Does the WTO Trade Facilitation Agreement Actually Promote International Trade? A Structural Gravity Analysis

Trade theories implicitly explain the significance of trade facilitation (TF) in increasing trade. Identifying the methodological gaps in the literature, this study assesses the effects of TF on international trade relative to internal trade under a theoretically consistent structural gravity model. The results suggest that countries' improved TF performance increases their agriculture and manufacturing trade. However, the ratification of the trade facilitation agreement (TFA) does not affect trade. The study observes differential effects of various dimensions of TF. Moreover, heterogeneity in the TF effects is found across different industries. These findings encourage countries to implement TF measures more seriously.