Growing Together: Economic Integration for an Inclusive and - escap

CHAPTER TWO
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Towards a broader integrated market
the borders, poor physical connectivity and
freight and associated costs, among others. 3
Accounting for the costs of merchandise
trade
According to the ESCAP Trade Cost Database,
nowadays tariffs typically account for no
more than 10 per cent of overall trade costs. 4
But while tariffs have been falling, both as
nominal and effective rates, the costs of
non-tariff and behind-the-border measures
remain very high. For example, intraregional
trade is inhibited by documentary and other
import and export procedures which account
for up to 15 per cent of the value of traded
goods. 5 These form part of what are measured
as comprehensive trade costs. 6
Between 2005 and 2011, the time taken to
complete all trade procedures involved in
moving goods from factory to ship at the
nearest seaport – or vice versa – in the Asia-
FIGURE TITLE
II.4. Policy-related factors in trade costs
Source: Duval and Uthoktham (2011).
Pacific developing economies decreased
on average by more than 18 per cent. The
greatest progress has been in South-East
Asia. On the other hand, procedures in South
and South-West Asia still take 50 per cent
more time to complete than in South-East
Asia. No significant progress was made in
the Pacific. Overall, it still takes three times
longer to complete trade procedures in the
Asia-Pacific developing economies than in
Australia, Japan and New Zealand, indicating
considerable room for improvement.
Some of the costs are inherent to the location,
culture or history of the trading partners and
may be difficult to address through policy, at
least within a reasonable time frame. These
costs are sometimes called ”natural” trade
costs. However, other costs – such as tariff rates,
the availability of logistics infrastructure and
services, a favourable exchange rate, a conducive
business environment and transparent
and streamlined border procedures – are open
to policy change.
a Illustrative based on casual observation of the data only. Natural trade costs for landlocked countries may be outside the range shown for
natural trade costs.