Ingredients of trade success

Applied tariffs are less than half the levels of 25 years ago

OK, so I read World Bank doc­u­ments for the pic­tures. It’s true…I’m not ashamed to admit it. The prose in these tomes is often gluti­nous but the graphs are great!

The chart shows why there’s much less inter­est, now, in tar­iff bind­ings, the cur­ren­cy of WTO agree­ments. The last big reces­sion (2007–9), unlike those of the 20th cen­tu­ry, led to hard­ly any new bor­der bar­ri­ers; although quite a few coun­tries adopt­ed mea­sures that attempt­ed to cap­ture domes­tic demand.

Here’s a sum­ma­ry para­graph from the first ever Trade Strat­e­gy (pdf file about 1.2mg). It’s a pret­ty accu­rate sum­ma­ry of what seems to mat­ter and what does­n’t. The WTO gets a cheery wave in the last sen­tence, but whether it’s “hail” or “farewell” is not yet clear. 

Trade suc­cess today is deter­mined by effi­cient inter­nal trans­ac­tions, low trans­port costs and easy access to qual­i­ty ser­vices inputs. Tra­di­tion­al poli­cies used to restrict trade (tar­iffs; non-tar­iff bar­ri­ers) have proven to be large­ly inef­fec­tive instru­ments of eco­nom­ic pol­i­cy for devel­op­ment. The pri­or­i­ties for cur­rent pol­i­cy are to reduce trade costs for firms, includ­ing through more effi­cient trade facil­i­ta­tion and logis­tics; improve trade com­pet­i­tive­ness by ensur­ing busi­ness­es have access to key inputs such as (trade) finance; and, increase coop­er­a­tion between trad­ing part­ners to inte­grate mar­kets there­by allow­ing economies of scale to be real­ized and fur­ther spe­cial­iza­tion and diver­si­fi­ca­tion to occur. Such coop­er­a­tion is being pur­sued region­al­ly as well as through mul­ti­lat­er­al fora such as the World Trade Orga­ni­za­tion (WTO)

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