By Obiabin Onukwugha
The World Trade Organisation (WTO) has stated that trade costs declined by 15 per cent globally between 2000 and 2018.
The report indicated that updates on global trade costs consist of the cost of market uncertainty.
The WTO trade cost index report reflects the cost of trading internationally relative to trading domestically. The report covered bilateral trade costs of 43 countries and 33 sectors between 2000 and 2018.
According to the report, the index includes all costs that burden foreign sales more than domestic sales such as transportation costs, trade policy barriers, costs to comply with foreign regulations, communication costs, transaction costs or information costs.
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By sector, the report showed that trade cost was highest in services and lowest in manufacturing, adding that export and import costs declined between 2000 and 2018 for most countries.
The report further showed that travel restrictions and border closure directly affected trade in goods and services, thereby disrupting freight transport, business travel and the supply of services that rely on the presence of individuals abroad.
“Global trade costs have declined by 15 percent between 2000 and 2018. Overall trade costs are higher for women, SMEs, and unskilled workers.
“Our estimates suggest that global trade costs are around 3.5 times higher than domestic trade costs. They are higher for lower-income economies than for high-income economies. While high-income economies’ trade costs declined throughout the entire period, trade costs in lower-income economies saw an uptick during the Great Financial Crisis of 2008/2009,” the report read.
WTO previously reported in August that trade costs may possibly increase due to COVID-19 disruptions.
