Maritime Trade and Transport - HWWI

y the European Union are the Euro-Mediterranean Association Agreements with non-
European Mediterranean countries, the planned Economic Partnership Agreements with the
ACP countries, the free trade agreements with South Africa, Mexico and Chile, and the planned
agreement with the Mercosur countries, which include Argentina, Brazil, Paraguay and
Uruguay and, most recently, Venezuela. 8
The quintessential characteristic of these preferential or free trade agreements is a reciprocal
reduction in trade barriers. On the one hand, new trade is created between the trade partners
of a regional agreement; on the other hand, existing trade is diverted at the expense of
other countries. 9 However, price-induced diversion of trade should be compared long-term
with income-induced creation of trade, which results from the fact that internal growth im -
pulses of regional integration also indirectly stimulate trade with other countries. Besides,
regional agreements are rarely limited to internal tariff reductions, but often also involve the
elimination of trade barriers resulting from various domestic measures and regulations (e.g.,
the EC single market). All in all, the trade-creating effects of regional integration are likely to
predominate so that, at least over time, a decline in interregional trade need not be expected.
2.3.3 Impact of transport costs
Through the reduction of state-imposed market access barriers, at the same time, other tradeinhibiting
factors have gained in relative importance. Of particular consequence here are transport
costs, which may have far-reaching effects on the regional structure of foreign tra de. 10
In many cases, transport costs now constitute a far more serious trade barrier than ta riffs.
A 2001 study by the World Bank concludes that, for 168 U.S. trade partners, transport cost
barriers outweighed tariff barriers. For the majority of Sub-Saharan African countries, for
example, the share of transport costs in trade value is approximately five times as high as the
tariff burden. In the developing countries, transport costs are on average 70% higher than
in the industrialized countries. 11
Transport costs are affected by numerous factors. Predominant is the geographical distance
between the trade partners. It is estimated that doubling the distance increases the transport
costs by 20 to 30%. This provides an additional explanation (in addition to the formation of
free trade areas and customs unions between neighboring countries) for the fact that the
intensity of international trade relations tends to be inversely correlated to the distance between
the trade partners, and explains why intraregional trade is dominant over interregional
8 See Koopmann (2006).
9 A liberalization of trade between the EU and the Central and Eastern European countries
in the 1990s, for example, led to a brief decrease in the exchange of goods between these
countries and Russia.
10 We will not go into detail here regarding wholesale and retail distribution costs,
which also constitute an important component of trade costs. For this, see Anderson,
van Wincoop (2004).
11 See WTO (2004).
20 Berenberg Bank · HWWI: Strategy 2030 · No. 4