ISSN 2330-717X

Trade Costs On Rise In Asia And Pacific: Cuts In Red Tape Could Help Bend Trend

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The high cost of trade in Asia and the Pacific continues to rise, but ongoing efforts to facilitate commerce will help keep goods flowing throughout the region, according to a new report by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Asian Development Bank (ADB).

Economies in the region have shown continued progress in streamlining trade procedures despite the COVID-19 pandemic, and the subsequent supply chain disruptions and surge in shipping costs – which hit an all-time peak this year. Implementation of 31 general and digital trade facilitation measures rose on average across the region to 64.9 per cent in 2021, about six percentage points higher than in 2019.

The Asia-Pacific Trade Facilitation Report 2021 also highlights that cross-border trade digitalization has great potential to help countries in Asia and the Pacific access critical goods, especially those most vulnerable to trade uncertainty and crisis. If countries speed up their implementation of digital trade schemes average trade costs could drop by more than 13 per cent.

“In addition to digitalization, there is also a need to pursue trade facilitation policies that make trade more sustainable and inclusive, leaving no one behind,” said Armida Salsiah Alisjahbana, United Nations Under-Secretary General and ESCAP Executive Secretary. She added that measures are specifically needed to support small and medium-sized enterprises, women and the agricultural sector to make recovery more sustainable. 

The ESCAP-ADB study underscores the need to strengthen the resilience of supply chains as the COVID-19 pandemic laid bare the vulnerabilities of concentrated trade networks, limited inventories and financing shortages. High global value chain participation left Asia and the Pacific particularly vulnerable to restrictive trade policies. 

“Border closures, export controls and health and safety protocols have disrupted production and the flow of goods across international boundaries, with dire effects on the supplies of critical goods such as food, personal protective equipment and vaccines, especially for the poor and vulnerable,” said Bambang Susantono, ADB Vice-President for Knowledge Management and Sustainable Development.

The pandemic spotlighted the importance of prompt global and regional support and cooperation to ensure continuous supplies of critical goods. About two-thirds of 20 Asia-Pacific Economic Cooperation (APEC) economies implemented new trade facilitation measures to mitigate supply chain disruptions. Many countries in the region also accelerated measures related to transparency and institutional coordination, simplification of customs procedures and expedited clearance.

The report further highlights the role of the WTO Trade Facilitation Agreement and the related UN treaty on cross-border paperless trade in Asia and the Pacific to accelerate recovery post-COVID-19 while trade openness remains a key element. As the pandemic has quickened the move to trade digitalization, more work is needed to leverage digital technologies to streamline customs procedures and electronic exchange of information, and implement national and regional single windows for document submission and clearance.

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