tariff cuts to the lowering of nontariff barriers (World Bank 2016). The EU alone participates in 46 RTAs, and other advanced economies are members of up to 75. Among EMDEs, membership of RTAs is less common, although all but a handful are members of at least one. Such agreements are most common in ECA, where some countries are EU members and others are members of the free trade area between members of the Commonwealth of Independent States, and in LAC, where most countries are members or associates of MERCOSUR or signatories to trade agreements with the United States, such as the U.S.-Mexico-Canada Agreement (USMCA) or the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR).

# Shipping and logistics

A multitude of trade costs arise from the transport of goods and from associated administrative border and customs procedures (Moïsé and Le Bris 2013). Transport costs, much like tariffs, penalize goods produced in multiple stages across different countries, since producers have to pay to move components at each stage of the production process. They can be thought of as services costs—the costs of services related to shipping and logistics. These costs depend on the efficiency and reliability of transport facilities and the burden of administrative procedures.

Transit delays have been identified as important deterrents to trade flows, together with poor shipping connectivity and inadequate logistics infrastructure and services (Freund and Rocha 2011). For most of U.S. trading partners, transport costs are higher than tariff costs, and for the broader group of advanced economies, poor logistics have resulted in larger trade costs than geographic distance alone (Marti and Puertas 2019; Staboulis et al. 2020). Transport costs, much like tariffs, penalize goods produced in multiple stages across different countries, since producers have to pay to move components at each stage of the production process. Estimates of the tariff equivalent of transit time find that each day in transit is equivalent to a 0.8 percent tariff (Hummels et al. 2007). For a 20-day sea-transport route (the average for imports to the United States), this amounts to a tariff rate of 16 percent—much higher than the actual average tariff rate. Using gravity models, studies find that a 10 percent increase in the time taken to transport exports reduces trade by 5-25 percent, depending on the sector and export destination (Djankov, Freund, and Pham 2010; Hausman, Lee, and Subramanian 2005; Kox and Nordas 2007, Nordas 2007).

Transport costs in real terms have declined over time, as land, sea, and air shipping costs have fallen. Technological improvements in transport services, such as jet engines and containerization, have reduced both transport costs per unit of time and transport times. Average shipping time for imports to the United States declined from 40 to 10 days between 1950 and 1998 (Hummels 2001). Evaluated at an average cost per day of 0.8 percent ad valorem (see previous paragraph), this increase in the speed of transport is equivalent to a reduction in the tariff rate of 24 percentage points.

In addition, advances in communication technologies have allowed the development of more effective multi-modal transport systems, which have helped both to reduce