MANILA – As international shipping costs surge to an all-time peak due to the COVID-19 pandemic, digital trade facilitation can help "bend the trend," a study by the Asian Development Bank and the United Nations Economic and Social Commission for Asia and the Pacific said.
The Asia-Pacific Trade Facilitation Report 2021 reported that "trade costs in Asia and the Pacific are the highest in South Asia. Central Asia and the Pacific have made progress in reducing trade costs over the past several years but they remain high."
While more developed nations in East Asia have the lowest trade costs in the region followed by the Association of Southeast Asian Nations (ASEAN), the report read.
The study also showed trade facilitation agreements between Asia Pacific economies can benefit from the shift toward trade digitalization.
The report cited a simulation by the World Trade Organization (WTO) that implementing full digital trade facilitation can help cut average trade costs in the region by more than 13 percent.
Rupa Chanda, director for trade, investment, and innovation at ESCAP, said, they also expect global trade to continue improving once cases of COVID-19 continue to decrease across the world along with an increase in vaccination rates.
She said this should improve the macroeconomic outlook for next year and help boost global and regional trade which are both closely tied to economic conditions.
"However, there will be differences across the region because of the pace that the pandemic has progressed and the pace of immunization," Chanda explained.
"There have been long-term efforts obviously of opening up trade, improving the liberalization measures, trade facilitation measures, but the pandemic was sort of a wake-up call for the need to accelerate some of these," she said.
She also emphasized the need for a greater commitment to market liberalization across jurisdictions in the Asia Pacific region.
"We've seen the disruptions that can be caused by having export restrictions, bans and all sort of very ad hoc policies which have an effect on other countries," Chanda noted.
She said they expect the pandemic to further decentralize the regional supply chain with more manufacturing hubs and investment hubs set up outside the traditional sites in Asia.