Better trade facilitation to reduce trade costs in Asia by up to 9pc annually: ADB

Improved trade facilitation – the simplification, modernisation, and harmonisation of export and import processes – can reduce trade costs by up to 9 per cent in Asia and the Pacific, according to a new joint report by the Asian Development Bank (ADB) and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) launched Tuesday on the sidelines of the Asia-Pacific Trade Facilitation Forum in Yogyakarta.

The report, Trade Facilitation and Better Connectivity for an Inclusive Asia and Pacific, highlights the benefits of better trade facilitation in the region such as promoting customs improvements and cross-border cooperation among countries, with the implementation of the provisions under the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) which entered into force in February of this year.

Partial implementation of the TFA, for instance, could reduce trade costs in the region by 5 per cent annually, while full implementation would yield a 9 per cent reduction in costs – or a $ 219 billion of savings every year.

“Trade facilitation increases trade flows and lowers trade costs, making it critical for development in Asia and the Pacific,” a statement received here quoted ADB’s Chief Economist Yasuyuki Sawada as saying.

“We’re hopeful that the findings of the report can further help our development partners in improving trade facilitation and paperless trade implementation in the region.”

The report features findings of a global survey on trade facilitation and paperless trade implementation, revealing various improvements across the region. The region marked improvements in general trade facilitation, paperless trade, and cross-border paperless trade, with the average implementation rate rising to 50.4 per cent in 2017 from 46.5 per cent in 2015. Sub-regionally, East Asia has the highest implementation rate at 73.7 per cent after Australia and New Zealand (85.0 per cent).

Digitalisation, along with institutional coordination, is seen as a great tool to further enhance trade facilitation, implementation and reduction of trade costs. The analysis in the report suggests that going fully “paperless” when implementing the measures in the WTO TFA could help reduce trade costs in the region by 16 per cent, instead of just 9 per cent.

“The Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific can accelerate implementation of digital trade procedures in the region,” said ESCAP’s Deputy Executive Secretary Hong Joo Hahm. “Three countries already formally signed this new UN treaty last week: Bangladesh, Cambodia, and the People’s Republic of China. It is a promising start, and we look forward to more countries joining soon.”

The report also highlights the efforts to improve trade facilitation in major sub-regional cooperation initiatives like the Greater Mekong Sub-region (GMS) and the South Asia Sub-regional Economic Cooperation (SASEC).

In the Central Asia Regional Economic Cooperation (CAREC) area, for example, the report finds that a 10 per cent reduction in time at the border could lead to an increase in trade by 2 per cent-3 per cent.

Via Profit