2. Literature review
Lloyd and Smith’s (2004) study on trade facilitation in ASEAN notes that the creation of
a single market implies that the law of one price holds in all markets. To obtain the goal
of economic integration (i.e. a single market), Lloyd and Smith (2004) have identified
three sets of measures, namely:
(1) border measures applying to imports into a member country;
(2) beyond-the-border measures applying to imports into a member country; and
(3) harmonization of measures across member countries.
Border measures pertain to the traditional tariff and non-tariff measures such as quotas,
prohibitions or licensing. Beyond-the-border barriers are measures that apply after the
goods have passed the border such as technical barriers due to industrial, environmental
and other standards, and other regulations which discriminate against foreign goods,
and differences in tax treatment. While trade barriers in the case of goods (tariff and
non-tariff barriers) are mainly restricted to cross-border transactions, in the case of
services the most important barrier is the set of regulations that operate behind the
border (CIES, 2006). In other words, in the case of services (e.g. logistics sector),
tariff measures are inapplicable.