Impacts of COVID-19 temporary trade measures on Viet Nam's trade efficiency with RCEP's partners

Under the pressure of the COVID-19 pandemic, many countries responded with various trade measures to prevent shortages of essential goods and ensure product quality and safety. COVID-19 trade measures were used to facilitate or restrict trade performance across countries, then increase or decrease the gap between trade actual and trade potential. During the midst of the pandemic, the Regional Comprehensive Economic Partnership (RCEP), which is made up of the10 member states of the Association of Southeast Asian Nations (ASEAN) plus five big partners (the People's Republic of China [PRC], Japan, the Republic of Korea, Australia, and New Zealand, excluding India) was signed in November 2020. The RCEP's enforcement also raises the question of regional integration's role in overcoming a crisis. Using the stochastic frontier gravity model (SFGM), the study examines how the COVID-19 pandemic affected Viet Nam's trade efficiency with that of RCEP country members. The paper also incorporates COVID-19 temporary trade measures as the explanatory variables that represent the presence of crisis and government response in front of a pandemic. The paper used panel data on Viet Nam's trade with RCEP members at a disaggregated level (HS6digit) in the period from 2017 to 2021, with a total of 376,530 observations. The study contributes to existing literature in a several ways. First, the results consolidate empirical literature about the effects of crisis on trade efficiency using evidence from Viet Nam to RCEP members at the detailed product level. Second, the study shows the heterogeneous effects of policy responses on trade efficiency across different types of trade measures. Most of the studies related to COVID-19 have used the Oxford policy stringency index as the proxy representing policy response to the pandemic with some limitations that do not reflect the varying responses across products. Thus, specific trade measures imposed on certain products were incorporated in the model to analyze the various effects on trade efficiency across products. Finally, the results provide trade policy implications to reduce trade inefficiency under the COVID-19 pandemic.