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Trade Facilitation Improvements to Reap Big Benefits in Asia Pacific
A new World Bank report discussed at the Asia Pacific Economic Cooperation (APEC) summit finds that action on trade facilitation--including improvements in ports, regulatory systems, standards, and electronic commerce--would increase trade among APEC members by US$280 billion.

This potential gain compares with trade among APEC members that totaled $2.1 trillion in 2001. The Economic Impact of Trade Facilitation Measures: A Development Perspective in the Asia Pacific Region shows that all countries gain even with a modest investment in capacity building projects. Collective action by industrialized countries would pay high dividends in export-led growth to reduce poverty.

"Trade can be a powerful force for growth and poverty reduction. Countries that have increased the share of trade in their GDP have grown faster and reduced poverty more rapidly," said Nicholas Stern, World Bank Chief Economist and Senior Vice President for Development Economics. "This study shows that investments in trade facilitation, such as improvements in customs and ports, significantly increase trade, thereby boosting growth and creating new opportunities for poor people to improve their lives. The benefits of trade facilitation will be greater still if rich countries act to remove barriers to trade and open their markets to developing countries' exports."

The Bank's study forms the basis for discussions on facilitation measures among trade ministers of the 21 APEC member economies, meeting in Los Cabos, Mexico on October 23-24. Canadian Trade Minister Pierre Pettigrew will present the Bank study to APEC members.

Among the study's findings, exports would rise in Indonesia by $2.9 billion, Thailand by $3.9 billion, Malaysia by $6.3 billion, Mexico by $1.9 billion, and China by $32 billion with investment in on trade facilitation in the region. The overall gains to trade from investment in trade facilitation would exceed those in tariff cuts on manufactured goods, the study finds.

The greatest gains to developing countries would come from improvements in ports and customs efficiency, the report says. Significant gains would also result from improvements in regulatory standards and harmonization, e-business usage and administrative transparency and professionalism. The study includes an analysis of the impact of various trade facilitation measures and includes suggestions on tailoring pilot projects in the region. The full text of the report will be available on the web at http://econ.worldbank.org/ under "Featured Resources."

Background information: Main Elements of World Bank Study

The Economic Impact of Trade Facilitation Measures: A Development Perspective in the Asia-Pacific Region

  • A new approach to measuring trade facilitation is recommended: Seven indicators of trade facilitation are generated to measure the efficiency of (1) port logistics; (2) customs procedures; (3) regulatory environment; (4) standards harmonization; (5) business mobility; (6) e-business use; and (7) administrative professionalism and transparency in each APEC economy.

  • The analysis considers how much trade in the APEC region might increase under various scenarios of "improved" trade facilitation. A practical scenario for targeting pilot projects calculates the increase in trade that would be associated with bringing those APEC members that have trade facilitation measures below the APEC average halfway up to the APEC average. The results show that for APEC as a whole there would be an increase in intra-APEC trade by about US$280 billion dollars.

  • The model reveals that the greatest gains would come from improvements in the area of port logistics. Significant gains would also result from improvements in regulatory standards and harmonization, e-business usage and administrative transparency and professionalism.

  • In terms of the distribution of the export gains, large APEC exporters such as the U.S., Japan, and Korea would see the greatest increase in dollar terms with investment in improved port efficiency (US$46 billion, US$38 billion, and US$11 billion respectively). Many APEC economies (Russia, Hong Kong, Chile, Chinese Taipei) would also experience large double-digit increases in exports to the APEC region (44%, 34%, 22% and 18% respectively).

  • The study will assist in better targeting capacity building projects. For example, in Peru, where the port logistics indicator is almost the lowest among APEC members, an improvement halfway up to the APEC average would increase imports by about US$2.7 billion. An improvement in its standards harmonization indicator would increase imports by approximately US$1.5 billion. Given limited resources, Peru might do better to focus on port logistics. The possible gains from focusing on standards harmonization are significant, however, and should not be ignored. Similarly for Indonesia, focusing on improving port logistics would yield an efficiency gain of some US$10.8 billion, but potential increased efficiency worth about US$3.5 billion from increased transparency and professionalism and about US$2.3 from standards harmonization suggests that these areas could benefit from for projects as well.

(china.org.cn October 29, 2002)

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