Do Private Inspection Programs Affect Trade Facilitation?

Private inspection of international
shipments has been used over the last half-century for a
variety of purposes. These include prevention of capital
flight and improvement of import duty collection, among
others. The existing literature has failed to find much
impact of these inspection programs on collected tariff
revenue or corruption at the border. This paper explores the
"facilitation" effect of private inspection
programs on trade. The results indicate that private
inspection has a positive and significant trade-facilitation
effect. These programs raise import volumes for countries
using them by approximately 2 to 10 percent. The findings
here also suggest that the benefit of private inspection of
imports may be associated with reforms and best practices
applied by private inspection firms. Private firms'
inspection of cargo may promote faster clearance times and
process reliability, rather than improved tax collection.