Yogyakarta – Simplification, modernizing and synchronization of import and export processes can reduce trade costs by up to 9 percent in Asia and the Pacific.
According to “Trade Facilitation and Better Connectivity for Inclusive Asia and Pacific”, the latest report from the United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP), associated with the Asian Development Bank’s (ADB), improvement of facilities could reduce trade costs and increase efficiency.
“Trade facilitation can increase trade flows and lower costs, so it is crucial for development in Asia and the Pacific,” ADB Chief Economist Yasuyuki Sawada said in a statement released on Tuesday, (5/9).
The report also highlights the importance of promoting customs and cross-border cooperation between countries, with the implementation of the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO), which has been in force since February 2017.
According to estimates, partial implementation of TFA could reduce the cost of trade in the region by up to five percent per year, while full implementation would result in a nine percent cost reduction, or the equivalent of savings of US$219 billion per year.
“We hope the findings in this report can further assist development partners in enhancing trade facilitation and implementation of paperless trade in the region,” Sawada added.
This report also outlines the findings of a global survey on trade facilitation and the implementation of paper trade, revealing progress in the Asia and Pacific region.
One of the most important advances in the region is in the area of general trade facilitation: paper trade and non-binding paper trade has seen its average rate of execution go up to 50.4 percent in 2017 from 46.5 percent in 2015.
In sub-region, East Asia has the highest implementation rate of 73.7 percent, after Australia and New Zealand, each of which has reached 85 percent.
In addition, digital processes, supported by institutional coordination, represent an excellent tool for improving trade facilitation and reducing trade costs.
Analysis shows that the full implementation of WTO TFA steps can help reduce trade costs in the region, not just by 9 percent, but up to 16 percent.
Deputy Executive Chairman of ESCAP Hong Joo Hahm added that the framework agreement in facilitation of paper trade in the Asia-Pacific region can support the acceleration of the implementation of digital trading procedures.
“Three countries have formally signed this new UN pact – Bangladesh, Cambodia and the People’s Republic of China – a promising start. We are waiting for more countries to join soon,” he said.
The report highlights efforts to improve trade facilitation through a number of sub-regional cooperation initiatives, such as the Greater Mekong Subregion (GMS) and the South Asia Subregional Economic Cooperation (SASEC).
For example, for the Central Asia Regional Economic Cooperation (CAREC) region, a projection of a 10 percent reduction in time spent on the border could lead to a trade increase of two to three percent.
Writing by Elisa Valenta