Global trade costs fall by 15% – WTO

THE World Trade Organization (WTO) has disclosed that global trade costs have dropped by 15% between 2000 and 2018. It said while Trade costs for services are higher than trade costs for agricultural goods, Trade costs for manufactured goods are the lowest.

The disclosure was made by was disclosed by the Ngozi Okonjo-Iweala-led WTO through a post made on its Twitter handle on Friday.

According to the reports,overall trade costs are higher for women, SMEs, and unskilled workers. High-income groups face higher trade costs, given their larger share of consumption in services.

Trade policy barriers and regulatory differences are estimated to account for at least 14% of trade costs in all sectors. They include tariff and non-tariff barriers, regulatory differences, as well as other policies covered by trade agreements, such as a lack of investment facilitation or of intellectual property protection.

The Trade policy barriers are relatively the most important component of trade costs for trade among low-income economies.

The report also stated that Transport and travel costs together with information and transaction costs explain the largest share of trade costs between high-income economies.

According to the WTO, the methodology introduces a number of improvements, which allows for sector-specific elasticities of trade flows to trade costs for both goods and services as its first function.

“It allows the estimation of directional trade costs, thus offering more realistic estimates of trade costs. Directional trade costs also allow us to estimate the incidence of trade costs on different groups of consumers and producers. This is a major achievement of this work,” the report stated.