COMCEC Trade Outlook 2019
42
to make payment”. 24 Trade Facilitation aims at easing the trade among the countries through
decreasing the burden of procedures and trade costs. Firms face various costs when trading
internationally including export and import procedures, customs formalities, transportation
and logistics problems that trade costs. WTO notes that trade costs can reach 134 per cent ad
valorem tariff equivalent on a product in high-income countries whereas they can be 219 per
cent tariff equivalent in developing countries.25
Studies, such as WTO (2004) and De (2009) suggest that higher transport costs is in many cases
more restrictive to trade than high tariffs. Various studies have been conducted to measure the
impact of transport constraints on international trade. For example, based on their research on
Middle East and North Africa (MENA) region, Bhattacharya and Hirut (2010) suggest that
reducing the transport constraint from the average in the region to the world average could have
a significant impact on trade volumes, raising exports by 9.5 percent and imports by 11.5
percent, while all other determinants are constant (ceteris paribus).
There are several indices or reports developed by the international institutions to identify the
bottlenecks in countries which hinder international trade. The World Bank Doing Business
Report is one of these reports. World Bank introduced a new methodology for measuring ease
of trading across borders in 2015. Trading across borders, measures the time and cost
(excluding tariffs) for documentary compliance and border compliance within the overall
process of exporting and importing a shipment of goods.26 The distance to frontier (DTF) score
shows how far on average an economy is from the best performance achieved by any economy
on Trading Across Borders indicator. Figure 51 below shows the DTF scores for OIC compared
to other regions. OECD high income countries are very close to the frontier while OIC countries
are slightly less than 60 per cent. This underlies the importance of policies to facilitate trade in
the OIC countries.
Figure 51: Comparative DTF Scores
Source: Authors’ calculation based on WB Doing Business 2019 data
24
25
26 For detailed information on the methodology please visit World Bank
60.17
94.21
53.59
58.93
0
10
20
30
40
50
60
70
80
90
100
Distance to frontier score
Trading Across Borders - Distance to Frontier
Middle East & North Africa OECD high income