Growing Together: Economic Integration for an Inclusive and - escap

Research undertaken by ESCAP suggests
that tariff trade costs in Asia and the Pacific
generally account for up to 10 per cent of
bilateral comprehensive trade costs, while
other policy-related trade costs, such those of a
non-tariff nature, account for 60 to 90 per cent.
Natural trade costs vary widely depending on
the partner countries, but account on average
for more than 20 per cent of trade costs. As
indicated in figure II.4, progress to bring down
trade costs will be particularly important in
maritime services and in information and
communications technology (ICT).
It should be noted, too, that the full costs lay
not so much in the direct costs of completing
the procedures, but in a potential reluctance
to engage in trade if the likely overall costs are
uncertain.
All subregions in Asia and the Pacific have
made progress in reducing non-tariff trade
costs between 2001-2003 and 2007-2009,
with trade costs between East Asia and
North and Central Asia experiencing the
largest reduction (table II.4). Because its
geographic proximity and similarities in
languages and culture, the costs of trade are
expected to be lower between countries in
the same subregion. However, the costs of
trade between subregions are quite high,
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even when they are also relatively close
geographically. Moreover, the costs of trade
between the Asia-Pacific subregions tend to
be substantially higher than those between
them and the traditional markets of the West.
Those between the ASEAN and SAARC, for
example, are on average nearly double the
costs of trade between ASEAN and the United
States of America. Similarly, the costs of trade
between North and Central Asia and South
Asia are about twice those between North
and Central Asia and the European Union. 7
Factors that explain these significantly higher
costs are explored below and in chapter three
of this study.
Apart from Singapore and Hong Kong, China,
the top-ranked economies in the ESCAP Trade
Cost Database – the ones with the lowest costs
– are Malaysia, the United States, China, the
Republic of Korea and Thailand, with Japan
and Germany following closely. 8 However, the
trade cost performance of a given country
varies significantly depending on trading
partners, as well as on the type of goods.
Compared with manufactured goods, the
barriers are greater for agricultural products
which are typically governed by extensive
regulations for food safety or food security. 9
Nevertheless, the costs vary considerably from
country to country suggesting significant
scope for reduction (figure II.5).
II.4. Non-tariff intraregional and extraregional trade costs in Asia and the Pacific, 2007-2009
Region ASEAN-4 East Asia-3
ASEAN-4
79
(-10)
East Asia-3
73
(-6)
47
(-21)
North and
291
187
Central Asia-6 (-14)
(-33)
SAARC-4
134
(-0)
119
(-3)
Australia-New
90
78
Zealand
(-12)
(-16)
EU-3
97
(-5)
70
(-19)
United States
77
(-0)
53
(-14)
North and
Central Asia-6 SAARC-4
149
(-21)
270
(-22)
270
(-22)
149
(-26)
165
(-17)
Australia-New
Zealand EU-3
Source: ESCAP Trade Cost database (version 2).
Notes: Trade costs may be interpreted as tariff equivalents. Percentage changes in trade costs between 2001/2003 and 2007/2009 are in parentheses.
ASEAN-4: Indonesia, Malaysia, the Philippines and Thailand; East-Asia-3: China, Japan and Republic of Korea; North and Central Asia-6: Armenia,
Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan and Russian Federation; SAARC-4: Bangladesh, India, Pakistan and Sri Lanka; EU-3: France, Germany
and the United Kingdom.
113
(-1)
130
(-3)
101
(-3)
99
(-1)
45
(-24)
89
(-17)
82
(-11)
32
(-33)
51
(-18)
28