequent risks to the national and economic security of the Russian and Chinese partners.

Firm‐level trade effects of WTO accession: Evidence from Russia

AbstractThis paper examines the impact of Russia’s World Trade Organization (WTO) accession on international trade patterns at the firm level. A large literature of cross‐country studies examines the long‐run trade effects of the General Agreement on Tariffs and Trade (GATT)/WTO membership. Our paper contributes to this literature by bringing short‐run micro‐level evidence from the experience of a large trading country. Using customs data on the monthly import and export transactions of Russian firms over the period 2011–2015, we investigate the short‐run responses of firm‐level trade along the intensive and extensive margins following Russia’s WTO accession in 2012. Our results indicate an increase in the number of foreign countries that Russian firms export to or import from, and a significant increase in the number of exported products. The evidence on the effects of the WTO accession on the intensive margin of firm‐level trade is mixed. Additionally, we find suggestive evidence that the Russian retaliatory food embargo imposed in response to the Crimean economic sanctions might have been intended as a protectionist policy to help out a vulnerable domestic industry (i.e. agriculture) directly impacted by the country’s WTO accession.

On the market failure of “missing pioneers”

An influential hypothesis states that export pioneers are too few relative to social optimum because the first exporter’s action creates an informational public good for all subsequent exporters. The hypothesis has been invoked to justify certain types of government interventions. We note, however, that such market failure requires two inequalities to hold simultaneously: the discovery cost is neither too low nor too high. Neither has to hold in the data. We propose a structural estimation framework to evaluate the hypothesis, and estimate the parameters based on the customs data of Chinese electronics exports. Our key finding is that “missing pioneers” is a low-probability event for large countries, but can be a serious problem for small economies.

Determinants of export pricing at the firm-level: evidence from Egypt

The study explains the export pricing behaviors of Egyptian firms using detailed customs data and high-dimensional fixed effects. Firstly, it finds that more productive firms (as proxied by firms’ importation of intermediate inputs and capital goods) charge higher export prices which are correlated with higher revenues, providing an evidence for competition in quality, rather than price, amongst firms. Secondly, firms with more destinations charge a higher price for their exported products and a wider price range across markets. Thirdly, firms charge higher prices for more distant and richer destinations, whereas they charge lower prices for larger-sized and less central ones. This could be explained by variable mark-ups across destinations, where higher mark-ups are set in more distant, richer, smaller (less competitive), and more central destinations. It could also indicate that higher quality product versions are sent to more distant destinations (Alchian-Allen or selection effects) and richer ones (demand effect). Lastly, firms charge higher prices for destinations with a larger prevalence of technical measures or those imposing specifically restrictive ones, potentially reflecting an adverse effect of these measures on the number of exporting firms, allowing survivors to charge higher mark-ups. Alternatively, this could reflect firms’ quality upgrading in compliance with such measures.