GENEVA — Slashing costly border administration procedures would bring significant benefits to the global economy and spur growth in exports of manufactured goods such as textiles and apparel, a report by the Organization for Economic Cooperation and Development said.
“Complicated border processes and excess red tape raise costs, which ultimately fall on businesses, consumers and our economies,” said Angel Gurría, OECD secretary-general.
The OECD’s “Trade Facilitation Indicators” report estimates that a comprehensive implementation of trade facilitation measures, currently being negotiated in the World Trade Organization, would lower global trade costs by 10 percent in advanced economies and by 13 to 15.5 percent in developing nations.
“We’re talking here about significant reductions of trade costs that can give a very important boost to the global economy,” said Evdokia Moïsé, senior trade policy analyst at the OECD and lead author of the report.
The Paris-based OECD estimates that reducing global trade transaction costs by 1 percent would increase worldwide income by more than $40 billion.
Moïsé said the study looked at the cost businesses incur to bring their goods to the global market place by evaluating 16 trade facilitation indicators in 133 countries worldwide. These included the simplification and harmonization of documents, streamlining of customs procedures, use of automated processes and advanced rulings.
Product-specific analysis on a sample of agricultural and manufactured products such as textiles and apparel estimated that a 10 percent reduction in the number of documents needed to import would increase trade 11.1 percent and that a 10 percent reduction in the number of days and signatures needed to import would result in trade hikes of 6.3 percent and 9.9 percent, respectively, according to the OECD.
In some countries, hidden costs such as smuggling, bribery and corruption at the border are estimated to contribute to loss of customs revenues, which exceed 5 percent of gross domestic product in some poor developing countries, the OECD said.
The OECD’s Gurría said the trade facilitation negotiations “offer countries a golden opportunity to reduce or eliminate these bottlenecks.”