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PolicyResearchWorkingPaper10795

BarrierorOpportunity?

HowTradeRegulationsShapeColombianFirms’ExportStrategies

SamuelRosenow

WORLDBANKGROUP

InternationalFinanceCorporationJune2024

PolicyResearchWorkingPaper10795

Abstract

Firmsincreasinglymustcontendwithtraderegulationstoaccessforeignmarkets.ThispaperquantifiestherelativeimportanceoftraderegulationsandtheirheterogeneouseffectsforColombianfirmsexportingtoLatinAmericabetween2007and2017,focusingonspecifictypesandchannels.Usingpanelevidencefromafirm-levelgrav-itymodelwithadifference-in-differencesidentificationstrategy,technicalbarrierstotradeandquantitycontrolmeasuresbothdecreasetradeonaverage.Othernon-tariff

measuresandtariffsplayaminorrole.Thetechnicalbarrierstotradeandquantitymeasuresreallocatetradefromsmalltobigfirms.Thesamemechanismbenefitsfirmspartici-patinginglobalvaluechains.However,quantitycontrolsmakeitmorelikelythatbigfirmswillleaveexportmarketstothebenefitofsmallerones.Theresultscontrolfortheendogeneityoftraderegulationsandarerobusttotheuseofdifferentsamplesandmeasuresoffirmsize.

ThispaperisaproductoftheInternationalFinanceCorporation.ItispartofalargereffortbytheWorldBankGrouptoprovideopenaccesstoitsresearchandmakeacontributiontodevelopmentpolicydiscussionsaroundtheworld.PolicyResearchWorkingPapersarealsopostedontheWebat

/prwp

.Theauthormaybecontactedatsrosenow@.

ThePolicyResearchWorkingPaperSeriesdisseminatesthefindingsofworkinprogresstoencouragetheexchangeofideasaboutdevelopmentissues.Anobjectiveoftheseriesistogetthefindingsoutquickly,evenifthepresentationsarelessthanfullypolished.Thepaperscarrythenamesoftheauthorsandshouldbecitedaccordingly.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheInternationalBankforReconstructionandDevelopment/WorldBankanditsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent.

ProducedbytheResearchSupportTeam

BarrierorOpportunity?HowTrade

RegulationsShapeColombianFirms’Export

Strategies*

SamuelRosenow

InternationalFinanceCorporation,WorldBankGroupWorldTradeInstitute,UniversityofBern

JELClassification:F13,F14,L11,O19.

Keywords:TradePolicy,Colombia,Non-TariffMeasures,FirmHeterogeneity

*IthankAngellaMontfaucin,AnaFernandes,MiriamManchin,JosephFrancois,MahdiGhodsi,MassimilianoCali,RalfPeters,DougNelsonandparticipantsintheGalbinoprojectsummerschoolfortheircomments.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthor.TheydonotnecessarilyrepresenttheviewsoftheWorldBankoritsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBank,theirManagements,orthegovernmentstheyrepresent.Allerrorsaremine.

2

1Introduction

Marketaccessconditionsattractpolicyandacademic

attention.1

Whiletariffshavedeclinedovertime,traderegulationsmatterincreasinglyforfirmswishingtoaccessinternationalmarkets(UNCTADandWorldBank,

2019).

Governmentsimposetheseregulationstoestablishthestandardsandproceduresaproductmustcomplywithtobesoldintheirmarket.Labelingrequirementsandsafetycertificationaretellingexamples,assuringsafetyandproductqualityforconsumersandencouragingtrade.However,traderegulationscanalsoincreaseexporters’complianceandthusproductioncostssinceadditionalinvestmentintechnologyandprocessesmayberequired.Thisimpliesthattraderegulationsmaybothreducesupplyandincreasedemandfortradables.

Firmsalsofaceunevencompliancecostsoftraderegulations,mostlydue

tomarketentrycosts(Bernardetal.,2012;

MelitzandRedding,2015).2

Fixedmarketentrycostsimplythatthemostproductivecompaniesaremostlikelytoenterandthriveinexportmarkets(Melitz,

2003;

Bernardetal.,

2011).

Theyarebestequippedtodealwithdiverseregulations,standards,testing,andcertificationproceduresacrosssalesmarkets.Takentogether,theoverallimpactoftraderegulationsontradeanditsdistributionacrossfirmsisuncertain.

1Intheacademicliterature,marketaccessiscommonlyassociatedwithexportdiversificationandfirmcompetitiveness,importantprecursorstoeconomicdevelopment.Forreferencesregardingtherelationshipbetweenmarketaccessandexportdiversification,see,forexample,FugazzaandNicita

(2013).

Foreffectsofmarketaccessforfirmcapabilities,seeFalciolaetal.

(2020).

Forimportantreviewsofthispolicydebate,seeNicitaandMelo

(2018).

2Ingeneral,firmsfacethreetypesofcosts.First,firmsincurproduct-specificproductioncoststhatreflecttheircapabilities.Second,firmsincurvariabletradecosts:shippingcostsintheformoficebergtradecostsandad-valoremtariffs.Thesecostsvarywithsales,butdonotdependontheexporter’sscope.Bothproductioncostsandvariabletradecostsdeterexportsatallmargins.Third,firmsincurfixedexportingcostsbyproductanddestinationmarket,reflectingthecompliancecostsoftraderegulations.Thus,themarketaccesscostschedulevariesbyfirm-product-destination.

3

ThispaperquantifiestheheterogeneouseffectsofLatinAmerica’straderegulationsforColombia’sexportingfirms,concentratingonspecifictypesandchannelsthroughwhichtheyoperate:firms’valueofexportsandtheirprobabilityofparticipatinginandexitingfromexportmarkets.ThereisafocusonLatinAmericaandtheCaribbean(LAC)astheregionhasbecomeColombia’smostimportantexportmarket.This,coupledwiththeuniquedataoftraderegulationsandothernon-tariffmeasures(NTMs)inLAC,providesanidealsetup.

Weuseafirm-levelgravitymodelwithadifference-in-differencesresearchdesignthatidentifiesheterogeneityintreatmentsacrossNTMtypesandchannels.OureconometricapproachaccountsforselectionandomittedvariablebiasaswellasendogeneityinthetimingofNTMswithrespecttotradeflowsintodestinationmarkets.Moreover,wetestfortherobustnessofresultswithstringentfixedeffects,differentmeasuresoffirmsizeandalternativesamplestoruleoutendogeneityconcerns.

Theimpactoftraderegulationsvariesgreatlyacrosstypesandchannels.OfallNTMtypesconsidered,onlytechnicalbarrierstotrade(TBTs)—astandard-likemeasure—andquantitycontrolsexplainchangesinColombianfirm-levelexports.Onaverage,TBTsundermineColombia’sfirm-levelexportsbehavioracrossallthreechannelsconsidered.Theseresultsareconsistentwithamodelinwhichtraderegulationsincreasefirms’compliancecostsrelativetoconsumerbenefits.TheeffectisevenmorepronouncedforquantitycontrolmeasureswhichundermineColombianfirms’exportsandtheirlikelihoodofremaininginmarkets.Intriguingly,newquantitycontrolsinproduct-destinationmarketslower,onaverage,firms’exitrates.

LookingattheheterogeneouseffectsofNTMs,weshowthatthiseffectisdrivenbysmallfirmsthatbenefitfromquantitycontrols.Conversely,bigfirmsaremorelikelytoleaveexportmarketswhenfacedwithnewquantitycontrols.Wearguethatquantitycontrolmeasuresconstrainbigfirms

4

morethansmallfirmsandwehelptoexplainthisoutcome.However,aregressiveeffectisatplayforTBTsforallthreechannels;bigfirmsbenefitfromadampenedeffect,whereassmallfirmsseetheirexportsandlikelihoodofremaininginmarketssignificantlyreduced.Similarly,firmsparticipatinginglobalvaluechains(GVC)benefitfromamutedtradeimpactwhenTBTsorquantitycontrolsareintroducedinthesalesmarket.Incontrast,non-GVCfirmssufferfromreducedexportsandlikelihoodofparticipatinginmarkets.

OurpaperimprovestheunderstandingoftheroleofNTMsforfirm-leveltradealongthreedimensions.First,wequantifytherelativeimportanceofNTMtypesforfirm-levelexportdecisions.SomeNTMtypesarebydefinitiontraderestrictive,suchasimportprohibitionsandquotas.Incontrast,theeffectofstandard-likemeasuressuchassanitaryandphytosanitary(SPS)orTBTsonexportdynamicsdependsoncompliancecostsrelativetoinformationbenefitsandis,intheory,ambiguous

.3

WedemonstratethatTBTsandquantitycontrolmeasures,onaverage,deterColombianexports.OurfindingsareconsistentwithAdarovandGhodsi

(2023),

Disdieretal.

(2008),

YousefiandLiu

(2013),

andLiandBeghin

(2012)

whofindnegativeTBTeffectsontradeflows.

Second,weexplorethechannelsthroughwhichNTMeffectsoperate.Tothatend,wedistinguishthreefirm-levelexportdecisions:thevalueofexportstoproduct-destinationmarkets(intensivemargin);theprobabilityofparticipatinginthem(extensivemarginI)andexitfromthem(extensivemarginII).WhilewedocumentthatTBTsandquantitycontrolmeasuresundermineallthreemargins,firmsmostlyreactbyreducingexistingexports.ThisfindingchallengesBaoandQiu

(2012)

whohighlightpositivefirm-levelresponsesattheintensivemargin.Atthesametime,wediscoverthatfirmsreacttoadditionaltypesoftraderegulationsattheextensivemargin.InadditiontoTBTsandquantitycontrols,increasesintariffsandSPSmeasuresinproduct-destinationsmakeitlesslikelythatColombianfirms

3SeeRonen

(2017)

fortheintuitionontradepromotingeffectsofNTMs.Beghinetal.

(2015)findthatalmost40%ofproductlinesaffectedbyTBTmeasuresyield

negativeNTMadvaloremequivalents(AVEs),suggestinganettrade-promotingeffectofthesemeasures.

5

participateinthesemarkets.Thispatterncouldreflectexporters’inabilitytopaytheadditionalcompliancecostsandtradediversiontolesscostlyproduct-destinationmarkets.Ourfindingsareconsistentwithfirm-levelevidencefromFrance(Fontagnéetal.,

2015;

FontagnéandOrefice,

2018).

Third,weextendtheanalysisofheterogeneityintheeffectsofNTMtypesacrossfirmcharacteristics.Ourresultsalignwiththepredominantfindingoftheempiricalliterature,thatsmallfirmssufferdisproportionateimpactsofTBTs(e.g.,Arkolakis,

2010;

Curzi,

2020;

Asprillaetal.,

2019;

MacedoniandWeinberger,

2022).

Moreover,weshowthatGVCfirms,definedasthosethatbothimportandexport,benefitfromthesamemutedtradeeffectsofTBTsasbigfirms,eventhoughthetwofirmcharacteristicsdiffersubstantiallyindefinition.However,wealsomarshalnovelevidencethatquantitycontrolmeasuresmakeitlesslikelythatsmallfirmswillexitexportmarkets,withtheoppositeeffectoccurringforbigfirms.Wearguethatthequantitycontrolsaremorebindingforbigfirms,increasingtheirlikelihoodofleavingmarketsand,conversely,helpingsmallfirmstakeovertheirspace.

Superiordataandmethodsunderpinthesethreecontributions.WecombineapanelofColombianfirm-leveltradedatafrom2007to2017withtime-varyinginformationonNTMsinregionalexportmarkets.Employingafirm-levelgravitymodelwithadifference-in-differencesresearchdesign,weestimatetherelativeimportanceofNTMtypescontrollingforunobservedconfoundersatthefirm-product-destinationlevel.Indoingso,weaddressempiricallimitationsintheliterature.Thisconcerns,ontheonehand,theuseofcross-sectionaldatatoestimateNTMimpacts(e.g.,Bratt,

2017;

Fugazzaetal.,

2018).

Ontheotherhand,manystudiesevaluateNTMsin

isolationorbundled(DisdierandMarette,2010

orFontagnéetal.,2015),

nottheirjointorrelativeeffects.

Moreover,drawingfromKeeandNicita(2022),

wealsoaccountfortheendogeneityofNTMsbypredictingNTMselectionbasedonthatinneighboringcountries.Thisapproachissuitableinourcontext,giventheculturalandlegalproximityofColombia’sregionaldestinationmarketsandtheirsimilarityinintroducingtraderegulations.

6

Thepaperisstructuredasfollows.Section

2

explainsourdatasourcesandprocedurestocleanthem.Section

3

documentsstylizedfactsaboutColombia’sexportingfirmsandthemarketaccessconditionstheyface.

Section4

explainsourempiricalidentificationstrategy,defineskeyvariables,andaddressesconcernstoidentifyhowmarketaccessconditionsaffectColombianfirmstradingwiththeregion.TheresultsandrobustnesstestsarepresentedinSection

5.

Sections

5.5

and

5.6

exploreheterogeneousNTMeffectsbasedonfirms’sizeandparticipationinglobalvaluechains,

respectively.Finally,Section

6

concludesanddiscussestheimplicationsof

ourresults.

2Data

Theempiricalinvestigationisbasedonthreedistinctdatasets,allcoveringtheperiod2007–2017.ThefirstdatasetcontainsinformationonexportandimporttransactionscollectedbytheColombiancustoms.ThesecondprovidesdataonNTMtypesappliedbyLatinAmericanimportingcountries.Thethirdcontainsbilateralappliedad-valoremtariffsofLatinAmericanimportingcountries.

2.1Firm-LevelCustomsData

Weusetransaction-levelexportandimportdatafromColombia’scustomsagencyDIAN.ThedataispartoftheexpansiontotheExporterDynamics

Database,asdescribedinFernandesetal.

(2016).

Thedatacoverthe

universeofexportingfirmsinallsectorsattheexporter-HS6-digitproduct-destination-yearlevelandincludessevenvariables:countryoforigin,exportingfirmidentifier,countryofdestination,HS6-digitproduct,exportvalue,exportquantity,andyear.InformationonexportandimportvaluesisexpressedinUSdollarsandisFOB(freeonboard).Weprocessedtherawdatasettoaseriesofcleaningprocedures,asdetailedinCebeciandFernandes

(2015).

Tomergewiththetariffvariabledescribedbelow,weconverttheHS

7

productnomenclaturesof2007,2012,and2017totheHScombinedversion.Moreover,weexcludeallfirmobservationsfromtheminingsector(HSchapter25–27).ThathelpstoavoidpotentialbiasfromLatinAmerica’scommoditypricecyclesduring2007–2017.Thus,oursampleframecontainsallColombianexportingfirmsbetween2007and2017,except

thosefromtheminingsector.

2.2NTMData

WeuseNTMdatafromUNCTADandtheLatinAmericanIntegrationAssociation(LAIA)forits18coremembersinLACbetween2007and2017

.4

Therawdataisrecordedatthereporter-nationaltarifflinelevel-destination-NTM,4-digit,andyearlevel.Weapplytwostepstoprocessthedata,resultinginanovelandunexploiteddatasetcomprisinganexhaustiveandupdatedsetoftraderegulationsinLatinAmericabetween2007and2017.

First,givenachangeintheclassificationofNTMsin2012wereconciletwoNTMclassificationspertainingtotheperiods2007–2011and2012–2017.Tothatend,wederiveacorrespondencetablebetweenthepre-2012andpost-2012classificationatthe1-digitNTMchapterlevelusingLAIA’sdatacollectioninbothclassificationsin2011and2012.Usingthenewclassificationasthereference,wereclassifiedNTMsbetween2007and2011atthechapterlevel,consistentwithUNCTAD’s(2019)MastClassificationM5.Asaresult,weobservethenumberofNTMsofeachtype(e.g.SPS,TBT,PSI,quantitycontrol)forallLatinAmericanreporter-destination-productscontinuouslyineachyearbetween2007and2017.

Second,weaggregateNTMdatafromthenationaltarifflineleveltotheHS6-digitproductlevel.ThebackgroundisthatNTMdataarecollectedatthenationaltarifflineat10digits.However,sincewetakeintoaccountexportstovariousdestinationcountriesthatdonotharmonizenationaltarifflineclassifications,ourtwodatasetscannotbesatisfactorilymerged

4Argentina,Bolivia,Brazil,Chile,CostaRica,Colombia,Cuba,Ecuador,ElSalvador,Guatemala,Honduras,Mexico,Nicaragua,Panama,Peru,Paraguay,UruguayandtheRepúblicaBolivarianadeVenezuela.

8

atthatlevel.Aggregationresultsinlittleattrition.Movingfrom10-to6-digitproductclassificationimpliesareductionofabout6%inthenumberofobservationsincludedinourreferencesample.

2.3TariffData

Ad-valoremtariffsforColombia’s17regionaltradingpartnerscomefromUNCTADTRAINS.Measuredattheimporter-HS6-digitproductlevelbetween2007and2017,tariffsreflecttheeffectivelyappliedrate,whichisdefinedasthelowestavailabletariff.Ifapreferentialtariffexists,itisusedastheeffectivelyappliedtariff.Otherwise,theMost-Favored-Nation(MFN)appliedtariffisused.

Thus,whilewemeasuretariffsintermsofadvalorempriceeffects,NTMsaremeasuredincountterms.Thereasonisthatbilateral,product-specificadvaloremequivalents(AVEs)ofNTMsremainscarce,despiterecentprogressforstandard-likeNTMs(AdarovandGhodsi,

2023).

3StylizedFacts

Beforedivingintoourempiricalexercise,wepresentaseriesofstylizedfactsonColombianexportingfirmsaswellasthetariffsandNTMstheyfaceintheirregionalsalesmarkets.

3.1ColombianFirm-LevelExports

Table

1

showstheevolutionofColombianexportsbetween2007and2017andtheirgeographicalcompositionineightmajorregions,followingtheWorldBankclassification.Threeresultsstandout.First,Colombianexportsreachedapeakin2012(firstrow)anddeclinedfromthenuntil2016.Thisdeclinewasdrivenbythecollapseofoilprices,whichmatterfor35%ofColombianexportsrelatedtominerals.Second,LatinAmericanandCaribbean(LAC)countrieshavebecomethemostimportantdestinationmarketforColombianexports,surpassingNorthAmerica,and,inparticular,theUnitedStates,since2012.Giventheimportanceofregionalexports

9

forColombianfirms,thisprovidesuswithsufficientexternalvaliditytoexploretheirtraderesponsetomarketaccessconditionsinLAC.Third,theimportanceofEastAsianandPacificdestinationmarketsforColombianexportershasdoubledbetween2007and2017to10%oftotalexportsnow.

Table1:Colombianexports(2007base)andselecteddestinations

Destination

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

World

1.00

1.25

1.10

1.36

1.97

2.08

2.00

1.85

1.22

1.04

1.27

EastAsia&Pacific

0.05

0.04

0.05

0.08

0.06

0.09

0.11

0.13

0.11

0.08

0.10

EasternEurope

0.01

0.01

0.01

0.01

0.00

0.00

0.00

0.00

0.01

0.01

0.01

LatinAmerica&Caribbean

0.37

0.39

0.31

0.29

0.33

0.32

0.32

0.31

0.36

0.34

0.37

MiddleEast&N.Africa

0.01

0.01

0.01

0.01

0.01

0.01

0.01

0.01

0.01

0.01

0.01

NorthAmerica

0.37

0.40

0.41

0.44

0.40

0.37

0.33

0.28

0.29

0.35

0.30

SouthAsia

0.00

0.00

0.02

0.02

0.01

0.02

0.05

0.05

0.02

0.01

0.01

Sub-SaharanAfrica

0.00

0.00

0.00

0.01

0.01

0.01

0.00

0.01

0.01

0.01

0.00

WesternEurope

0.19

0.16

0.19

0.15

0.18

0.17

0.18

0.20

0.20

0.20

0.19

Source:Author’scalculationbasedontheoriginalColombiancustomsdata.

Note:ThistabledisplaysColombianexportsasashareoftotalexportsandisnormalizedin2007.

SinceNTMdataareonlyavailableforLACcountries,thefocusofthepaperisonColombianexportstoLACcountries.Thus,thefollowingtablesexplorehowexportmarginshaveevolved,takingLACcountriesasthedestination.

Table2

revealsthatthenumberoffirmsexportingtoLACcountriesfollowedaU-shapedpatternovertheperiodunderinvestigation.Thenumberoffirmsdecreasedbyabout10%duringtheglobalfinancialcrisisof2007–2010andthensteadilyincreasedtoreachanewpeakin2017.Inrelativeterms,however,theimportanceofLACfirmsremainedstableataround68%ofallexportingfirmsoverthewholeperiod.Moreover,theimportanceoffirmsonlyexportingtoLACdestinationmarketsremainedstablebetween2007–17.Indeed,boththenumberandthecorrespondingshareoffirmsexportingtoLACcountriesexclusivelywaveredataround3,500firmsor44%ofallexportingfirmsinColombiaduringthewholeperiod,respectively.

LookingattheproductdiversificationofColombianfirmsyieldsthreeinsights.First,multi-productfirmsdominateColombianexporters.Theymakeup91%ofallexportingfirms,asharewhichremainedremarkablystablebetween2007–17.Second,Table

3

revealsthatColombianexportersincreasedthediversificationoftheirproductportfoliofromanaverageof

10

Table2:Numberofexportingfirmsanddestinationmarkets

Destination

200720082009201020112012

2013

2014

2015

2016

2017

NumberofexportingfirmstoLAC

5,6155,8155,6965,0985,2555,520

5,508

5,450

5,604

5,612

5,738

NumberofexportingfirmstoLAConly

3,3833,7133,6693,1143,2863,526

3,535

3,462

3,518

3,523

3,621

ShareofLACfirmsintotalfirms

0.680.690.700.690.710.73

0.71

0.70

0.69

0.68

0.68

ShareofLAConlyfirmsintotalfirms

0.410.440.450.420.440.46

0.46

0.45

0.43

0.43

0.43

Source:Author’scalculationbasedonColombiancustomsdata.

Note:ThistabledisplaysColombianfirm-levelexportdynamicstoLatinAmericaandtheCaribbean(LAC),measuredinabsolute(numberoffirms)andrelativeterms(shareintotalnumberofexportingfirms).ThethirdandfourthrowsreportthenumberandtheshareoffirmsamongthoseexportingtosomeLACcountrythatexportsexclusivelytotheregion.

19HS6-digitproductsin2007to26productsin2017.Third,theincreaseinproductdiversificationisdrivenbytheexpansionofregionalexportrelationships,ratherthanextraregionalones.Putinperspective,Colombianexportingfirmsshowarelativelyhighlevelofproductdiversification;Peruvianfirms,forexample,onlyexport,onaverage,8.5HS6-digitproducts(Fugazzaetal.,

2018).

Table3:Numberofexportedproductsperfirm

Mean

Median

Maximum

LAC

All

LAC

All

LAC

All

2007

19.5

17.4

10.0

9.0

128

131

2008

20.5

18.3

10.0

9.0

133

133

2009

22.8

20.1

11.0

10.0

180

181

2010

23.3

20.8

11.0

10.0

175

175

2011

26.0

22.9

12.0

11.0

193

195

2012

27.0

23.7

13.0

11.0

202

204

2013

29.0

25.7

13.0

11.0

207

209

2014

29.4

26.1

13.0

12.0

202

204

2015

29.6

26.0

13.0

11.0

207

208

2016

28.6

25.4

13.0

11.0

182

186

2017

26.6

23.6

12.0

11.0

153

155

Source:Author’scalculationbasedonColombiancustomsdata.

Note:ThistablereportsthenumberofexportedHS6-digitsproductsbyColombianfirmsovertimeandbyLACandworlddestinationmarkets.

Colombianexportingfirmsareincreasinglydiversifiedintheirsalesmarkets.

Table4

showsthattheaverageshareofthesalesmarketgrewfrom6.4in2007to7in2017.Whatismore,Colombianfirmsexporttoanadditionalfivedestinationmarketsbeyondtheregion,resultinginatotalof12destinationmarketsglobally(columns2and3).

11

Table4:Numberofdestinationsperfirm

Mean

Median

Maximum

LAC

All

LAC

All

LAC

All

2007

6.4

10.1

6.0

8.0

16

45

2008

6.5

10.3

6.0

8.0

16

48

2009

6.6

10.7

6.0

9.0

16

48

2010

6.7

11.2

7.0

9.0

17

51

2011

6.8

11.5

7.0

9.0

17

51

2012

6.9

11.6

7.0

9.0

17

49

2013

7.0

12.0

7.0

9.0

17

51

2014

7.0

12.3

7.0

9.0

17

61

2015

7.0

11.9

7.0

9.0

17

61

2016

7.0

11.9

7.0

9.0

17

58

2017

6.9

11.5

7.0

9.0

16

60

Source:Author’scalculationbasedonColombiancustomsdata.

Note:ThistablereportsthenumberofdestinationmarketsbyColombianexportersovertime.

3.2TariffsinLAC

Colombianexporterssawdecliningtariffsintheirregionaldestinationmarketsbetween2007and2017.Theappliedtariffdecreasedsteadilyfrom6.7%in2007toonly4.1%in2017,asseeninTable

5,

asColombiaratifiednumerouspreferentialtradeagreementswithregionalpartnersovertheperiodunder

investigation.5

Thisismostevidentfor2017whentariffreductionsofthePacificAlliancebetweenColombiaandMexico,PeruandChile,cameintoeffect.Atthesametime,Most-Favored-Nation(MFN)tariffsnegotiatedattheWorldTradeOrganization(WTO)declinedonlymarginallyfrom9.1%in2007to8.7%in2017,reflectingthepersistentdeadlockinmultilateraltradenegotiations.

3.3Non-TariffMeasuresinLatinAmerica

TheNTMdatasetcontains6,211regulationsforColombia’s17destinationmarketsinLACbetween2007and2017.Tostudythevariationofregu-

5ThePacificAlliance,signedin2013betweenColombiaandMexico,PeruandChile,reduced92%oftariffsbetweenmembersin2016.Moreover,thefreetradeagreement(FTA)betweenColombiaandCostaRicaenteredintoforceonAugust1,2016.Asaresult,74%ofindustrialproductsbecameduty-free.

12

Table5:Simpleaveragetariff(appliedandMFN)toColombianexportsinLatinAmericancountries,2007–2017

Applyingcountry

Tariff

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

ARG

Applied

4.5

3.6

3.4

2.5

2.0

1.4

0.8

1.2

1.1

1.1

1.0

MFN

11.1

11.0

12.3

12.3

12.3

12.3

13.2

13.4

13.4

13.4

13.5

BOL

Applied

7.9

7.9

9.6

10.3

10.3

10.3

10.6

10.6

10.6

10.6

10.5

MFN

8.7

8.7

10.4

11.1

11.1

11.1

11.5

11.4

11.4

11.5

11.7

BRA

Applied

4.0

3.0

2.3

1.5

0.7

2.5

13.0

2.0

2.0

2.1

2.1

MFN

12.1

13.0

13.3

13.4

13.4

13.4

13.4

13.5

13.5

13.5

13.5

CHL

Applied

5.5

5.4

5.5

5.4

5.3

5.3

5.9

5.9

0.6

5.9

0.7

MFN

6.0

6.0

6.0

6.0

6.0

6.0

6.0

6.0

6.0

6.0

6.0

CRI

Applied

6.1

6.6

5.7

5.7

5.6

5.7

5.7

5.7

5.7

5.7

5.7

MFN

6.1

6.6

5.7

5.7

5.6

5.7

5.7

5.7

5.7

5.7

5.7

CUB

Applied

10.6

10.6

10.6

10.6

10.6

10.6

10.2

10.2

10.2

10.2

10.2

MFN

10.6

10.6

10.6

10.6

10.6

10.6

10.2

10.2