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Trade facilitation helps reduce rising costs in Asia-Pacific

27/10/2021 04:29 PM
The Covid-19 pandemic has had a negative impact on world trade. High participation in global value chains makes Asia-Pacific more vulnerable to restrictive trade policies, leading to higher trade costs in the region. Therefore, trade facilitation will help reduce these costs, strengthening the resilience of economies.

According to the report on trade facilitation in the Asia-Pacific region 2021 of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Asian Development Bank (ADB), after the supply chain was disrupted because of the pandemic, transportation costs have increased to an all-time high. The Covid-19 caused shipping companies to make large-scale capacity cuts, severe port congestion, a shortage of empty containers and a partial closure of some major ports, leading to freight rates are higher on long-haul routes, such as Asia-Europe and Asia-North America.



Freight charges at these routes have increased about 4 to 8 times within a year. The implementation of 31 joint trade facilitation measures and digital transformation in 2021 has helped goods circulate throughout the region, Implementing trade facilitation helps reduce costs that are on the rise in the region. Asia-Pacific The Covid-19 pandemic has had a negative impact on world trade. High participation in global value chains makes Asia-Pacific more susceptible to restrictive trade policies, leading to higher trade costs in the region. Therefore, trade facilitation will help reduce these costs, strengthening the resilience of economies.

According to the Nikkei Asia news site (Japan), transportation costs on the route from China to the US West Coast have been reduced from $15,000 to $8,000/FEU (1 40-foot container). At the same time, the cost of shipping containers for spot on the route from China to the US East Coast also decreased from $20,000 to $15,000/FEU. So far, Australia and New Zealand are leading the Asia-Pacific region in implementing trade facilitation measures, followed by East Asia, Southeast Asia and the East Timor-Leste regional borders. like China and India.

The UNESCAP-ADB study found that border closures, export controls, and health and safety protocols disrupted production and the flow of goods across international borders, affecting international borders. severely affect the supply of critical items such as food, personal protective equipment and vaccines. Supply chains are also disrupted by natural disasters, epidemics, restrictive trade policies; lack of labor due to travel restrictions and fear of contagion; restrictions on post-harvest storage of agricultural products; port restrictions and congestion, leading to a lot of cargo spoilage and increased food waste due to lack of cold storage; Meanwhile, many countries still lack long-term trade facilitation plans to enhance crisis preparedness, even using restrictive policies. export production materials and goods for epidemic prevention and control.

The Covid-19 pandemic has become a major challenge for the global supply chain and requires a paradigm shift in supply chain management. Even the production and supply of vaccines requires the “power” of trade facilitation to reach the most vulnerable least developed countries (LLDCs). Rapid global and regional support and cooperation to ensure continued supply of items is therefore crucial. About two-thirds of the 20 Asia-Pacific economies have implemented new trade facilitation measures to minimize supply chain disruptions. Many countries in the region have also stepped up measures related to transparency and institutional coordination, simplifying customs procedures, and speeding up customs clearance. All sub-regions have made progress on trade facilitation. The proportion of trade facilitation measures and policies of Asia-Pacific countries has increased since 2019 until now.

The pandemic has also accelerated the shift to digitization of trade, so more efforts are needed to leverage digital technology to streamline customs procedures and electronic information exchange, and to implement Implement national and regional single-window mechanisms for the submission and clearance of documents. Digitization and trade facilitation will make trade more sustainable and inclusive, leaving no one behind, especially for SMEs, women and the agricultural sector. The pandemic has highlighted the role of trade facilitation in ensuring the rapid delivery of medical and other essential goods. Trade facilitation as an effective tool for mitigating negative effects. 

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