Writing in the Wall Street Journal, Cato Institute’s Daniel Ikenson examines how nations can still increase free trade despite yesterday’s collapse of the Doha Round WTO talks:
As Doha negotiations sputtered for seven years, the WTO reports that annual global trade flows have increased 70%, to $14 trillion. UNCTAD reports that annual foreign direct investment flows are up 25%, to $1.5 trillion. And the IMF notes that the global economy has expanded by 30%, to $54.4 trillion. These positive trends should continue if governments unilaterally ramp up their own “trade facilitation” efforts. Trade facilitation is about streamlining the administrative and physical procedures involved in actually moving goods across borders. … While reduced tariffs are important, they will not improve trade flows if bureaucratic customs procedures and shoddy logistics and communications systems are still in place.
The World Bank’s most recent “Doing Business” survey offers the anecdote of a Yemeni fish exporter, Tarik, whose fortunes are limited by the persistence of bureaucratic export procedures. Tarik can sell fresh tuna to Germany for $5.20 per kilo or frozen tuna to Pakistan for $1.10 per kilo. But since it takes on average 33 days to get official clearance to export from Yemen, he sells only 300 fresh tons to Germany and 1,700 frozen tons to Pakistan, at an opportunity cost of about $7 million per year.