"This database allows us to rank countries’ progress in liberalizing their tariff regimes, as well as the extent to which countries’ broader policy and institutional environment supports export growth" said Roumeen Islam, the World Bank Institute Manager who led the team that developed the World Trade Indicators. "The ranking shows that those countries that have reduced their trade barriers, and are doing well on trade facilitation and institutions, have also experienced sustained increases in their volume of trade. These improvements are possible despite poor endowments."
While high-income countries still have the world’s lowest tariff barriers, many developing countries are converging rapidly. Georgia, Haiti, Armenia and Mauritius, are among the 10 countries having the lowest tariffs as measured by the simple average MFN tariff. Neither the European Union nor Japan is among the top 10.
Developing countries showing large declines in import restrictions since the beginning of this decade include Egypt, which reduced its average MFN tariff from 47 to 17 percent; the Seychelles, dropping its average tariff from 28 to eight percent; India, reducing from 32 to 15 percent; and Mauritius, which reduced its average from 18 to just 3.5 percent.
These observations emerge from the World Trade Indicators (WTI), a unique new database and ranking tool that allows benchmarking and comparisons among 210 countries and customs territories, across multiple trade-related indicators. The easy-to-use web-based tool is aimed at helping policymakers, negotiators and researchers assess each country’s performance relative to others’ as well as relative to its historical achievements.
The Indicators show the Middle East and North Africa, South Asia, and Sub-Saharan Africa to be the developing regions with the highest average tariffs. About half of the countries among the 20 having the highest tariffs are in Africa.
But WTI data also show that high-income countries still have much higher maximum tariffs than low-income ones. High tariff peaks also remain in the sectors of greatest export interest to many developing countries.
Services trade liberalization could deliver large benefits, but movement has been slow in this area, especially in low-income countries. Locking in current levels of liberalization through the General Agreement on Trade in Services (GATS) would be an important first step towards a more ambitious reform agenda, especially for low-income countries. Improvements in low-income countries’ domestic institutions would boost their export performance, particularly in manufacturing and services, and help support new markets and new products. With trade costs now higher than tariffs in many countries, improvement in trade logistics in developing countries would deliver high payoffs in improved trade performance.
Despite global reductions in tariffs and preferential trading arrangements, low-income country exporters, as a group, still face the least favorable market access for their products, as they face average tariffs (3.7 percent) on their exports that are 32 percent higher than those faced by high-income country exporters (2.8 percent).
The Indicators also underscore the fact that developing countries are hurt by poorer institutional environments; countries with better behind-the-border policies and institutions are more likely to have a larger proportion of manufactures among their exports, as well as lower export concentration. Better logistics also boost trade integration.
"In a global economy, trade is at the heart of development," said Danny Leipziger, Vice President of the Bank’s Poverty Reduction and Economic Management Network. "It is essential that countries adopt policies that promote trade and help them benefit from it. This ranking and benchmarking exercise seeks to spur policy and institutional reforms and encourage better market access for countries that could be left behind."
The WTI database brings together key trade-related indicators from the Geneva-based International Trade Centre (ITC), the World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD), and the World Bank. The database also provides country briefs on developing countries, while its companion publication summarizes global patterns in trade policies, institutions, and outcomes revealed by the database.
"Effective assessments of trade policies and outcomes are dependent on good-quality data," said Gianni Zanini, the World Bank Institute’s Trade Program Leader. "In compiling this database, we found gaps, indicating that countries and international agencies need to improve the quality and collection of trade-related data, as they are vital to sound policymaking."
Still, the WTI provide, said Indonesia’s Trade Minister Mari Pangestu, "an impressive array of information that policymakers can use as a benchmark to measure their country's progress as well as its position with respect to other countries. It should provide a good basis for informed policy making, including negotiations, and thus provide much needed information for small and/or developing countries which have limited resources to develop such a comprehensive database."
