NEW Trade Policy Analysis

June 17, 2008
TRADE POLICY ANALYSIS
Trade facilitation offers alternative to fledgling trade talks

WASHINGTON -- As the Doha Round lies in a cryogenic state, governments can promote trade, investment, and economic growth by reforming the administrative and physical procedures involved in the transport goods into and out of their countries.

In “While Doha Sleeps: Securing Economic Growth through Trade Facilitation” associate director of Cato’s Center for Trade Policy Studies Daniel Ikenson reminds us that “comprehensive multilateral agreement is not the only way to improve the trading system. … Like tariff cuts -- and often with greater impact --improvements in trade facilitation procedures can help reduce the cost of trade and increase its flow.”

According to recent studies from the World Bank and elsewhere, improvements to a country’s trade infrastructure -- logistics services, port capacity, administrative procedures, customs requirements, etc. -- could do more to increase global trade flows than further reductions in tariff rates. And, trade facilitation reforms are not only for developing countries.

“One recent study suggests that a one-day improvement in the average time it takes to move U.S. cargo from a warehouse to the port of export and inbound cargo from the port to a domestic warehouse could increase U.S. trade by almost $29 billion per year,” writes Ikenson. “With world trade continuing to grow faster than global output, it is imperative that governments embrace practices that position their citizens to compete effectively for markets and investment. … Closing the trade facilitation performance gap will be crucial to U.S. competitiveness going forward,” concludes the author.

Trade Policy Analysis #37