RESTRICTED  
  
WT/COMTD/SE/W/34  
18 April 2017 
(17-2119) Page: 1/33 
Committee on Trade and Development  
Dedicated Session   
 
  CHALLENGES AND OPPORTUNITIES EXPERIENCED BY SMALL ECONOMIES IN THEIR 
EFFORTS TO REDUCE TRADE COSTS, PARTICULARLY IN THE AREA OF TRADE 
FACILITATION  
BACKGROUND NOTE BY THE SECRETARIAT1 
1   EXECUTIVE SUMMARY  ................................ ................................ ................................ . 2 
2   INTRODUCTION  ................................ ................................ ................................ ..........  2 
3   WHAT ARE TRADE COSTS IN GOODS AND SERVICES AND WHY DO THEY 
MATTER?  ................................ ................................ ................................ ..........................  3 
4   DEFINITIONS AND PARAMETERS OF TRADE COSTS  ................................ .....................  4 
5   POLICY MATTERS FOR TRADE COS TS IN GOODS MARKETS  ................................ .........  7 
5.1   Agriculture and manufacturing  ................................ ................................ ....................  10 
6   BEHIND THE BORDER POLICIES ARE ALSO IMPORTANT - SANITARY AND 
PHYTOSANITARY MEASURES, TRADE FINANCE AND INVESTMENT  ................................ . 10 
6.1   Non-Tariff Measures  ................................ ................................ ................................ ... 12 
6.2   Sanitary and Phytosanitary Measures and Trade Facilitation  ................................ ............  14 
7   POLICY MATTERS FOR TRADE COSTS IN SERVICES  ................................ ...................  16 
8   SMALL ECONOMIES AND TRADE COSTS AS REFLECTED IN THE JOINT 
OECD/WTO AID FOR TRADE MONITORING AND EVALUATION EXERCISE, 2015  .............  21 
9   AID FOR TRADE IS HELPING TO REDUCE TRADE COSTS  ................................ ............  22 
10   THE ROLE OF  POLICY REFORMS IN REDUCING TRADE COSTS  ................................ . 24 
11   CONCLUSION ................................ ................................ ................................ ...........  26 
12   REFERENCES  ................................ ................................ ................................ ...........  27 
13   ANNEX  ................................ ................................ ................................ .....................  29 
 
                                                
1 This document has been prepared under the Secretariat's own responsibility and is without prejudice 
to the positions of Members or to their rights and obligations under the WTO.  WT/COMTD/SE/W/34  
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  1  EXECUTIVE SUMMARY  
1.1.  Small economies face  numerous challenges when trying to buy and sell goods and services at 
globally competitive prices . The cost of cross -border trade can make the difference between being 
able to fully exploit a foreign market or being priced out of international trade alt ogether . 
Geographic location, economies of scale, air and sea port infrastructure and transport systems are 
all key factors , which contribute toward participation in trade . Clearance procedures for imports 
and exports and access to trade finance  also determi ne whether or not goods and services can be 
sold competitively on the international market.  
1.2.  In light of these challenges, the small economies in the WTO requested the Secretariat to 
carry out research on two areas : (i) the specific challenges which small e conomies and developing 
countries experience in their efforts to reduce trade costs  and (ii) solutions used by policy makers 
in small economies to address trade costs, especially in the areas of sanitary and phyto sanitary 
measures (SPS) and technical barri ers to trade (TBT) , specific services sectors and the role of 
trade facilitation, including logistics.  
1.3.  This paper examines the definitions of trade costs as they relate to goods, including 
agricultural products, and to services . It also looks at recent sta tistics which compare small 
economies with in regions and with  the rest of the world . Examined are import and export costs to 
trade, time to clear customs and compl iance with documents . Other areas include the quality of 
port infrastructures, the quality of  telecommunication  services and the ease of doing business . Also 
discussed  are the responses to questions from small economies concerning the reduction of trade 
costs as part of the Joint OECD/WTO Aid for Trade Monitoring and E valuation  exercise  carried ou t 
for the Fifth Global Review o f Aid for Trade  in 2015.  
1.4.  A detailed look at the source of trade costs in the area s of SPS and TBT shows how important 
it is for small economies to tackle such costs head on and why the use of trade facilitation 
measures is im portant.  
1.5.  This paper notes that the WTO's Trade Facilitation Agreement (TFA) is a key instrument , 
which helps small economies , in particular , with their domestic trade cost reform programmes . 
However, countries could build on TFA implementation , which is co nsidered as a type of platform 
from which to undertake additional reforms which go well beyond TFA measures . In fact, most 
active reform programmes, supported by international agencies, regional development banks and 
efforts undertaken as part of the Aid -for-Trade I nitiative, are already pushing the modernisation of 
the trade facilitation  infrastructure beyond the provisions of the TFA.  
2  INTRODUCTION  
2.1.  This background paper has been prepared pursuant  to the Ministerial Decision of 
19 December  2015 taken at the  WTO's T enth Ministerial Conference (MC 10) in Nairobi, Kenya .2 
The decision on the Work Programme on Small Economies instructed the WTO Secretariat to 
continue its work in the Dedicated Session of the Committee on Trade and Development on global 
value chai ns (GVCs) in trade in goods and services . It also requested the Secretariat to conduct 
work on the challenges small economies experience in their efforts to reduce trade costs, 
particularly in the area of trade facilitation.  
2.2.  The Nairobi Decision follows ot hers taken at previous Ministerial Conferences and the WTO's 
General Council . Each of the decisions relate to paragraph  35 of the Doha Ministerial Declaration of 
2001, which states that a work programme, under the auspices of the General Council, "is to 
frame responses to the trade -related issues identified for the fuller integration of small, vulnerable 
economies into the multilateral trading system, and not to create a sub -category of WTO 
Members" .3 The Work Programme on Small Economies was adopted in 200 2. 
2.3.  At the 33rd Dedicated Session  on Small Economies  held on 4 November 2 016, Members 
agreed on how work on the Ministerial Decision should progress . They accepted a proposal 
submitted by the Group of Small and Vulnerable Economies (SVEs) "to identify and d iscuss the 
                                                
2 WT/MIN(15)/40, WT/L/975 . 
3 WT/L/447 . WT/COMTD/SE/W/34  
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  specific challenges experienced by small, vulnerable economies in their efforts to reduce trade 
costs, and then  analyse best practices and policy approaches for reducing the negative impacts of 
these challenges in their productive capacity and e xport competiveness" .4 In this regard, the 
Secretariat was asked to disaggregate relevant st atistical information from the Joint OECD/WTO 
Aid for Trade at a Glance , 2015,  study prepared for the Fifth Global Review o f Aid for Trade . In this 
regard, t his res earch include s the sources of trade costs in goods and services trade , which are 
most often encountered by small economies and listed as such in their survey responses . 
Furthermore, this paper also examines  some of the positive impacts resulting from domes tic policy 
actions taken to reduce trade costs.  
2.4.  The agreed proposal called for the analysis to be discussed during at least two meetings in 
2017: the first was to focus on the most important sources of merchandise and services trade 
costs as reported by SV Es in order  to identify specific challenges ; the second was to focus on the 
actions, best practices and policies associated with the most positive results achieved in reducing 
trade costs for goods and services.  
2.5.  This paper examines the 32 countries listed in Table 1 which have been actively engaged in 
the Small Economies' Work Programme .5 The list does not include countries in the WTO accession 
proceedings or least developed countries ( LDCs) (with the exception of Vanuatu, which is to 
graduate from LDC stat us in 2017) . The list is the same as that used for a previ ous study 
conducted in May 2 015 "Challenges and Opportunities experienced by Small Economies when 
Linking into Global Value Chains in Trade in Goods and Services"  (WT/COMTD/SE/W/31).  
Table 1. Small economies included in the analysis  
ISO3  
 Country name  ISO3  Country name  ISO3  Country name  
Africa  Caribbean  Central and South America  
CPV Cabo Verde  ATG Antigua and Barbuda  BLZ Belize  
MUS Mauritius  BRB Barbados  ECU Ecuador  
SYC Seychelles, Rep. of  CUB Cuba SLV El Salvador  
Asia/Pacific  DMA Dominica  GTM Guatemala  
BRN Brunei Darussalam  DOM Dominican Republic  GUY Guyana  
FJI Fiji GRD Grenada  HND Honduras  
MDV Maldives  JAM Jamaica  NIC Nicaragua  
PNG Papua New Guinea  KNA Saint Kitts an d Nevis  PAN Panama  
WSM Samoa  LCA Saint Lucia  PRY Paraguay  
LKA Sri Lanka  VCT Saint Vincent and the Grenadines  SUR Suriname  
TON Tonga  TTO Trinidad and Tobago    
VUT Vanuatu6     
 
3  WHAT ARE TRADE COSTS IN GOODS AND SERVICES AND WHY DO THEY MATTER?  
3.1.  The cost  of cross -border trade can make the difference between being able to fully exploit a 
foreign market or being priced out of international trade all together . Geographic location, air and 
sea port infrastructure, transport systems, clearance procedures for i mports and exports and 
access to trade finance are all key factors , which can  determine whether or not goods and services 
can be sold competitively on the international market.  
3.2.  While trade costs alone do not explain the development pathways of small econom ies, they 
are a major factor in clarifying why some countries are unable to grow or diversify or do s o slowly 
with some difficulty . In fact, t rade costs matter significantly . The Joint OECD/WTO Aid for Trade at 
a Glance , 2015, publication "Reducing Trade C osts for Inclusive, Sustainable Growth," found that 
                                                
4 WT/COM TD/SE/W/33/Rev.1  
5 Other countries which qualify as small economies and which are interested in obtaining such data, 
even though they are not included in the data sets prepared for this paper, should contact the Secretariat.  
6 Vanuatu has been included in the list (unlike other LDCs) since it is slated for graduation in 2017.  WT/COMTD/SE/W/34  
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  costs exerted a strong influence on trade flows, on who trades what and with whom, and on where 
products are made, traded and how.7 
3.3.  The report also found that trade costs inter act with economic fundamenta ls such as  
technology and  factor endowments (labour and capital) to produce the pattern of trade and 
production observed around the world . As such, the costs of trade have a great potential to 
influence the trajectory of a country 's economic development . At their worst, very high trade costs 
can effectively isolate countries from world markets resulting in consumers from these countries 
not being able to take advantage of competitively priced goods from abroad . Meanwhile, their 
firms cannot access high qual ity foreign inputs or export to overseas markets.  
3.4.  Trade costs may not explain why some co untries are low income or least developed . 
However , in combination with other factors, they do help explain why some countries struggle to 
grow and face difficulties e xploiting their comparative advantages . Keeping trade costs at 
reasonable levels and reducing them as far as possible in some key areas is essential for enjoying 
comparative advantage and the gains from trade.  
3.5.  It has also been found that countries which do  more to lower trade costs, for instance by 
improving logistics and trade facilitation performance, tend to grow more quickly than others . Not 
only do trade costs matter between countries, they also matter within countries . Firms that face 
high costs of mo ving their goods from the factory to an international gateway such as  a port or 
airport, effectively have an extra cost hurdle to bear when trying  to enter international markets . 
Sometimes these barriers keep them out of business altogether . Studies have s hown that certain 
regions with high trade costs overall are often economically deprived and lie at the low end of 
income distribution (Inter -American Development Bank, 2013).  
3.6.  A substantial body of research has emerged that highlights the negative impact of  trade costs 
on economic welfare and development, as well as trade connectivity . Respondents to the J oint 
OECD /WTO Aid for Trade  Monitoring and E valuation  questionnaire (2015 M&E exercis e) agreed 
strongly on the impact of trade costs . For instance, around 87% of the 62 developing  countries  
and LDC respondents indicated that trade costs were very important for their export 
competitiveness . An even higher number at 91.9 % believed that trade costs were important or 
very important for access to imports.  
4  DEFINIT IONS AND PARAMETERS OF TRADE COSTS  
4.1.  In the economic literatur e, trade costs are defined as : "costs incurred in getting a good to a 
final user other than the marginal cost of producing the good itself : transportation costs (both 
freight costs and time costs) , policy barriers (tariffs and non -tariff barriers), information costs, 
contract enforcement costs, costs associated with the use of different currencies, legal and 
regulatory costs and local distributi on costs (wholesale and retail)"  (Anderson and Van Win coop, 
2004).  
4.2.  Although trade today takes place in an increasingly interconnected world, goods and services 
do not flow seamlessly across borders . A range of factors create friction, which in turn generates 
costs (Moïsé and Le Bris, 2013) . How trade costs an d economic fundamentals interact explains, in 
large part, the range of goods and services exported and the markets served by exporters and 
importers.  
4.3.  A recent discussion paper prepared by the OECD, the World Bank and the WTO for the G20 
on Monitoring and R educing Trade Costs, found that trade costs have two main categories of 
sources . The first has to do more with exogenous factors than particular po licy choices . Examples 
include: (i) geographical distance ; (ii) transportation costs or the lead time associa ted with 
transportation ; and (iii) Common features between trading partners, such as language, common 
history, sharing a common border, or participation in the same economic community . 
4.4.  A second category of trade cost sources includes endogenous trade costs , which include 
factors specific to the origin or destin ation, and which represent the "thickness"  of the borders.  
                                                
7 Aid for Trade at a Glance , 2015,  OECD/WTO:  Reducing Trade Costs for Inclusive, Sustainable Growth . WT/COMTD/SE/W/34  
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  4.5.  Examples include t ariffs, non- tariff measures , trade policy uncertainty , logistics performance 
(cost, delay, and reliability) and trade faci litation bottlenecks (such as border controls and transit 
systems with third countries) . International connectivity, such as the existence of regular 
maritime, air or terrestrial services, notably in view of the hub -and-spoke organization of 
international transportation  are other examples .8 
4.6.  Economists distinguish between fixed and variable trade costs . Fixed costs require 
investment such as equipment manufacturing and are typically paid once . Variable costs, 
meanwhile, are paid per unit shipped . The interna tional movement of goods in itself does not 
happen without cost . Products need to be moved from a factory to a port or airport, processed at 
the border and loaded onto a cargo ship or airplane . They are then transported, unloaded, 
processed again at the bo rder, transferred onto a truck or train and moved into a local distribution 
network so that they can finally reach the consumer in the importing country.  
4.7.  The 2015 M&E exercise asked for respondents ' views on a representative cross -section of 
trade costs . For merchandise goods, the questionnaire surveyed views on trade costs such as the 
impacts of border procedures (i.e. trade facilitation), tariffs, fees and other charges, non -tariff 
measures, transport infrastructure and access to trade finance.  
4.8.  For servic es, the questionnaire surveyed views on trade costs such as network infrastructure 
(Information Communication Technology  (ICT), power and telecoms), transport infrastructure, 
non-recognition of professional qualifications, restrictions on commercial presen ce, restrictions on 
the movement of natural persons, poor regulatory environments for services, tariffs on product 
inputs (e.g. on computers for ICT services) and the level of skills in the services sector.  
4.9.  Simila r data are reflected in Table 2 which uses 2016 data from the World Bank, the 
International Telecommunications Union  (ITU)  and UNCTAD a s well as  data from the World 
Economic Forum  in 2015 . 
4.10.   It can be seen that while border compliance costs are well above average in the Caribbean, 
small economies in the Caribbean clear their goods faster than others in the Central and South 
America or in the Pacific region.  
4.11.   The liner shipping connectivity index (LSCI) aims at capturing a country's integration level 
into global liner shipping networks. A country's acce ss to world markets depends largely on its 
transport connectivity, especially in regard to regular shipping services for the import and export 
of manufactured goods.  
4.12.   Table 2 looks at how connected countries are to global maritime shipping lines . The data , 
compiled by UNCTAD , is based on five components of the maritime transport sector including the 
number of ships, their container -carrying capacity, maximum vessel size, number of services and 
the number of companies that deploy container ships in a country' s ports . For each component a 
country's value is divided by the maximum value of each component in 2004, the five components 
are then averaged for each country, and the average is divided by the maximum average for 2004 
and multiplied by 100 . The index gen erates a value of 100 for the country with the highest 
average index in 2004.  
4.13.   Access to global shipping and air freight networks and the quality and accessibility of ports 
and roads also affects logistics performance . Maritime transport is the backbone of international 
trade and a key engine driving globalization . UNCTAD estimates that close to 80 % of glob al trade 
by volume and over 70 % by value is carried by sea and is handled by  ports worldwide . A total of 
60% of world seaborne trade by volume is l oaded, and 57 % unloaded  in developing country ports . 
This constitutes a strong shif t away from previous patterns  several decades ago when developing 
economies served mainly as loading areas for raw materials and natural resources.9 
4.14.   From T able 2 below , it can be s een that the small economies are well below the world 
average as concerns their integration into the global linear shipping networks . Small economies in 
Central and South America are the most integrated , whereas their neighbo urs in the Caribbean are 
                                                
8 G20 Trade and Investment Working Group discussion paper on Monitoring and reducin g Trade Costs, 
April 2016.  
9 Review of Maritime Transport 2015, UNCTAD.  WT/COMTD/SE/W/34  
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  the le ast connected to global shipping lines . This is the case even though the port infrastructure in 
the Caribbean is considered to be of higher quality than in the Central American or the Pacific 
regions . The situation, however, is reversed when it comes to ai r transport infrastructure . Here, 
the Caribbean region scores well above the world's average and is considered to have considerably 
better infrastructure than small economies in Central America or the Pacific.  
4.15.   In the area of communications infrastructure, data from the ITU showed that three small 
economies in Africa (Cabo Verde, Mauritius and Seychelles) were far ahead of other regions in the 
number of mobile telephone subscriptions as a percentage of the population . The three island 
states also scored well  on the percentage of the population using the internet, just after the 
Caribbean but ahead of Central America.  
4.16.   Meanwhile, the ease of doing business was an area examined by the World Economic Forum 
and showed Central America behind vis-à-vis other regions  in the areas of legal institutions and 
ease of doing business . The time required to start a business in Central America for example was, 
at 30 days, considerably longer than for the Caribbean (14) or the Pacific and WTO Member 
average (20).  WT/COMTD/SE/W/34  
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  Table 2. 2016 Trade cost i ndicators for Small Economies  
 Small Economies  WTO 
Members  LDCs  
 
All 
C. and S . 
America  
Carib -
bean  
Africa  
Asia/ 
Pacific  
 
 
Cost to trade         
Export : Border compliance (USD)  521 439 590 422 576 400 519 
Export : Docum entary compliance (USD)  112 75 92 123 179 129 230 
Import : Border compliance (USD)  620 427 893 434 590 468 648 
Import : Documentary compliance (USD)  121 80 100 128 195 170 313 
Time to trade         
Export : Border compliance (hours)  60 71 48 73 55 57 94 
Export : Documentary compliance (hours)  52 46 36 34 88 52 101 
Import : Border compliance (hours)  61 56 56 69 71 75 132 
Import : Documentary compliance (hours)  49 51 37 30 70 65 113 
Maritime connectivity UNCTAD         
Liner shipping (max. value in 2004 = 10 0) 13 17 9 14 13 30 10 
*Quality of transport infrastructure         
Air transport, 1 -7 (best)  4.43 4.26 4.86 4.24 4.35 4.46 3.15 
Port infrastructure, 1 -7 (best)  4.14 4.09 4.48 3.82 3.96 4.09 2.90 
Roads, 1 -7 (best)  4.10 3.80 4.18 4.37 4.69 4.09 3.14 
**Communications infrastructure 2015         
Mobile -broadband subscriptions (% of pop.)  33 27 39 43 27 51 15 
Fixed -broadband subscriptions (% of pop.)  9 5 16 11 3 13 1 
Mobile telephone subscriptions (% of pop.)  110 112 108 142 97 113 69 
Individuals using t he internet (% of pop.)  45 36 58 50 38 49 13 
Legal institutions         
Legal rights index (0=weak to 12=strong)  5.23 4.70 5.60 3.33 6.13 5.47 4.91 
Time required to enforce a contract (days)  734 867 739 620 605 647 709 
Ease of doing business         
Ease of doing business ranking  105 110 108 90 99 89 151 
Time required to start a business (days)  21 30 14 17 20 20 27 
*Ease of access to loans, 1 -7 (best)  3.89 4.08 3.63 3.76 3.86 3.89 3.16 
Source : WB World Development Indicators ; *WEF Global Competitivene ss Index (GCI) ; **ITU World 
Telecommunication/ICT Indicators.  
Note:  Cost and time to trade measure the cost in USD and the time in hours required for documentary and 
border compliance. Indicators represent simple averages across countries . Depending on the  
availability of data, averages are based on 31 to 32 small economies (10 in Central and South 
America, 10 to 11 in the Caribbean, 3 in Africa and 8 in Asia/Pacific), 158 to 163 WTO Members and 
43 to 48 LDCs. *WEF GCI data allowed only calculating averages  for 15 small economies (7 C. and 
S. American, 4  Caribbean and 2 A frican), 130 WTO Members and 25  LDCs.  
 
5  POLICY MATTERS FOR TRADE COSTS IN GOODS MARKETS  
5.1.  Trade costs , as either exogenous or endogenous , were discussed briefly above and were also 
examined as part of the Aid for Trade at a Glance 2015 study . The latter placed trade costs in 
goods and services markets under two headings : (i) locational factors ; and (ii) policy related 
factors . Locational factors are exogenous : each country must take them as a gi ven and cannot 
change them . They include issues such as sharing a common land border, geographical distance 
and remoteness, being landlocked or sea -locked, having a population that speaks one of the main 
international languages and historical, cultural or commercial links with other countries.  WT/COMTD/SE/W/34  
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  5.2.  Although countries must take geography and history as factors which cannot be changed, 
that does not mean that the trade costs related to those factors are impervious to government 
action . As many small islands are aw are, geographical remoteness, for example, tends to increase 
trade costs substantially and poses particular problems  which  governments need to work hard to 
resolve . However, policy makers can limit the effects of remoteness by developing the hard and 
soft infrastructure in the area of infor mation communication technology . For example, build ing an 
economy that is strongly connected to global trade, tr ansport and production networks ; and an 
emphasis on the internet and e lectronic commerce is key . High-country  connectivity based on 
appropriate policies can help reduce trade costs and limit economic remoteness, even though 
geographical remoteness in the strict sense cannot be changed.  
Figure 1. Types of trade costs in goods markets  
 
Source:  Aid for Trade at a G lance, 2015, OECD/WTO  and B, Shepherd  and E, Archanskaia  2014. 
 
5.3.  Policy measures affecting trade costs come in three types : (i) at the border ; (ii) between 
borders ; and (iii) behind the border . However, recognition of the importanc e of trade costs in 
goods trade needs to be distinguished from government action to reduce trade costs . For example, 
while 87 % of the 62 developing and least developed country respondents to the 2015 M&E 
exercise recognised the imp ortance of trade costs, o nly 62 % of the respondents indicated that 
trade costs were addressed in their national development strategies . Some 60% said trade costs 
were included in their na tional trade strategies and 53 % said they were part of their country's 
sector -specific strateg ies. Interestingly, the percentage of respondents who said that trade costs 
were part of their infrastructure strategies was only 35 % even though this sector is key insofar 
that it has considerable potential to influence trade costs and performance.  
5.4.  The pi cture at the  regional level was similar : 80% of respondents indicated that their regional 
development strategies addressed trade co sts, 60 % in the case of regional infrastruct ure and 
trade strategies , and 50 % for sector and corridor -specific strategies . While there was a clear 
recognition of the importance of trade costs, there were difficulties capturing this insight at a 
policy level, both nationally and regionally . This was especially true of those countries which 
provided assistance with development str ategies . Each of the 37 donor countries and agencies 
which responded to the 2015 M&E exercise recognised the importance of tr ade costs, with 54.1 % 
of them indicating that trade costs were very important to the integration and development  of 
countries and L DCs and 45.9 % considering the m important . However, only 59.5 % of donor 
countries ' Aid-for-Trade strategies specifically addressed the issue of trade costs.  WT/COMTD/SE/W/34  
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  Figure 2. Number of partner country survey respondents indicating that a pa rticular 
sourc e of trade costs is important (Goods)  
 
Source : Joint OECD/WTO Aid for Trade M onitoring and Evaluation exerci se, 2015 . 
 
5.5.  Trade cost issues are reflected regularly in Aid-for-Trade  programming, particularly in 
regional projects and progr ammes a nd in country work (73.0 % and 64.9 %, respectively) . One set 
of border policies that affect trade costs in a very direct way relates to trade facilitation, i.e. 
customs and other border procedures . When those procedures are slow, expensive or unreliable, 
costs to business increase - with a resulting impact on trade costs . Trade facilitation reforms can, 
therefore, reduce trade co sts. The WTO TFA  provides one framework for moving forward in this 
area. The OECD has estimated that full implementation of the new  WTO agreement could reduce 
developi ng countries ' trade costs by 14 % for low income c ountries, 15 % for low er middle income 
countries and 13 % for upper -middle income countries (OECD, 2014).  
5.6.  The TFA deals with one set of factors that determine trade costs in  goods markets, namely 
customs and other border procedures . However, many other policies are also at play . As already 
mentioned, transport plays a key role . Since traded goods have to be moved internationally, 
policies governing the development and operati on of maritime, rail and air gateways have the 
potential to affect trade costs . Countries that sign liberal, bilateral air services agreements can 
expect to see their trade costs go down for goods transported by air . This can help reduce costs 
for parts an d components that circulate through GVCs  or for horticultural and other perishable 
products.  
5.7.  Countries with lower bilateral trade costs tend to trade more . As a result, measures to reduce 
trade costs can boost trade all around the world . They can also incr ease diversification, as new 
sectors become competitive and start to play a role in world markets.  
Box 1. Reducing trade costs to support A frica's transformation  
Trade -costs are a key determinant of trade performance and investment de cisions, especially in 
the context of GVCs, where trade frictions assume even greater relevance, since goods are likely 
to be exported and imported several times along the value chain . In this respect, addressing those 
trade frictions that put African trad ers at a disadvantaged position could go a long way in 
unleashing the region's trade potential . Furthermore, research points to the fact that trade 
facilitation measures could significantly boost the gains from regional integration initiatives, 
allowing a greater number of countries to reap the benefits from the trade liberalization.  
Source :  Reducing trade costs to support Africa's transformation : the role of Aid for Trade, submitted by the 
UN Economic Commission for the Joint OECD/WTO Aid for Trade Monit oring and Evaluation exercise, 
2015. 
 
5.8.  The benefits of reducing trade costs on a broad basis as with a multilateral agreement such 
as the TFA are particularly attractive from a systemic point of view because the reforms affect all WT/COMTD/SE/W/34  
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  trading partners simultane ously, not just a selection of partners, as in a regional agreement . For 
example, upgrading gateway infrastructure like ports makes it easier to export to and import from 
all countries in the world, not just those countries in the same regional grouping . Similarly, many 
trade facilitation reforms that have been implemented unilaterally are effectively extended to all 
partner s in much the same way as a cut in most -favoured -nation  (MFN)  tariffs . Of course, some 
aspects of trade cost reduction - such as improv ing transit for landlocked countries - do have a 
regional dimension and benefit landlocked  countries in very specific ways . Nonetheless, the point 
remains that general reforms to reduce trade costs tend to be beneficial to the multilateral trading 
system a s a whole, even when implemented unilaterally.  
5.9.  The WTO's 2015 World Trade Report on Trade Facilitation found that the overall cost of 
conducting trade remained high worldwide . Based on database research by Arvis et al. (2013) and 
as referenc ed in the OECD/ WTO Aid for Trade  at a Glance 2015 , it was found that trade costs in 
developing countries in 2010 were equivalent to applying a 219 % ad valorem tariff on 
international trade . This implies that for each dollar it cost to manufacture a product, another 
US$2.19 would be added in the form of trade costs, due mainly to charges related to packaging, 
transport, insurance and handling . In developed countries, similar charges amounted to $1.34 
additional cost.  
5.10.   However, the report also found that trade costs in gener al concealed large differences 
across sectors and regions . It also found that given the sectoral and regional variation in trade 
costs, the implementation of the TFA would help to further reduce trade costs in goods and 
services . However, the reductions wo uld have bigger trade effects on some product sectors and 
regions than on others.  
5.1  Agriculture and manufacturing  
5.11.   The 2015 World Trade Report referred to above examined ad valorem  trade costs in 
agriculture and concluded that on average, th ey were some 68 % higher than in manufacturing . 
However, it also found that a lack of trade facilitation appears to be more damaging to trade in 
manufactured goods than to trade in agricultural goods . Part of this may be explained by the fact 
that agricultural goods are trad ed in bulk and transported using slower moving carriers, so traders 
can adjust to delays in customs clearance . The one exception is fresh agricultural products, which 
have higher sensitivity to time and are increasingly transported by air . The report concl uded that 
by speeding up the clearance of goods across borders, trade facilitation could prove a boon for 
trade in perishable goods.  
5.12.   It is estimated that trade cost reductions across the globe from full implementation of the 
TFA woul d be in the range of 9. 6 to 23.1 %, with the averag e reduction being equal to 14.5 %. Not 
surprisingly, those economies with the biggest pre -implementation deficiencies in trade facilitation 
standards are set to reap the greatest reductions . The report states that even the smalles t 
estimate of trade cost reduction implies that full implementation of the TFA w ould have an even 
bigger impact on trade costs than reducing all tariffs (currently estimated to average around 9 %) 
to zero . Even if one takes  the smallest estimate of a 9.6 % reduction in trade costs, this is 
equivalent to reducing the ad valorem  equivalent of trade costs in developing countries by  21 
percentage points (from 219 % to 198 %) and by 13 percentage points in high-income countries 
(from 134 % to 121 %). 
5.13.   It is further est imated that the average trade cost reduction for all  merchandise goods 
would be 14.3 %, with the average decrease in trade costs for manu factured goods at 18 %, 
against 10.4 % for agricultural goods . All regions are expected to experience reductions in trade 
costs, with Africa (16.5 %) benefitting the most . Comparisons of the anticipated impact of TFA 
implementation on different income groups suggest that LDCs would see the bi ggest reduction in 
trade costs by 16.73 %. 
6  BEHIND THE BORDER POLICIES ARE ALSO IMPORTAN T - SANITARY AND 
PHYTOSANITARY  MEASURES , TRADE FINANCE AND INVESTMENT  
6.1.  Other factors which influence the cost of trade are behind -the-border policies (Moïsé and Le 
Bris, 2013) . Wholesale and retail distribution and transport and logistics issues determine t he 
ability of producers to get their goods to market in a cost -effective way . Countries with poorly WT/COMTD/SE/W/34  
- 11 - 
  performing distribution and logistics networks tend to suffer from high trade costs and can become 
isolated  from world markets.  
Box 2. Case study from the World Bank - Central America  
A case story submitted by  the World Bank as part of the Fifth  Global Review  of Aid for Trade 
describes how in Central America, non -tariff measures  (NTMs)  were creating obstacles that 
hindered effective trad e integration - with the issue being less about the measures enacted and 
more about the way they were applied in practice . The Bank 's study estimated that SPS measures -
such as inspection requirements or labelling standards for meats and grains - increased import 
prices in Cent ral America by approximately 30% on average.  
 
In one country, the entry of foods and drinks into the sanitary registry - a process that verifies 
that all the products meet the country 's SPS standards - requires between 48 hours (for lo w-risk 
goods) and 20 days (for goods that require laboratory testing) . The exporting company must then 
spend two to four weeks preparing a product file . It must also pay between US$250 and US$450 
per item registered . The World Bank study suggests that when  faced with this type of requirement, 
some companies - especially if they are small - abandon the effort altogether.10  
Source : Submitted by the World Bank for the Joint OECD/WTO Aid for Trade M&E exercise, 2015.  
 
6.2.  Another policy question of relevance for t rade costs concerns product standards . This is a 
type of behind -the-border measure that is usually not protectionist in intent but can be in practice 
due to  the competitive advantage it creates for national firms . Overseas firms need to certify their 
produ cts and production processes to meet foreign norms . This can increase costs, sometimes 
substantially, especially for small suppliers from small economies.  
6.3.  The World Bank case study concludes that while NTMs  are effective policy tools to achieve 
non-trade o bjectives, such as the protection of human, animal and plant health, the imprudent use 
of these measures can hurt poor consumers . More generally, in the area of behind -the-border 
measures, it is necessary to consider issues such as the business environment  and investment 
climate, which affect the ability of firms to trade  internationally . Finance is also crucial . This was 
seen during the fall in trade finance in the aftermath of the financial crisis when it became obvious 
that finance plays a key role in en abling private sector operators to move goods across borders 
and engage in trade.  
                                                
10 OECD -WTO Aid for Trade at a Glance , 2015:  Chapter 1: Why trade costs matter for inclusive 
sustainable growth.  WT/COMTD/SE/W/34  
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  Box 3. Examples of trade costs associated with product standards, cited by 2015 
monitoring respondents  
"Other issues currently exist such as the connec tion between non -tariff barriers and new trends 
regarding approval of products by consumers, which are reflected in private standards ." 
Guatemala  
 
"Yemen 's exports to the Gulf countries face border processing and non -tariff obstacles without 
appropriate ju stifications ." Yemen  
 
"Trade costs depend on markets . In Africa the costs are related to border procedures, while in the 
EU they are geared towards stringent standards ." Mauritius  
 
"According to the series of studies by the UNECE (United Nations Economic C ommission for 
Europe) on regulatory and procedural barriers to trade, non -tariff measures, such as 
standardisation (standards, standardisation policy, use of national, regional and internationally 
agreed standards), and regulatory issues are a significant source of barriers to trade ." UNECE  
Source : Aid for Trade at a G lance, 2015, OECD/WTO  - Box 1.5.  
 
6.4.  As a result, private sector development also plays a key part in the trade costs agenda . 
Figure 2 summarises the above discussion by means of reference to a broad set of trade cost 
factors that are of relevance to many countries.  
6.1  Non-Tariff Measures  
6.5.  NTMs  comprise a significant source of trade costs, the importance of which has risen as tariffs 
have fallen globally . Streamlining NTMs, and harmonising them betwe en trade partners and within 
regions, can have a significant impact in lowering trade costs . Diagnostics like the World Bank NTM 
Toolkit can help governments analyse NTMs in a more systematic manner and provide a basis for 
more objective discussion with  different stakeholder groups . The ITC also carries out specialized 
research on domestic and external policy issues affecting a country's ability to meet SPS or TBT 
standards.  
6.6.  It should be noted here that small economies are more specialized in products that are 
significantly exposed to NTMs, especially SPS measures . For instance, fats and oils and vegetable 
products account for 14% of the exports of 32 sma ll economies compared to only 3 % of the 
exports at the world level . Similarly, the share of foodstuffs in  exports is 9% for small economies 
and 3 % at the world level . Furthermore, foodstuffs is the product group with the second highest 
number of TBT notifications and the highest number of TBT s ignificant trade concerns . In this 
regard , small economies are aff ected by both SPS and TBT me asures. G iven their export 
specializ ation, however, they are particularly exposed to and hence vulnerable to SPS measures.11 
                                                
11 WT/COMTD/SE/W/28 . WT/COMTD/SE/W/34  
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  Figure 3 . Policies affecting trade costs in goods markets at all points in the supply chain  
 
Source:  Moïsé and Le Bris (2013) . 
 
6.7.  TBT and SPS measures cover a significant share of exports for many small economies . In 
particular, notified TBT and S PS m easures cover on average 34 % and 30 %, respectively,  of 
exports across the 32 small economies.  
6.8.  In a paper tit led "Implementing SPS Measures to Facilitate Safe Trade" the Standards and 
Trade Development Facility (STDF) found that information from various official sources has shown 
the prevalence of TBT, SPS and other measures in the overall incidence of NTMs .12 The paper 
focused on recent business surveys , which found these measures to represent a main source of 
concern for exporters in most small economies . Another insight from the surveys is that exporters 
generally have more problems with the way in which measure s are applied than with the measures 
themselves . However, initiatives exist to overcome problems arising from the application of such 
measures . For example, current work by the STD F addresses the implementation of SPS measures 
in the context of trade facil itation, which is linked to the control, inspection and approval of 
procedures foreseen by the SPS Agreement (Art. 8 and Annex C).  
6.9.  A lot of the activities of the SPS and TBT Committees involve information sharing, in 
particular on best practices . The Commi ttees also provide forums for small economies to state 
their concerns publically about any new or proposed measures and regulations being applied by 
their key trading partners and any eventual problems they might encounter.  
6.10.   Another area which poses challen ges for small economy exporters are preparing goods for 
export . As indicated in some of the ITC surveys of private sector exporters in small economies, it is 
essential to establish and upgrade national testing facilities and laboratories so that domestic 
products meet international standards and especially those of key partners.  
                                                
12 http://www.standardsfacility.org/facilitating -safe-trade 
WT/COMTD/SE/W/34  
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  6.11.   Conformity assessments require exporters to test and certify products well before they are 
exported . If companies wish to trade across borders, they will have to demonstrate not onl y that 
their products meet technical and other requirements in foreign markets, but do so at competitive 
prices . Furthermore, such testing equipment needs to be properly calibrated if results are to be 
trusted by future importers.  
Box 4. The Pacific Agreement on Closer Economic Relations (PACER ) plus 
The Pacific Islands are some of the remotest economies on earth . They face particularly high levels 
of trade costs as small island dev eloping states . The PACER Plus A greement currently und er 
negotiation is designed to support Pacific Island countries ' increased participation in international 
trade . The Agreement will not be a traditional free trade agreement as its primary objective is to 
promote the economic development of Pacific Island C ountries . It contains chapters on issues such 
as Customs Procedures, Transparency, SPS and TBT measures and economic development, 
including addressing supply -side constraints and co-operation . The latter will assist developing 
country parties to implement the Agreement and maximise the benefits flowing from it . Australia 
and New Zealand will be two developed country markets which will provide technical assistance 
and capacity building in various areas, in particular trade facilitation, in line with the new WTO TFA 
Agreement which entered into force at the end of February 2 017. 
 
For example, some 80% of the Pacific Islands' exports to Australia and New Zealand are foodstuffs 
and primary products . However, a number of small suppliers in the region face conform ity costs 
which exceed their narrow profit margins and are thus discouraged from exporting . In response, 
Australia and New Zealand have committed themselves to providing assistance to these exporters 
so that they can meet the required SPS and TBT standards , as well as those under the Pacific 
Horticultural and Agricultural Market Access regulation . Exporters in the region can therefore 
diversify their exports and hopefully realize increased profits due to reduced costs for meeting 
conformity assessment requi rements.  
Source:  Office of the Chief Trade Adviser  for the Pacific Island Countries , Joint OECD/WTO Aid for Trade 
Monitoring and Evaluation exercise , 2015. 
 
6.12.   Such testing and certification procedures require investments w hich add to an exporters' 
short-term trade costs . It is, therefore, suggested by the STDF that any attempt to establish or 
upgrade national or regional diagnostic capacities be preceded by a cost -benefit analysis . Given 
the public funding constraints in many countries, a prioritization of investments might be 
necessary based on distinct criteria such as foreign demand and domestic supply . For those 
countries lacking national or local testing facilities, either private or public laboratories, alternative 
solutions exist . For instance, it has  been suggested that regional options be examined (such as 
those in the CARICOM region in the Caribbean) to establish such facilities and overcome related 
obstacles.  
6.13.   Given the importance of some key export markets for small economies in the spices and 
agrifood sector, it is also important for small economies to keep abreast of any new, future 
legislation in the area of NTMs, especially if they are keen to maintain any current comparative 
advantages or levels of market share . This requires more government sp ending or more 
investment in testing infrastructure and more regional cooperation.  
6.2  Sanitary and Phytosanitary  Measures and Trade Facilitation  
6.14.   Research undertaken by the STDF concludes that countries can make enormous progress in 
reducing SPS trade transact ion costs, while simultaneously strengthening or reinforcing the 
protection of human, animal and plant health, through proper implementation of the WTO SPS 
Agreement and implem entation of measures in the WTO's TFA.13 
6.15.   The increasing attention on trade facili tation as a means to stimulate economic growth and 
competitiveness has generated a renewed focus on SPS measures, and on how they are applied to 
imports, exports and transit goods . There is also a focus on whether SPS measures unnecessarily 
increase the co sts of doing business . Recent STDF work has sought to identify, analyse  and foster 
                                                
13 Implementing SPS Measures to facilitate Safe Trade, STDF, December 2015 
(http://www.standardsfacility.org/sites/default/files/STDF_Briefing_No10_EN_web.pdf ) WT/COMTD/SE/W/34  
- 15 - 
  dialogue on experiences, lessons and good practices to improve the implementation of SPS 
controls in a way that facilitates safe trade, while minimizing transaction costs . The findings of this 
work also provide timely inputs to enhance the integration of SPS -related components in broader 
trade facilitation programmes.  
6.16.   Costs linked to trade, which are also referred to as transaction costs,  occur every time a 
party within the s upply chain is required to submit information to government agencies, including 
authorities responsible for SPS controls . These costs might be direct (e.g. submission of 
documents, charges and fees, inspection costs, informal payments) or indirect (e.g. bo rder delays, 
uncertainty about procedures) . The OECD estimates that each 1 % saving in trade -related 
transaction costs yields a worldwide benefit of US$43  billion  (OECD, 2013).  
Figure 4 . Difficulties suppliers from small economies face when entering, establ ishing or 
moving up agrifood value chains (percentage and number of suppliers)  
00223445677911121515
0% 10% 20% 30% 40% 50% 60%Access to livestock geneticsPresence of animal diseases in national territoryImport licensing or quotasPresence of plant pests in national territorySupply chain governance issuesInadequate telecommunications networksSeasonal export or import restrictionsLack of transparency in regulatory environmentInformal controls and corrupt practicesAccess to trade financeInadequate airport capacity or linksInadequate maritime transport and port capacityCertification costsCustoms paperwork and delaysAccess to business financeTransportation costs
 
Source : WT/COMTD/SE/W/28 , Figure 6 . 
Note:  Based on answers from 26 agrifood suppliers from 14 small economies.  
 
6.17.   While the implementation of robust and science -based SPS measur es to ensure health 
protection inevitably results in some trade transaction costs, the SPS Agreement requires that any 
such costs should not be higher than necessary . Article 8 and Annex C of the SPS A greement set 
out provisions on control, i nspection and  approval procedures . The provisions require that 
procedures to check and ensure the fulfilment of SPS measures are implemented without undue 
delay and in a no less favourable manner for imported products than for like domestic products . 
For instance, infor mation requirements should be limited to what is necessary for appropriate 
control, inspection and approval procedures . Furthermore, standard process ing periods should be 
published and  fees should be no higher than the actual cost of the service, etc.  
6.18.   Exam ples of SPS -procedural obstacles  include:  (i) complex and lengthy procedures ; (ii) 
excessive document requirements ; (iii) limited information on requirements ; (iv) forms ; (vi) fees ; 
(vii) multiple inspections by different services ; (viii) arbitrariness and  unpredictability.  
6.19.   Work by the World Bank, ITC and others indicates that sometimes SPS measures are 
implemented in a way that is more trade disruptive than necessary . At times, this may result in 
more controls than needed, longer than required waiting time s, uncertainty, as well as increased 
costs for traders and sometimes also governments.  WT/COMTD/SE/W/34  
- 16 - 
  Box 5. Case Stories - Papua New Guinea  
European Union Customs and Origin experts assisted Papua New Guinea (PNG) with a capacity 
building and training programme to monit or the implementation of the  PNG - EU Trade Agreement . 
The Agreem ent grants Papua New Guinea 100% free market access to the European Union for all 
its products in the hope that products "made in PNG" will find a lucrative export market and one 
that helps t o create jobs and income in and for PNG.  
 
In force since 2011, the A greement has resulted in an increase of PNG exports to the EU and the 
creation of some 40,000 jobs in PNG in the fisheries sector alone . The EU has become P NG's 
second biggest export marke t, accounting  for 9.2 % of total exports . For the A greement to function 
properly, it is important to ensure that exports originate  from PNG and not from other countries 
using its label and name to access Europe.  PNG customs officials therefore ha d to certif y the origin 
of the products and to work  with EU officials to strengthen certification systems.  
 
Training was also provided to the PNG Customs and the National Fisheries Authority, which al so 
took part in this exercise . PNG customs officials have been made  better aware of the requirements 
concerning the export of frozen fish, for which exporters need to comply fully with the procedures 
and exporters must follow the applicable declarations and certificates.  
 
This not only guarantees that benefits of PNG fish  accrue to P NG but also help better controlled 
fishing and fish stock conservation in PNG waters.  
Source:  Papua New Guinea  case study submitted to the Joint OECD/WTO Aid for Trade Monitoring and 
Evaluation exercise, 2015.  
 
6.20.   Implementing SPS measures and f acilitating safe trade depends on adequate capacity and 
resources . Development partners and donors can provide support to enhance SPS capacity in 
developing countries . Opportunities also exist to leverage additional funds from larger programmes 
focused on trade facilitation . Many of the services delivered by SPS authorities are global public 
goods . So while it may be possible to recover some of the costs associated with the provision of 
SPS services from the private sector, it is essential to ensure suffici ent public funding for SPS 
systems.  
6.21.   The TFA will affect all government agencies involved in border control procedures, including 
SPS authorities, once it is fully implemented . Some of the TFA 's provisions (e.g. on pre -arrival 
processing, publication of ave rage release times, review and publication of fees, publication of 
information on import/export requirements) add more specificity to provisions in the SPS 
Agreement, even if the TFA will not diminish the  rights and obligations of WTO M embers under the 
SPS Agreement.  
6.22.   If SPS measures are linked to trade facilitation then, as can be seen in the Figure  4 above, 
transportation costs pose major constraints and point to a lack of maritime port and airport 
infrastructure.  In this regard, the STDF also sees capacit y building as a vital element in improving 
national competitiveness and international cooperation on TBT and SPS measures . In the SPS 
area, the STDF has proven to be very successful and the question has arisen as to whether the 
model could be replicated in  building capacity relating to standard -setting, technical infrastructure 
and the development of regulations in the TBT area.  
7  POLICY MATTERS FOR TRADE COSTS IN SERVICES  
7.1.  The discussion so far has focused on trade costs in goods markets . However  as mentioned  at 
the outset, trade costs in services can also be significant . Recent estimates suggest that even in 
spite of technological advances, especially in areas such as e -commerce which have helped reduce 
transaction costs, the expenses of trading in some servi ces sectors may actually be higher than in 
many goods sectors (Miroudot et al., 2013).  
7.2.  Amongst the reasons often cited are the policies of trading partners that may directly restrict 
trade in services . Examples can be seen in the WTO's General Agreement on  Trade in Services 
(GATS) which recognizes four different modes of supply . Mode 1 most closely resembles goods 
trade because of its pure cross -border trade coverage . An international transaction via the internet 
falls into this category . Some countries, ho wever, apply direct restrictions on this k ind of trade in WT/COMTD/SE/W/34  
- 17 - 
  certain sectors, such as in retail banking . These are regulatory measures which limit foreign -
service suppliers from offering certain types of services . Regulatory issues, however, are not the 
only drivers of costs in trade in services . The ability to engage in pure cross -border services trade 
at reduced costs also depends, and with increasing frequency, on the quality and quantity of ICT 
infrastructure that is available in the two or more markets wh ere the transactions take place as 
well as the way in which access to and use of the infrastructure is regulated . Users of well -
connected, speedy information technology systems can expect to operate with lower trade costs 
for cross -border transactions than  their counterparts operating in markets with inferior connections 
and slower systems.  
7.3.  It is important to remember that regulatory aspects apply to all of the GATS modes of 
supply , and it is not just border regulations that matter for trade costs . As was s een in the case of 
agricultural and industrial goods where specific measures such as SPS and TBT measures are in 
place, behind -the-border regulatory measures also play an important role in services trade . 
Particularly in the case of services, an important factor is regulatory heterogeneity, i.e. differences 
in sectoral regulations between countries.  
7.4.  As cited in the Aid for Trade at a Glance 2015 publication prepared for the Fifth  Global Review 
of Aid for Trade in 2015, firms active in services develop their  business models based on a 
particular regulatory and institutional environment . Making that business model work in foreign 
settings can be challenging because of varying regulatory and institutional arrangements . 
Transactions that can be legal in one form  in one country may need to take on different forms in 
another so that they can be offered legally in that market . An example is advertising which needs 
to be adapted to meet not only local standards, but also local tastes and interests . More generally, 
services need to be tailored to meet the environment i n which they are being supplied - all of 
which adds to the cost of doing business abroad as opposed to at home.  WT/COMTD/SE/W/34  
- 18 - 
  Figure 5. Partial Typology of policy measures affecting trade costs i n services, according 
to the GATS mode of supply  
 
 
Source : Aid for Trade at a Glance , 2015, OECD/WTO  publication . 
 
7.5.  Information  communications  technology services  (ICT) and infrastructures  are important to 
all service providers because ICTs are typically a vital input into the production of modern 
services . They are of particular ly importan t to services traded by GATS Mode 1 (pure cross -border 
supply) . For developing countries  as small economies  overall, GATS Mode 1 is a key mode of 
supply . This finding mak es sense because GATS Mode 3 (commercial presence) requires 
substantial public or private sector investment resources that may not be available to many 
developing countries . Commercial presence is, however, often the preferred means of entry for 
developed country firms which are seeking expedited access to a foreign market and which wish to 
bypass some of the bureaucratic hurdles involved with starting a new business in a foreign 
country . In this respect, e -commerce has proven itself to be particularly attr active for developing 
country service providers because of its low start -up and operational costs.  WT/COMTD/SE/W/34  
- 19 - 
  Figure 6. Number of partner country survey respondents indicating that a particular 
sourc e of trade costs is important (S ervices)  
0 10 20 30 40 50 60Tariffs on product inputsRestrictions on commercial presenceRestrictions on movement of natural…Non-recognition of professional…Poor regulatory environment for servicesLow levels of skills in service sectorsTransport infrastructureNetwork infrastructure
Number of responsesNumber of responses
Source: Joint OECD/WTO Aid for Trade Monitoring and Evaluation  exercise, 2015 . 
 
7.6.  Even though this paper has so far dealt with costs in goods and services markets separately, 
it should be noted that such costs can also interact . Especially in the context of GVCs , lead firms 
often need to supply specific services to subsidiaries and also to other more distant suppliers of 
inputs needed for production . Restrictions on trade in services can, therefore, increase trade costs 
in goods sectors as well as in services sec tors. Similarly, service providers usually need goods - 
such as computers and telephones - to provide their services . In this case, trade costs in goods 
have an indirect impact on trade costs in services . The link in both examples is that services are 
inputs into goods and goods are inputs into services . In a world of interlinked production 
processes, trade costs too become interlinked.  
7.7.  Some  of these interlinkages are reflected in Figure 6,  which shows  the responses received 
from developing countries as part of the 2015 M&E exercise . Respondents ranked infrastructure or 
regulatory issues affecting costs in services trade according to their levels of importance . Costs 
related to network infrastructure in telecommunication services came out on top, followed by  
transport infrastructure for tourism services . Regulatory issues such as non -recognition of 
professional qualifications and poor policy environments for services were ranked equally alongside 
low levels of skills in key service sectors . The latter was see n as an issue especially in tourism 
services offered by small econ omies, as portrayed in Figure 7 below.  
7.8.  In the 2015 publication Aid for Trade at a Glance, the World Bank called for a priority focus 
on the role that services can play to lower trade costs . It cited recent results from the World Bank 
Group Logistics Performance Index , which underlined the importance of improving the quality of 
logistics service provisions . Since private sector firms, rather than governments, are the service 
providers, the ser vices sector policy environment needs effective rules . The World Bank writes that 
regulations include business licenses and the enforcement of technical standards by regional and 
international operators . It states that closed markets or a lack of enforceme nt competence in 
regulatory agencies are common and actually preve nt the emergence of the quality -oriented 
services that exporters need . The report explains that in major economies, the most efficient 
exporters have most logistics services provided by thir d parties, allowing firms to maximise 
productivity in their core area of business . This is in cont rast to the situation in middle -income, 
and especially low income countries, where there is little use of third party logistics providers.14 
                                                
14 Aid for Trade at Glance , 2015,  OECD/WTO:  Chapter 2: How are Trade Costs Evolving and Why?  WT/COMTD/SE/W/34  
- 20 - 
  Box 6. Underwater  cable in Vanuatu  
The 1, 259 km cable project was the first ever underwater cable to Vanuatu . The project was a 
private -public partnership investment between Interchange Vanuatu Limited, a local 
telecommunications company, and the Government of the Republic  of Vanuatu, as well as  other 
stakeholders . The total costs of installation and connection of the submarine cable amounted to 
$US30  million. S ince the arrival of the cable in early 2014, four major internet services now supply 
users with high speed interne t. In November 2 014, the Telecommunications and Radio 
communications Regulator reported that prices of broadband inte rnet had dropped by at least 70% 
and are expected to drop further as demand for internet access increases . The Government 's 
Universal A ccess Policy aims to connect 98% of Vanuatu's population (270,000 people spread over 
83 islands) to telecommunications services by 1 January 2 018. Telecoms s ervices make up 
approximately 5% of Vanuatu 's GDP, and the arrival of the submarine cable will help boo st 
dependent services linked to agriculture, trade, tourism and finance . Interchange Vanuatu Limited 
soon plans to install more redundant cables to New Caledonia, to the Solomon Islands and to 
Papua New Guinea . The proposed new cable project has shown Vanu atu as a competitive provider 
of telecommunications services in the South Pacific region.  
Source :  Case study submitted by Va nuatu for the Joint OECD/WTO Monitoring and Evaluation exercise, 2015.  
 
Figure 7. Main operational difficult ies for developing country suppliers in tourism value 
chains  
0%10%20%30%40%50%60%Small economies Other developing economies
 
Sourc e:  Joint OECD/WTO Aid for Trade Monitoring and Evaluation  Questionnaire , 2013. 
Note:  Based on answers of 41 suppliers from small economies and 44 suppliers from other developing 
economie s. 
 
7.9.  As in an earlier WTO Secretariat paper on the challenges small economies face w hen entering 
value chains, costs associated with offering services competitively can be considerably reduced 
through foreign direct investment (FDI) . However, small economie s face particular difficulties in 
attracting FDI since such exogenous factors such as distance to markets and the small size of the 
local market can dissuade potential investors.  
7.10.   Even if small economies did decide to produce for local consumption and expor t any surplus 
production, the remote locations of some of these small states could prove to be a further 
deterrent . This is exacerbated when local production is more dependent on imported goods . An WT/COMTD/SE/W/34  
- 21 - 
  UNCTAD report explains that small economies are less attra ctive to market -seeking FDI and to FDI 
aimed at the export of goods, with the exception of raw materials . In addition, with the 
liberalization of markets and the reduction of tariff barriers, high transport costs have become a 
far more restrictive barrier to trade than tariffs . The report finds that h igher costs for moving 
goods can make small economies much less attractive to FDI . Investment is largely dependent on 
the trade of goods, in particular to competitive global production networks which rely on in tra-firm 
trade.15 
7.11.   These constraints are reduced when it comes to trade in services such as retailing, tourism, 
IT and business process outsourcing , telecommunications and energy . In the case of efficiency -
seeking FDI, the development of ICT has opened up op portunities in areas such as call centres, 
data entry and processing centres, and back offices (such as purchases, logistics, accounting, 
claims and payment processing) . However, many of these sectors require a skilled labour force 
and access to telecommun ication and information networks.16 
7.12.   The limited size of small economies means that development and the environment are 
closely interrelated and interdependent . There is usually great competition for land and water 
resources among tourism, agriculture and ot her land uses (such as mining, in resource -rich 
countries), and the over  development of any of these sectors could be detrimental to another 
sector . The challenge for small economies is to ensure that FDI and its use for economic 
development do not cause a ny permanent harm to the sustainable use of land, water and marine 
resources.  
7.13.   Kolstad and E . Villanger (2004) examined efforts to promote investment in small states, and 
especially in the Caribbean . They found that the chances of states increasing FDI flow s - both 
domestic and foreign - to their countries are higher in states that are open to international trade 
and also to those which pursue regional trade arrangements . Since investment is higher in 
countries whose domestic markets are larger and more adva nced, regional integration to expand 
what is considered a limited domestic market is therefore deemed to be beneficial.  
8  SMALL ECONOMIES AND TRADE COSTS AS REFLECTED IN THE JOINT OECD/WTO AID 
FOR TRADE MONITORING AND EVALUATION EXERCISE, 2015  
8.1.  Part of the F ifth Global Review o f Aid for Trade conducted in 2015 was an exercise which 
involved  asking developing countries to identify the issues that they considered to be the main 
drivers of high trade costs in both goods and services.  In total, 112 responses were  received from 
developing countries (including SVEs) with an ad ditional 31 received from least developed 
countries . Of the 32 SVEs bei ng examined in this paper (see T able 1), 17 responded to the 
questionnaire on reducing trade costs .17 The tables are reprod uced in the Annex . The 17 responses 
represent just slightly more than half of the SVEs being examined in this paper . While the small 
number does not allow a detailed analysis of the "trade cost" situation in small economies per se , 
the responses do give an  idea about common concerns faced by some small economies in regard 
to specific areas of trade costs.  
8.2.  For example, on the goods side, the main challenges mentioned in descending order of 
importance concerned transport infrastructure (15), NTMs  (13), border  procedures (11) tariffs, 
fees and other charges and access to trade finance (both 10) . The concern considered the least 
important driver of trade costs was network infrastructure, including information communication 
technology, power and telecoms (4).  As regards the regional export markets of small economies, 
transport infrastructure and border procedures (both 14) were found to be the most important 
sources of trade costs . This was closely followed by NTMs  (13). Of lesser importance were tariffs 
and other  charges (7), access to trade finance (4) and network infrastructure (3).  
                                                
15 United Nations Conference on Trade and Development (UNCTAD) (2013a), World Investm ent Report 
2013 - Global Value Chains: Investment and Trade for Development, Geneva: UNCTAD.  
16 Global Investment Trends Monitor, September 2014, UNCTAD.  
17 Questionnaires were received from Mauritius (Africa), Papua New Guinea, Samoa, Tonga and Vanuatu 
(Pacific), Antigua & Barbuda, Dominica, Dominican Republic, St. Lucia, St Vincent and the Grenadines, Trinidad 
& Tobago (Caribbean) and from Belize, El Salvador, Guatemala, Honduras, Panama and Paraguay (Central & 
South America). Joint OECD/WTO Aid for Trade M onitoring and Evaluation exercise, 2015.  WT/COMTD/SE/W/34  
- 22 - 
  Table 3. The most important sources of trade costs for the export of merchandise  
What are the most important sources of trade costs for the export of merchand ise goods?  (You may 
choose more than 1 option)  
Answer Options  Response Percent  Response Count  
Border procedures (trade facilitation)  61.1%  11 
Tariffs, fees and other charges  55.6%  10 
Non-Tariff Measures (including standards)  72.2%  13 
Transport infrast ructure  83.3%  15 
Network infrastructure (ICT, power, telecoms)  22.2%  4 
Access to trade finance  55.6%  10 
Unsure  0.0%  0 
Other  5.6%  1 
answered question s 17 
Source:  Joint OECD/WTO Aid for Trade Monitoring and Evaluation exercise, 2015.  
 
8.3.  Regarding trade in services, the situation was very different with many SVEs indicating that 
the main drivers of high costs were network infrastructure (15) followed by transport 
infrastructure (10) . Non-recognition of professional qualifications and the restrictions on 
movement of natural persons were each viewed as sources of high costs by 9 respondents, 
followed by poor regulatory environments (8), low level of skills in the services sector (6), 
restrictions on commercial presence (4) and tariffs on product inputs (2).  
8.4.  When looking at services trade in regional markets, the first driver of high costs identified by 
SVEs was the non -recognition of professional qualifications (12), followed by restrictions on 
movement of natural persons (10), poor network and transport infr astructure (7 each), restrictions 
on commercial presence and inefficient government regulations (4 each).  
Table  4. The most important sources of trade co sts for the export of services  
What are the most important sources of trade cos ts for the export of services?  
(You may choose more than 1 option)  
Answer Options  Response Percent  Response Count  
Network infrastructure (ICT, power, telecoms)  83.3%  15 
Transport infrastructure (e.g. for tourism)  55.6%  10 
Non-recognition of professiona l qualifications  50.0%  9 
Restrictions on commercial presence  16.7%  3 
Restrictions on movement of natural persons  50.0%  9 
Poor regulatory environment for services  44.4%  8 
Tariffs on product inputs (e.g. on computers for ICT 
services)  11.1%  2 
Low levels  of skills in service sectors  33.3%  6 
Other  5.6%  1 
answered question s 17 
Source:  Joint OECD/WTO Aid for Trade Monitoring and Evaluation exercise, 2015.  
 
9  AID FOR TRADE IS HELPING TO REDUCE TRADE COSTS  
9.1.  This paper has touched on how trade costs matter for  the global pattern of trade and 
production in goods and services and for national incomes . It has also looked at some behind the 
border issues . What has not been touched upon in detail, however, is the importance of policies as 
a determinant of trade cost s. Policies can be either direct or indirect insofar as they affect the 
economic implications of trade costs from other sources, such as transport.  
9.2.  If policy matters for trade costs, then it follows that Aid for T rade can be part of a successful 
policy  mix to help reduce trade costs . This is supported by the results of the 2015 M&E e xercise . 
Figure 8  below highlights the outputs that have been achieved from aid -for-trade actions to reduce 
trade costs, as reported by developing countries, donors, regional ec onomic communities and 
South -South partners . WT/COMTD/SE/W/34  
- 23 - 
  Figure 8. Outputs achieved by actions taken to reduce trade costs  
 
Source : Joint OECD/WTO Aid for Trade Monitoring and Evaluation exercise, 2015 . 
 
9.3.  Broadly speaki ng, Aid for T rade covers the full set of activities that help developing countries 
trade more with the rest of the world . Following the categories used in the OECD 's Creditor 
Reporting System, Aid for Trade includes technical assistance for trade policy an d regulations, 
trade -related infrastr ucture and building productive capacity including trade development, trade 
related adjustment and other trade -related needs . Each of these categories has something to offer 
national policy efforts designed at reducing t rade costs, so there is much that the donor 
community and partner countries and small economies can do to work together successfully in this 
area. 
9.4.  As illustrated  by donor and partner country responses to 2015 monitoring exercise , the three 
main priorities for Aid for T rade in the area of reducing trade costs in goods markets are 
infrastructure, border procedures (trade facilitation) and NTMs  such as product standards . Aid for 
infrastructure can include assistance with the construction or upgrading of import ant gateway 
infrastructure, such as ports and airports, or infrastructure that connects those gateways with the 
rest of the country, like road and rail links . In addition to the costs of developing infrastructure, 
there is also the cost of maintaining it - and aid resources frequently need to be mobilized for this 
purpose in contexts where user -pay fee systems are unlikely to be effective, sufficient or 
equitable.  
9.5.  Indeed, developing countries themselves need to mobilize to support key infrastructure 
develop ment, including in achieving partnerships with neighbo urs to realize costly infrastructure 
projects such as roads , dams and electricity grids . In this regard, establishing transport corridors 
and customs clearance stations makes it possible to reduce trans port and customs clearance times 
for the processing and delivery of goods . Several examples show how road haulage volumes have 
increased and how waiting times have been reduced . Both provide benefits to the transport sector 
that can be passed on to consume rs and producers.  
WT/COMTD/SE/W/34  
- 24 - 
  Box 7. Belize case study  
Belize undertook a project to significantly improve road connectivity between its main cities and 
the rest of Central America . Linkages were to be improved to the popular tourist destinations and 
road infrastructu re was to be brought up to world standards . This would help decrease travel time 
and costs, reduce road fatalities and injuries, and ensure road accessibility and resilience to 
climate change . The existing road system was in the last decade unable to keep up with the 
increasing demands of the tourism industry, agricultural and petroleum production and cross -
border trade . This corridor is viewed as a key component of the trade facilitation infrastructure, 
both for national purposes and as a spoke in the regi onal Mesoamerican trade network hub.  
 
Some of the key results expected from the five -year project include the rehabilitation and 
moderniz ation of the 31.2 kilometres of highway between Belize and the rest of Central America, 
the replacement of the deficien t Roaring Creek Bridge that succumbs to flooding and limits the 
evacuation from the coastline during heavy storms and the institutional strengthening of the 
transport administration.  
 
An economic evaluation of the project estimated that the road will lead to a US$53  million  
decrease in costs over the next 20 years . The tourism industry has been growing significantly over 
the last two decades with the number of overnight passenger s growing by 5.8% in 2013.  
 
An expanding tourism sector and burgeoning trade wi th Central America is contributing to Belize 's 
GDP. The reality of an enhanced transportation corridor at reduced cost will be a crucial lifeline for 
national development.  
Source:  Case Story submitted for 2015 M&E Exercise : Belize George Price Highway (G PH) Rehabilitation 
(Improving Belize 's Main Transportation Corridor for further integration into RICAM -The 
International Network of Mesoamerican Highways) . 
 
9.6.  The Aid for Trade at a Glance 2015 publication showed how targeted interventions could 
significant ly alter the trade costs landscape in developing countries . Policies aimed to enhance 
infrastructure, reform trade facilitation and meet NTMs  such as product standards were widely 
recognized to be the most important ones for reducing trade costs . However, they are by no 
means the only ones . Interventions in other areas also matter, depending on particular national 
contexts . The key is for interventions to be backed up with sufficient resources, as well as the 
availability of technical know -how, to make a su stained difference in the trade costs environment 
of a partner country or group of partner countries.  
9.7.  Trade costs often have a regional dimension, so it can be beneficial to work with small groups 
of countries on regional initiatives . The PacerPlus Agreeme nt in the Pacific alluded to earlier could 
serve as an example for other regions . Indeed, the OECD -WTO survey s indicate that many 
developing countries work together regionally on reducing trade costs, the most common means 
being through regional economic c ommunities and free trade agreements . Trade often takes place 
through key corridors that cross borders and involve multiple modes of transport . A 
comprehensive Aid-for-Trade  approach can enhance corridor performance and reduce trade costs 
for groups of cou ntries . The survey found that there was clear evidence that current efforts were 
going in the r ight direction . For exa mple, 76 % of developing countries in the 2015 OECD -WTO 
survey indicated that external support was aligned with national and regional needs  to reduce 
trade costs.  
10  THE ROLE OF POLICY REFORMS IN REDUCING TRADE COSTS  
10.1.   Across many small economies as well as developing countries, there are several areas 
where policy reforms could lead to significant reductions in trade costs . In its contribution to  the 
2015 WTO/OECD joint publication Aid for Trade at a Glance, the World Bank asked what policy 
makers in developing countries could do to reduce trade costs and realize the economic 
development benefits that can potentially result ? While much depends on individual country 
circumstances, especially for small economies facing distinct challenges, the Bank found that 
developing countries in general have a number of policy options available to them that can be 
effective in reducing trade costs.  WT/COMTD/SE/W/34  
- 25 - 
  10.2.   The World Bank  identified three main areas for trade logistics reforms . These include trade 
facilitation measures to simplify processes at the border, trade -related infrastructure projects such 
as rail or road corridors, ports and information technology, and the develop ment and quality of 
logistics services . In its experiences, the Bank found that many policies related to reducing trade 
costs are complementary and are actually stronger when they work together than when applied 
separately . Expensive elements of trade faci litation reform programmes, such as setting up single -
window systems or upgrading border infrastructure, are in general far lower investments than 
larger infrastructure projects like building or expanding ports, undertaking airport upgrades or 
road and rai l construction projects . However, the World Bank has found that these facilitation 
reforms are better implemented when tied to physical infrastructure and even regional projects 
designed to promote transport corridors . Linking "hard" with "soft" infrastruc ture is likely to bring 
more sustainable participation from stakeholders and agents . It also provides a good framework 
for donor co ordination.18 
10.3.   The World Bank believes that implementation of the TFA is a key instrument in developing 
countries ' trade reform  programmes and  should be seen as setting a reform floor from which 
countries could realize further reforms . It sees inefficient border management as one of the most 
significant sources of trade costs for developing countries which makes trade facilitation  a highly 
cost-effective area of reform . Increasingly, trade facilitation reforms target the implementation of 
comprehensive border management reforms, with participation of the full set of institutions 
involved in regulating trade . This includes agencies responsible for quarantine, health, security, 
etc. (in many countries there can be more than ten agencies involved in trade facilitation).  
10.4.   The impact of resources invested to improve the efficiency of customs procedures - the 
traditional focus of trade fac ilitation reforms - can be diminished if other agencies involved in 
clearing goods at the border maintain inefficient procedures . Results from the Logistics 
Performance Index 2014 show this as an ongoing area of weak performance, with respondents 
identifyi ng more problems with non -customs agencies, including those involved in standards, 
transport, veterinary issues and health/SPS.  
10.5.   Even though, t he TFA is a key instrument in developing countries ' trade facilitation reform 
programmes , the World Bank urges countries not to stop with TFA implementation . Current reform 
programmes in many countries go beyond the TFA measures . In fact, most active reform 
programmes, supported by international agencies are already pushing the moderni zation of the 
trade facilitation infrastructure much beyond the provisions of the TFA.  
10.6.   As has been mentioned, NTMs  comprise a significant source of trade costs , the importance 
of which has risen as tariffs have fallen globally . Streamlining NTMs, and harmoniz ing them 
between trade partner s and within regions, can have a significant impact in lowering trade costs . 
Diagnostics such as the STDF's assessments can also help governments analyse NTMs in a more 
systematic manner and provide a basis for more objective discussion with different stak eholder 
groups on NTMs than is often the case . Such studies also help governments identify testing 
priorities.  
10.7.   Finally  there is Aid for Trade which also addresses groups of countries with special needs 
due to comparatively very high trade costs . Such is th e case of landlocked developing countries 
(LLDCs ) and small e conomi es or island developing states . Figure 9 provides strong evidence that 
landlocked developing countries or islands states indeed suffer from particularly high trade costs 
that effectively ma rginali ze them from the trading system . They are indeed at a disadvantage 
given the need to cross a transit country (landlocked countries) or the dependence on trans -
shipment (island states) to access international markets.  
                                                
18 Aid for Trade at a Glance , 2015, OECD/WTO: C ontributed by World Bank, Chapter 2 "How are Trade 
Costs Evolving and Why?"  WT/COMTD/SE/W/34  
- 26 - 
  Figure 9. GDP per capita and Aggregate Trade Costs  
 
Source : World Bank 2014 ( http://dx.doi.org//10.1787/888933240979 ) 
 
11  CONCLUSION  
11.1.   This paper was prepared pursuant  to the Ministerial Decision taken at MC10 .19 The Decision 
on the Work Programme on Small Economies instructed the WTO Secretariat to continue its work 
in the Dedicated Session of the Committee on Trade and Development on GVCs  in trade in goods 
and services . It also requested the Secretariat to conduct w ork on the challenges small economies 
experience in their efforts to reduce trade costs, particularly in the area of trade facilitation.  
11.2.   As part of the follow -up to the Decision, Members accepted a p roposal in November 2 016 by 
the SVEs Group  "to identify a nd discuss the specific challenges experienced by SVEs in their efforts 
to reduce trade costs . They also agreed to have the Secretariat analyse best practices and policy 
approaches for reducing the negative impacts of these challenges in their productive c apacity and 
export competiveness".20 
11.3.   This paper, therefore, pr ovides  an overview of some of the challenges which small 
economies experience in their efforts to reduce trade costs, especially in the areas of SPS and TBT . 
While it is not an exhaustive study o f this subject, the paper does look at specific services sectors 
and the role of trade faci litation, including logistics.  
11.4.   It was seen that NTMs comprise a significant source of trade costs, the  importance of which 
has risen as tariffs have fa llen globally . Streamlining certain NTMs and engaging in efforts to 
harmonize them between trade partners and within regions, could lead to positive results in 
lowering trade costs . Furthermore,  diagnostics and objective assessments about how to meet 
specific NTM requir ements in key export markets could help both businesses and governments to 
analyse NTMs in a more systematic manner and provide a basis for more objective decision 
making.  
11.5.   The paper also shows  how certain trade policies can affect trade costs and how cruci al 
certain logistics operations can be in either adding costs or to substantially reducing them . Here, 
the role of infrastructure was underscored and its importance for ports, telecommunication 
services and for maritime connectivity generally.  
                                                
19 WT/MIN(15)/40, WT/L/975.  
20 WT/COMTD/SE/W/33/Rev.1  WT/COMTD/SE/W/34  
- 27 - 
  11.6.   It was also seen how Aid-for-Trade  interventions could significantly help to reduce trade 
costs, especially i f they enhanced infrastructure and how reformed trade clearance practices were 
successful in meeting product standards  in export markets . Case stories were inc luded in the 
paper to show how some  small economies have  made use of Aid-for-Trade  projects to assist with 
national customs clearance systems and the realization of infrastructure projects such as road and 
transit corridors.  
11.7.   Finally , the important role of trade facilitation in reducing trade costs was considered . It was 
emphasized that the TFA and trade facilitation reforms in general should be understood to be a 
starting point for small economies in their quest to ensure lower trade costs and to safeguard their 
positions in key export markets . Experiences encountered by global agencies such as the World 
Bank were referred to insofar as they show ed that many policies related to reducing trade costs 
are indeed complementary and are actually stronger when they  work together than when applied 
separately . It was seen that costly elements of trade reform programmes such as single -window 
systems were, in general, far lower investments than larger infrastructure projects like building or 
expanding ports . However, th e World Bank found that such facilitation reforms were better 
implemented when tied to physical infrastructure and to regional projects designed to promote 
transport corridors . Linking "hard" with "soft" infrastructure was, therefore, likely to bring more 
sustainable participation from stakeholders and agents.  
12   REFERENCES  
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Decreux, Y. and L . Fontagne (2011), "Economic impact of potential outcome of the DDA II ", 
Working Paper.  
Diop, N., P . Brenton and Y . Asarkaya ( 2005), "Trade costs, export development and poverty in 
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GEA (2015), Express Delivery and Trade Facilitation : Impacts on the Global Economy , 
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(http://global -express.org/assets/files/Whats new section/GEA_FinalReport_STC_13012015.pdf ) 
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Transport Costs  on Latin American and Caribbean Trade,  IADB. 
 
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Moise, E. and F . Le Bris (2013), "Trade costs : what have we learned ? A synthesis report ", Trade 
Policy Paper No. 150, OECD.  
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Trade Facilitation Agreement on Trade Costs, 
http://www.oecd.org/tad/facilitation/OECD_Trade_Facilitation_Indicators_updated -
flyer_October_2014.pdf . 
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region ", Publication No. 214-SE-01.28, APEC.  
Standards and Trade Development Facility, Implementing SPS Measures to Facilitate Safe Trade; 
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UNCTAD : liner shipping connectivity index  WT/COMTD/SE/W/34  
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_______________  
   
  WT/COMTD/SE/W/34  
- 29 - 
 
13  ANNEX  
Table 1.  Trade in Goods  
Trade in Goods  
Most Important Sources of Trade Costs  
  
Border procedures 
(Trade Facilitation)  
Tariffs, fees and 
other charges  
Non-Tariff Measures 
(including standards)  
Transport infra -
structure  
Network infra -
structure (ICT, 
power, telecoms)  
Access to Trade 
Finance  
Regional  Markets  
Border procedures 
(Trade Facilitation)  
Tariffs, fees and 
other charges  
Non-Tariff Measures 
(including standards)  
Transport infra -
structure  
Network infra -
structure (ICT, 
power, telecoms)  
Access to Trade 
Finance  
Region  Member  
             Africa  Cabo Verde                            
Mauritius  X X X X   X North America, Western Europe, East Africa, Southern 
Africa  X   X   X   
Seychelles                            
Asia/Pacific  Brunei Darussalam                            
Fiji                           
Maldives                            
Papua New Guinea    X X X X   North America, Western Europe, Developed Asia        X X X 
Samoa      X   X X Central America, Central Asia,  South Asia, Pacific 
Islands, Other  X   X X     
Sri Lanka                            
Tonga    X   X     Developed Asia, Pacific Islands, Australia and New 
Zealand  X X X X     
Vanuatu  X     X   X East Asia, South Asia,  Pacific Islands  X   X X     
Caribbean  Antigua and Barbuda  X X X X   X Central America, Central and Eastern Europe, East 
Asia, South Asia, West Africa  X X X X     
Barbados               
Cuba              
Dominica  
          X Other. The countries which Dominica actively trades 
with are within and under the auspices of PTAs and 
therefore "duty free" applies o n those goods exported              
Dominican Republic  X X           X X         
Grenada  X X X X   X North America, Central America, South America, The 
Caribbean, Western Europe  X X   X   X 
Jamaica               
St. Kitts and Nevis               
St Lucia X X X X   X North America, the Caribbean,  Western Europe  X X X X   X   
  WT/COMTD/SE/W/34  
- 30 - 
 
Trade in Goods  
Most Important Sources of Trade Costs  
  
Border procedures 
(Trade Facilitation)  
Tariffs, fees and 
other charges  
Non-Tariff Measures 
(including standards)  
Transport infra -
structure  
Network infra -
structure (ICT, 
power, telecoms)  
Access to Trade 
Finance  
Regional  Markets  
Border procedures 
(Trade Facilitation)  
Tariffs, fees and 
other charges  
Non-Tariff Measures 
(including standards)  
Transport infra -
structure  
Network infra -
structure (ICT, 
power, telecoms)  
Access to Trade 
Finance  
Region  Member  
             
 St Vincent and the 
Grenadines  X   X X   X North America, the Caribbean,  
Western Europe  X   X X     
Trinidad and Tobago    X X X     North America, the Caribbean,  
Western Europe    X X       
Central 
America  Belize    X X X     Central America,  
The Caribbean  X   X X     
Ecuador                            
El Salvador  X   X X X X North America, Central America, South America, the 
Caribbean, Western Europe  X   X X X X 
Guatemala*  X   X X     North America, Central America, South America, the 
Caribbean, Western Europe  X   X X     
Guyana                            
Honduras        X     South America, the Caribbean,  
Western Europe, Central and Eastern Europe        X     
Nicaragua                            
Panama  X X X X X X North America, Western Europe, Central and Eastern 
Europe, Developed Asia  X X X X     
Paraguay  X   X X     North America, South America,  
Central and Eastern Europe  X   X X     
Suriname                            
*Other – Additional costs such as controls/inspection, sanitary and phytosanitary treatment, quarantine, etc  
 
   
  WT/COMTD/SE/W/34  
- 31 - 
 
Table 2.  Trade in Services  
 
Trade in Services  
Most Important Sources of Trade Costs  
  
Network  
infra -structure (ICT; 
power, telecoms)  
Transport infrastructure 
(e.g. for tourism)  
Non-recognition of 
professional 
qualifications  
Restrictions on 
movement of natural 
persons  
Restrictions on 
commercial presence  
Low levels of skills in 
service sectors  
Poor regulatory 
environment for services  
Tariffs on product inputs 
(e.g. on computers for 
ICT services)  
Other  
Regional Markets  
Poor network 
infrastructure (ICT, 
telecoms)  
Poor transport 
infrastructure (e.g. for 
tourism)  
Recognition of 
professional 
qualifications  
Restrictions on 
movement of natural 
persons  
Restrictions on 
commercial presence  
Inefficient government 
regulations  
Region  Member  
Africa  Cabo Verde                    
Mauritius  X  X X X  X    North America, Western 
Europe,  
East Africa, Southern Africa    X X X  
Seychelles                    
Asia/  
Pacific  Brunei 
Darussalam                    
Fiji                   
Maldives                    
Papua New 
Guinea  X  X   X X X   North America, Western 
Europe,  
Developed Asia        
Samoa  X X X X       Central America, Central 
Asia, South Asia, Pacific 
Islands, Other    X X   
Sri Lanka                    
Tonga  X X         Developed Asia, Pacific 
Islands,  
Australia and New Zealand   X X    
Vanuatu   X X X  X X    East Asia, South Asia,  
Pacific Islands   X X    
Caribbean  
 
 
 
 Antigua and 
Barbud a X  X X X   X   Central America, Central  
and Eastern Europe, East 
Asia, South Asia, West Africa      X X     
Barbados                            
  WT/COMTD/SE/W/34  
- 32 - 
 
Trade in Services  
Most Important Sources of Trade Costs  
  
Network  
infra -structure (ICT; 
power, telecoms)  
Transport infrastructure 
(e.g. for tourism)  
Non-recognition of 
professional 
qualifications  
Restrictions on 
movement of natural 
persons  
Restrictions on 
commercial presence  
Low levels of skills in 
service sectors  
Poor regulatory 
environment for services  
Tariffs on product inputs 
(e.g. on computers for 
ICT services)  
Other  
Regional Markets  
Poor network 
infrastructure (ICT, 
telecoms)  
Poor transport 
infrastructure (e.g. for 
tourism)  
Recognition of 
professional 
qualifications  
Restrictions on 
movement of natural 
persons  
Restrictions on 
commercial presence  
Inefficient government 
regulations  
Region  Member  
 
 Cuba                         
Dominica          X Other. The countries which 
Dominica actively trades 
with are  within and under 
the auspices of PTAs and 
therefore "duty free" applies 
on those goods exported        
Dominican 
Republic  X   X X X          X X  
Grenada  X     X X    North America, Central 
America,  
South America, The 
Caribbean, Western Europe    X X X  
Jamaica                    
St. Kitts and 
Nevis                    
St Lucia  X X X X X    Ability to 
access 
financing  
from the 
traditional 
sources to 
finance 
services 
contracts  North America, the 
Caribbean,  
Western Europe  X X X X  X 
St Vincent 
and th e 
Grenadines  X X X    X    North America, the 
Caribbean,  
Western Europe   X X X   
Trinidad and 
Tobago  
 X  X X       North America, the 
Caribbean,  
Western Europe  X  X X  X   
  WT/COMTD/SE/W/34  
- 33 - 
 
Trade in Services  
Most Important Sources of Trade Costs  
  
Network  
infra -structure (ICT; 
power, telecoms)  
Transport infrastructure 
(e.g. for tourism)  
Non-recognition of 
professional 
qualifications  
Restrictions on 
movement of natural 
persons  
Restrictions on 
commercial presence  
Low levels of skills in 
service sectors  
Poor regulatory 
environment for services  
Tariffs on product inputs 
(e.g. on computers for 
ICT services)  
Other  
Regional Markets  
Poor network 
infrastructure (ICT, 
telecoms)  
Poor transport 
infrastructure (e.g. for 
tourism)  
Recognition of 
professional 
qualifications  
Restrictions on 
movement of natural 
persons  
Restrictions on 
commercial presence  
Inefficient government 
regulations  
Region  Member  
Central 
America  Belize  X X     X    Central America, The 
Caribbean  X  X    
Ecuado r                   
El Salvador  X X X   X     North America, Central 
America,  
South America, the 
Caribbean, Western Europe  X X X    
Guatemala*  X X  X       North America, Central 
America,  
South America, the 
Caribbean, Western Europe  X X  X   
Guyana                    
Honduras        X    South America, the 
Caribbean,  
Western Europe, Central and 
Eastern Europe  X     X 
Nicaragua                    
Panama  X X         North America, Western 
Europe,  
Central and Eastern Europe, 
Developed Asia        
Paraguay  X X  X  X X    North America, South 
America,  
Central and Eastern Europe  X X X X X X 
Suriname                          
* Restrictions on movement of natural persons can be illustrated, for example, by migratory problems encountered in the transpo rt services area.  
 
 
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