AN EXPLORATION OF THE NEED FOR AND COST OF SELECTED TRADE FACILITATION MEASURES IN ASIA AND THE PACIFIC IN THE CONTEXT OF THE WTO NEGOTIATIONS

An exploration of the need for and cost of selected trade facilitation measures in Asia and the Pacific in the context of the WTO negotiations

Neither of the two approaches mentioned above allows evaluation of the economic
and trading impact of specific TFMs or instruments, such as those that might result from
a possible future WTO agreement on trade facilitation (although Wilson et al.’s approach
may allow prioritization of trade facilitation capacity building projects across four broad
areas). Both methods also require large amounts of data not easily available, collected or
made consistent across developing countries.

In addition to these global or regional macro-level studies, a number of micro-level
and country case studies have also been conducted (e.g., Abid Khan, 2004; Nomura
Research Institute, 2004; Keen, 2003; OECD, 2005b). They highlight the significance of
inefficient trade regulations, documents and procedures in impeding firms in some developing
countries to compete in the global markets, and point to the potentially large benefits
associated with implementation of TFMs to cut customs clearance time and streamline
trade regulations.

While, as mentioned earlier, the definition/scope of trade facilitation (and related
measures) varies widely from study to study and the estimated benefits are very often not
linked to a specific TFM, there is a broad consensus that implementation of TFMs result in
significant welfare and competitiveness gains in both developing and developed countries.⁷
The documents submitted by WTO members to the Negotiating Group on Trade Facilitation
(NGTF) on their national experience in implementing various TFMs also generally support
this consensus.⁸

However, the existing literature provides little information on the costs associated
with implementing the various measures discussed. In a first attempt to address this
issue, OECD conducted a series of country surveys in 2004 and 2005. Data on
implementation approaches and costs of eleven TFMs selected among those proposed by
WTO members for negotiations was collected in fourteen developing countries (OECD,
2004; OECD, 2005c). While the OECD cost study does not include any conclusive
quantitative cost estimates for the measures examined, it provides very useful information
on the relative complexity of the various measures examined and some of the major
issues associated with their implementation. The study focused specifically on implementation
costs for Government and considered the following 4 cost components (1) Regulatory
costs, (2) Institutional costs, (3) Training costs and (4) Equipment/Infrastructure costs
specifically and directly related to a given TF measure. However, the study notes that

⁷ The significance of the long-term benefits associated with trade facilitation is also not a controversial
issue among trade policymakers and negotiators, as demonstrated by the spirit in which the WTO
trade facilitation negotiations took place, as well as the constructive discussions that took place during
the OECD Global Forum on Trade Facilitation, held in Colombo, Sri Lanka in October, 2005. However,
the initial and operational costs associated with TFMs remain of concern to some governments, which
need to decide to what extent they should allocate their very scarce resources to their implementation.

⁸ Australia, Egypt, Guatemala, Japan, Republic of Korea, Malaysia, Norway, Singapore, Thailand
and others have submitted national experience papers to the WTO NGTF (TN/TF/W/.. series available
at www.wto.org).

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