The Global Enabling Trade Report 2010: Country Profile Highlights

Transcription

1 The Global Enabling Trade Report 2010: Country Profile Highlights Asia and Pacific Singapore continues to lead the ETI rankings by maintaining its outstanding performance across the board. The city-state comes in 1st position on no less than five out of the nine pillars, and features in the top 10 on 43 out of the 56 indicators composing the ETI. As a small economy, Singapore has a very open trade policy and exporters face only a few barriers in target markets. The trade-weighted applied tariff rate amounts to almost zero (0.03 percent, the second lowest), as 99.9 percent of imports enter duty-free and Singapore s exporters face an average tariff in destination markets of 4.5 percent, the second-lowest rate after Chile. i Singapore also is rewarded for the extreme simplicity of its tariff structure, ranking 4 th on this indicator, just a few places behind leading Hong Kong. These two are the only high-income economies within the top 30 on this indicator. Singapore s border administration is top notch in every respect. The country tops the customs services index with the maximum score of 12, and the Doing Business study reveals that border clearance of goods requires little paper work (four documents on average), is swift (3 to 5 days on average), and inexpensive. The estimated cost of US$450 per container is less than half the average of high-income economies and the lowest in the sample. As in previous years, the assessment of the quality and availability of transport infrastructure is equally excellent. Singapore leads the way for the quality of air transport, seaport, and road infrastructure. On measures related to connectivity, as well as timeliness, ease and affordability of shipments, and logistics competence, Singapore places at or near the top. Against these excellent results, the 16th rank of Singapore in terms of overall ICT penetration points to some room for improvement. For example, there are 20 broadband users per 100 population in Singapore, less than half the rate of Sweden. More generally, and as highlighted repeatedly, including in the World Economic Forum s Global Competitiveness Report and Global Information Technology Report series, Singapore offers a supportive business environment that contributes to making it one of the major trade hubs worldwide. The levels of corruption are the lowest among the countries covered, financial markets are world class (2nd), and policymaking is perceived as the most efficient in the ETI sample. The economy is also open to foreign participation (2nd), although it would benefit from more openness to multilateral trade rules (54th). Placed 2 nd, Hong Kong SAR continues to deliver consistently strong performance across the components of the ETI, ranking no lower than 16th in any of the pillars, yet not at the top of any. Hong Kong s commitment to developing trade is shown in the absence of trade barriers in the domestic market. In this category Hong Kong achieves a score of 7, which corresponds to the highest possible score on all the related indicators. Despite its openness to incoming trade, exporters from Hong Kong face the highest trade barriers in their target markets within the ETI sample. The trade-weighted tariff rate amounts to 6.2 percent. Hong Kong s 1st place in the quality of transport infrastructure reflects outstanding infrastructure facilities available across the four main transport modes: air (2nd), sea (2nd), rail (3rd), and road (3rd). With regard to transport by sea, the territory has direct routes to many countries and for non-direct routes the number of transshipments required is minimal. Finally, Hong Kong offers a very conducive environment for business (6th). In particular, the efficiency of its financial sector is rated as second to none, as is its openness to foreign participation. New Zealand progresses by five positions to 6 th rank. New Zealand leads the transparency pillar of the border administration component (5th) although it underperforms on some specific indicators, including the fees, number of documents, and time associated with exporting and importing goods. Partly because of its remoteness and small size, the availability and quality of transport services (39th) are limited as reflected by New Zealand s low ranking on the Liner Shipping Connectivity Index (68th) and transshipment connectivity index (49th). On a more positive note, New Zealand offers a favorable business environment (11th), scoring high on all indicators entering this variable except the openness to foreign participation (48th). Australia ranks 15th as a result of good performance across the board, although leaving some room for improvement in specific areas, such as market access where the country places 63 rd. Access to the domestic market remains hampered by tariffs close to 4 percent; these apply to a large share of imports (45 percent). ii Australian exports face some of the highest tariffs, 6 percent, and the margin of preference at less than 3 percent is extremely narrow. The quality of border administration has improved significantly (14th), The Global Enabling Trade Report World Economic Forum 1

2 although ample room for improvement remains as to the time, costs, and paperwork associated with exporting and importing goods. Some facets of Australia s transport infrastructure (32nd) are in need of improvement; maritime transport is the most worrisome, especially given the country s remoteness. The country ranks 46th for the quality of seaport infrastructure, and 27th and 33rd on the transshipment connectivity index and Liner Shipping Connectivity Index, respectively. Finally, the business environment is fairly good (19th). Yet, among the various issues affecting their international operations, the business community cites the difficulty of hiring foreign labor (91st) and somewhat restrictive rules on FDI (50th), as well as the costs incurred by the threat of terrorism (77th) and by crime and violence (45th). Japan, at 25 th, loses two positions. The country has one of the most protected domestic markets in the entire sample. At 25.3 percent (111th), import tariffs on agricultural products move toward prohibitive levels; in addition, the market is protected by frequent recourse to non-tariff measures. The highly complex tariff schedule (93rd) is difficult to navigate for business as a result of the variance and the large number of distinct tariffs. The openness to foreign participation is limited (77th), as manifested in the difficulty of hiring of foreign labor; restrictive rules on FDI; and, consequently, infrequent foreign participation. At the same time, Japan s border administration is transparent and efficient, albeit businesses express concerns about the burden of customs procedures. Last but not least, the quality of transport-related services is world class (4th), with the most efficient postal service worldwide and high level of logistics competence (7th). At the same time, the assessment of the quality of transport infrastructure is less somewhat positive (20th) and mixed across the different modes of transport. Although the quality of railroads is world class (2nd), air transport infrastructure lags behind the world s best (48th). With its score unchanged from last year, Korea, Rep. (27th) drops one position, displaying a mixed performance across the four main components of the ETI. Korea remains a laggard in the market access component (111th), imposing some of the highest tariffs on agricultural imports in the sample (44 percent, followed only by Norway, Morocco, and Turkey). Korea s tariff structure is characterized by very high tariffs on a few selected agricultural products (e.g., dairy products), as reflected in the third-highest variance of tariffs in the sample. On the export side, Korean products face some of the highest tariffs in the world and are granted only very narrow preference margins. On a more positive note, Korea achieves high marks for the quality and availability of its transport and communications infrastructure (15th, up six positions) and to a lesser extent border administration (24th). In particular, the country boasts excellent connectivity through maritime routes and world-class shipping services. In addition, railroad infrastructure is also very well rated (8th overall) and Korea also possesses one of the world s best and densest ICT infrastructures (6th). The government is among the most active in promoting ICT, for example, through putting online services in place. Korea obtains the best score in the sample in the Government Online Service Index, an assessment of the extent and quality of the government s online offer. Border administration and import-export procedures are efficient, smooth, and swift, though relatively costly. More problematic is the quality of the general business environment. In this component, Korea ranks a middling 44 th, owing to the negative assessment by the business community of such critical factors as the efficiency of government policymaking and the financial market, corruption, and the country s openness to foreign investment. The fourth and lowest-ranked member of the Tigers quartet, Taiwan (28th), loses three positions, although its main strength and weaknesses remain in line with the previous edition of this Report. Market access is by far the weakest area (106th), whereas Taiwan obtains good to excellent marks on most indicators having to do with the quality of transport infrastructure (15th) and related services (24th), and ICT infrastructure (14th). The business environment is also fairly conducive to trade (31st), with one major shortcoming in the openness to foreign participation (66th). Following closely, Malaysia (30th) maintains its position within the top 30. The country ranks fairly high in the market access (31st) and infrastructure (24th) components. Transport infrastructure is of high quality (19th) and widely available (9th), and the related services are well developed (17th). Border clearance procedures are the least costly in the world and businesses assess them as fairly hassle-free, although many documents are necessary. However, against this positive assessment, it has to be noted that the quality of the business environment has deteriorated considerably since the last assessment. Malaysia loses ground in all 10 indicators of this component, falling from 33rd to 51st position. In particular, the costs associated with crime and violence and the threat of terrorism are on the rise. Yet the regulatory framework remains fairly propitious (35th) thanks to efficient financial markets (10th), solid property rights (34th), and strong domestic competition (32nd). China, the world s largest exporter and one of its fastest-growing countries, progresses one rank to 48 th position; it ranks 3rd within the lower-middle-income country group. Although considerable room for improvement remains in every component of the Index, China s performance appears in a different light when compared with other large countries, such as its BRIC peers. India, its closest contender, lags 36 places behind at 84th, followed by Brazil at 87th, while Russia follows at a much lower 114th. The Global Enabling Trade Report World Economic Forum 2

3 The availability and quality of transport services constitute the main areas of strength for China (18th). In particular, the country tops the Liner Shipping Connectivity Index and obtains very good and improving scores on most of the other indicators in this category. By contrast, transport infrastructure (57 th ) still presents major shortcomings, in particular with respect to air and sea transport infrastructure. China s customs procedures are assessed as fairly efficient (33rd), especially when compared with the other BRIC economies the closest being India, at 72nd. Average fees associated with importing and exporting goods are among the world s lowest (3rd), at US$545 and US$500 per container, respectively. However, the time required to complete these procedures ranges from 21 to 24 days, far longer than in Singapore, for example (3 to 5 days). While being fairly efficient, border administration remains subject to irregular payments and corruption, as reflected in China s results on the related variable (51 st ) and the 65th position in the Corruption Perceptions Index. China ranks 79th on the market access component, owing to the high import tariffs of 11.8 percent (108th) it levies as well as the very narrow margin of preference (122nd) granted in destination markets. Finally, the quality of the Chinese business environment, the fourth main component of the ETI, improved somewhat (41st, up eight notches), but important constraints persist with respect to the efficiency of the financial sector (73rd) and some aspects of the openness to foreign participation (50th), including the restrictions placed on international capital flows (117th). Indonesia, at 68 th, improves its score but retains the same position in the rankings. At 68th, it does better than most of its peers of the lower-middle-income group. The most positive aspects of Indonesia s performance are found in the regulatory framework pillar (48th). In particular, the country receives good marks for the efficiency of its financial sector (29th) and of government policymaking (46th), as well as for some measures of the country s openness to foreign participation (52nd), including the prevalence of foreign ownership (40th), rules on FDI (38th), and restrictions on capital flows (32nd). The assessment is more negative regarding security (76th), another key determinant of the quality of the overall environment: Indonesia ranks 82nd for the costs associated with the threat of terrorism and 74th for the reliability of the police, in line with the average for the country group. Overall, the quality of Indonesia s transport infrastructure, including roads and seaports, is second rate (80th) and airport density is low (0.3, 100th). The availability and quality of transport services (73rd), though improving, are not satisfactory. In this context, the 48th and 38th ranks obtained in the transshipment connectivity index and the Liner Shipping Connectivity Index, respectively, are encouraging. ICT infrastructure remains largely underdeveloped (90th), with very sparse Internet usage and a very limited government online presence. Border administration also offers a mixed picture. Customs procedures associated with importing and exporting are relatively inexpensive and require little paperwork, but they still take a lot of time by international standards, and border administration remains marred by corruption (88th). Vietnam posts one of the biggest progressions among all countries, leaping 18 places to 71st position. The improvements in the country s trade environment reflect Vietnam s commitments following the country s recent accession to the WTO (in 2007), which is leading to a significant liberalization of trade in goods and services over the phase-in period to This is reflected in the ETI in Vietnam s improved ranking in the market access component (50th). Despite progress made, Vietnam s tariff schedule remains complex in some respects. The area of biggest concern, however, is in border administration. Recent efforts to streamline the efficiency of the country s customs led to a 10-place improvement in the related category, albeit from a low base (107th). Simultaneously, the low rank of 104th for the transparency of border administration indicates room for improvement in this area. Trade could be further enabled by upgrading the country s transport infrastructure, which is in a dire state (103rd). Low airport density (104th), poor road quality (95th), and insufficiently developed port facilities (93rd) indicate that the booming economy is straining the country s infrastructure. The assessment of transport services is much more positive. Vietnam improves its scores on all indicators composing this category and ranks 31st. Finally, Vietnam achieves mixed results in the business environment component (60th). Openness to foreign participation is limited because of the low prevalence of foreign ownership (102nd) and limited participation in multilateral trade rules (102nd), and despite the openness toward FDI (26th) and foreign labor (46th). India ranks a low 84th, owing to a mixed performance in the ETI. Among the nine pillars of the Index, the country s highest ranking is 47 th in the regulatory environment pillar and it attains only a very low 115th on the market access pillar. The domestic market is protected through tariffs of 13 percent on average (115th), which are particularly high for agricultural products (40 percent, 121st). Further, only 17 percent of all imports enter the country free of duty (112th). Adding to the costs, the structure of tariffs is difficult to navigate (89th) because of the large dispersion of tariffs (107th) and the high number of distinct tariffs (94th), including many specific tariffs (90th). Trade is also impeded by customs procedures, which remain largely inefficient (72nd) on both exports and imports mainly because of the time and paperwork required to clear goods at the border. In addition, the process is characterized by corruption and bribery (82nd). India s good connectivity and some aspects of India s general business environment (47th) brighten somewhat this rather bleak assessment. The Global Enabling Trade Report World Economic Forum 3

4 Other than the Philippines, at 92nd, the other countries in the region are found below the 100 mark with Pakistan at 112th, followed by Bangladesh (113th), Mongolia (116th), and Nepal (118th). Europe and North America Up one rank from last year, Denmark moves into 3rd position. The best ranked of the Nordics does very well on three out of the four components of the ETI. It ranks 3rd behind Singapore and Hong Kong for the efficiency of its border administration. It gets excellent marks for the efficiency, transparency, and rapidity of customs clearance procedures, although importing and exporting goods remain very costly. With its very dense ICT penetration Denmark leads the way when it comes to ICT infrastructure. iii By the same token, the quality of transport infrastructure is world-class, despite limited connectivity by sea. Also among Denmark s strengths is the quality of its business environment (3rd). Yet, the gap with its two predecessors in the overall ETI rankings remains sizeable because of Denmark s rather mediocre performance in the market access component, where it ranks 95 th. Denmark, as all other European Union (EU) member countries, owes this low position to the highly complex common external tariff schedule of the European Union (96th) and the frequent recourse to non-tariff measures (68th). In addition, while tariffs applied by the European Union are very low (4th), its members still face average tariffs of close to 6 percent in destination markets. Sweden, ranked 4 th, posts a performance similar to Denmark s. Also up one notch from last year, the country stands out for its highly efficient and transparent border administration, as reflected in the 2nd rank (after Singapore) in the related subindex. Another area of strength is its excellent ICT infrastructure, where Sweden ranks 1st thanks to the extensive use of Internet by businesses, the most dense penetration of broadband connections in the sample (41 subscribers per 100 population), and universal use of mobile telephony. Finally, Sweden offers a business environment that is remarkably conducive to trade (2nd), characterized by extremely high ethical standards in the public and private sectors (3rd), a very efficient government (3rd), well-functioning financial markets (4th), and a high degree of openness to foreign participation (7th), although the hiring of foreign labor remains rather difficult (49th). By contrast, the highly complex tariff structure and the prevalence of non-tariff measures make Sweden, as other EU members, a laggard in the market access component (96th). Down two positions, Switzerland (5th) fares very well in most of the dimensions of the ETI, with some notable exceptions within the market access component. Switzerland ranks last among the 125 economies for the complexity of tariffs. The country imposes a staggering 6,662 distinct tariffs, while the count for second-to-last Russia only amounts to 1,921. Moreover, over 82 percent of all tariff lines bear a specific tariff. Yet, this complexity seems to apply only to a limited share of trade, since almost 90 percent (9th highest share) of all imports to Switzerland are duty-free. Turning to border administration, there remains some room for improvement for making procedures less costly, burdensome, and time consuming on the export and import end. For example, exporting a standardized container costs $US1,537 (96th) on average, three times more than in Singapore. Switzerland boasts excellent infrastructure for roads, railroads, and air transport, although the fact that the country is landlocked results in relatively poor connectivity to maritime routes. Switzerland partially compensates for its disadvantageous geographical position by striving for high performance in transport services (13th): its logistics competence as well as its tracking and tracing ability are second to none, as measured by the Logistics Perception Index. Continuing on this positive note, the regulatory environment is extremely supportive to business activity and trade with a great degree of openness to foreign participation (6th). Losing two ranks, Canada (8th) is the largest country in the top 10. Canada owes its good positioning to a consistently good performance across the board, ranking no lower than 30th in any of the nine pillars of the ETI. Yet there is room for improvement, as Canada places below the top 10 on many of the pillars. The country does better than many advanced economies in the market access component (25th) of the Index, despite a complex tariff structure (83rd), which is partly the result of the great variance in tariff rates (115th). Some barriers to smooth border administration persist, such as very high average costs to export (100th) and import (91st) goods, and customs procedures that could be less burdensome (30th). On a more positive note, Canada boasts good transport infrastructure and services, including good connectivity, as well as very high ICT penetration (11th). Moreover, Canada offers one of the most conducive business environments (18th), thanks to a favorable regulatory environment (14th). Luxembourg improves four ranks to reach 9th position. The most positive aspect is the quality of transport and ICT infrastructure, in which Luxembourg places 3rd, behind neighboring Germany and the United Kingdom. More generally, the Duchy offers a very safe environment (6th) and a very supportive regulatory framework (5th), thanks to efficient policymaking (4th), a mature financial sector (8th), high ethical standards (6th), as well as one of the highest degrees of openness to foreign participation (3rd). In particular, the business community recognizes the high prevalence of foreign ownership in the country s economy (5th), the ease for employers to hire foreign labor (4th), and the relative mobility of capital flows (11th). Less positive and uneven is the performance in the border administration component (20th). While customs clearance The Global Enabling Trade Report World Economic Forum 4

5 procedures are generally efficient, they remain expensive (US$1,420), and Luxembourg receives a rather low score on the customs services index (6 points out of 12, 76th). Closing the top 10, the Netherlands (10th) retains its position with the same score as last year. Border administration and the quality and availability of transport and logistics services are the strongest aspects of the country s performance. The Netherlands customs offers the necessary services to business (5th) and clearance procedures for imports and exports are hassle-free and swift (11 th on the efficiency of importexport procedures), while transport services are assessed as the 2nd best in the world in terms of availability and quality. Moreover, the country s connectivity with the rest of the world via maritime routes is among the best (3 rd ), which is not surprising given that the country hosts Europe s main maritime gateway, the Port of Rotterdam. By the same token, the quality of port infrastructure is assessed as among the world s best (3rd). The assessment is somewhat less positive when it comes to specific aspects of the regulatory environment and physical security. Trade would benefit from easier rules and regulations for hiring foreign labor (42nd) and from better protection from common crime and violence (54th). Germany, which has just been surpassed by China as the world s largest exporter, is the highest ranked among the large economies in terms of enabling trade, and placed 12th after losing one rank compared with last year. As is the case in all EU member countries, Germany provides fairly strong protection to agricultural markets through non-tariff barriers (73rd) and a highly complex tariff structure that protects a small number of mainly agricultural products. As in many other developed countries, tariffs faced by Germany abroad are fairly high in international comparison (76th), but the country performs very well on all the other pillars of the ETI except for the efficiency of border administration, where it ranks 20th. Irregular payments in exports and imports also appear to be more prevalent (24th) than could be expected from a country with a very strong regulatory environment (15th). Further disadvantages include difficulties in hiring foreign labor (86th) and restrictions on FDI (67th). However, Germany s excellent transport infrastructure (5th) and the high quality of the related services (3rd) compensate for these weaknesses. Dropping three places, the United States is ranked 19th this year. The country s performance has fallen in international comparison in almost all areas assessed by the Index, bar the regulatory environment and physical security. Although some progress has been achieved in absolute terms, this has not been sufficient to lead to an improvement in the rankings. There has been a deterioration by 13 places of the market access component, placing the country 62nd. Most aspects measuring the state of trade policy in the United States have remained unchanged, with the exception of a very small increase in the complexity of tariffs, yet US exporters appear to be facing higher tariffs abroad and benefiting from lower preference margin than in previous years. Overall, the United States continues to benefit from hassle-free import and export procedures (17th) and efficient customs clearance (11th), and provides excellent customs services to business (3rd).The country also benefits from excellent infrastructure, including ICTs, providing a strong basis for enabling trade within the country. However, over the past year, the United States has fallen behind in two crucial categories of openness business leaders perceive that the rules and regulations both for hiring foreign labor and for encouraging foreign direct investment have become more restrictive, falling by 18 and 17 places, respectively, to 62nd and 64th position. And as in the previous year, the threat of terrorism to business, at 114 th, remains among the costliest in the world. France places 20th in this year s ETI, down by three positions. As for other European countries, market access has slightly deteriorated mainly because of higher barriers faced by exporters abroad. There has also been a decline in the transparency of the border administration. The country s overall trade environment remains characterized by high barriers to the domestic market by means of non-tariff measures and highly complex, although low, tariffs, which apply to a significant portion of imports. Access to foreign markets remains limited with fairly high tariffs faced and low margins of preference in place. Nevertheless, France s transport infrastructure plays an important role in facilitating trade: it is second to none, widely available, and of excellent quality. The high-quality transport services, ranked 10th, also play a key role in supporting the country s trade performance. Businesses operate in a largely suitable regulatory environment (24th), with the only drawbacks being regulations on hiring foreign labor and encouraging FDI that are rather restrictive, ranked at 90th and 62nd, respectively. Physical security is not a major disadvantage (35th), although the threat of terrorism continues to pose some costs to business (70th). The Russian Federation slides by five places to obtain a very low 114th position in this year s ETI. Despite pledges of the G-20 not to increase protectionism following the financial crisis, Russia has fallen to the last place in the entire sample on the market access subindex. Although the average weighted tariff rate declined, non-tariff measures are being used more frequently than in previous years and the complexity of the tariff structure has increased somewhat. Yet the bulk of the decline can be traced to higher tariffs in target markets faced by Russia s exporters, which are among the highest worldwide (102nd). Russian exporters are clearly suffering from the country s decision not to pursue accession to the WTO. Russia s low ranking obscures to a certain extent the strengths of its trade environment. Given the country s level of development, transport infrastructure remains in fairly good condition, although its availability is assessed The Global Enabling Trade Report World Economic Forum 5

6 more positively (at 31 st ) than its quality (at 74th). Furthermore, Russia continues benefit from the availability of ICTs in the context of trade, with the use of these technologies spreading quickly by both businesses and government. On the other hand, enabling trade in Russia would require an overhaul of the import export procedures (110th) and reform of what is one of the most burdensome customs clearance processes in the world (122nd). Russia also obtains poor marks for its regulatory environment (110th), which bears witness to the country s rather protectionist stance with regard to foreign participation (ranked 115 th ). And although physical security is moderate (ranked 68 th for the business cost of common crime and violence), business leaders do not trust the police for enforcing law and order (105th). Latin America and the Caribbean With some notable exceptions such as Chile and Costa Rica, which display very strong performances Latin American and Caribbean countries place for the most part in the middle of the ETI rankings. As highlighted in past editions of this Report, the region s outstanding domestic and foreign market access continues to be the main strength of many of its countries. However, the overall business environment remains an area for improvement, particularly in terms of corruption and physical security. At 18 th, Chile improves by one position, once again leading the ETI rankings in Latin America and the Caribbean. Chile s strong commitment to participating in international trade is demonstrated by its extended participation in regional trade agreements (RTAs), along with the government s continuous efforts to improve the country s facilitation of trade. iv Displaying an extraordinary performance in the area of market access (2 nd ), Chile benefits from both its high share of duty-free imports (16 th ) and the low tariffs (1 st ) faced by Chilean exporters. Likewise, Chile applies an almost uniform MFN tariff (a rate of 6 percent with only a few exceptions) to all its importers, v a measure that has helped to reduce the complexity of the country s tariff structure (2 nd ). The country s overall assessment of border administration (23 rd ) is also positive because of its transparency (20 th ) and efficiency (21 st ). Furthermore, Chile is characterized by seamless customs procedures (5 th ), as well as little corruption related to exports and imports (16 th ). In fact, during the past few years, Chile has made significant efforts toward the modernization of its customs regime through the introduction of new measures such as the advance publication of regulations, the computerization of procedures, and the creation of a customs tribunal. vi But, despite these advances, its clearance procedures remain time consuming and cumbersome. With regard to Chile s communications infrastructure, the still modest availability and use of ICTs in the country (46 th ) indicates room for improvement. On the other hand, the country received a sound general assessment of its transport infrastructure (28 th ), thanks in large part to the excellent quality of its roads (15 th ), ports (24 th ), and air transportation (17 th ). Last but not least, Chile s favorable business environment (26 th ) has also been key to the country s success in benefiting from trade. Costa Rica, ranked 44 th for enabling trade across borders, is down one position in this edition of the Report. As a big contributor to national GDP, trade plays a significant role in Costa Rica s social and economic development strategies. For this reason, the government pays special attention to trade policy and considers it a crucial tool for economic growth and social equity. As in the case of Chile, Costa Rica is an example of best practices in market access (7 th ), thanks to moderate non-tariff measures (21 st ) and relatively simple tariff structure (35 th ). Consequently, the country s market access is assessed favourably at 37 th. vii Costa Rica also has experienced recent improvements concerning the efficiency of its import-export procedures. For example, the time required to import goods dropped from 25 to 15 days, and the number of documents needed to import and export both decreased by one, with only 7 and 6 documents now required, respectively. In addition, Costa Rica s border administration is considered to be reasonably efficient (34 th ), even though some difficulties were identified by the business community regarding irregular payments in imports and exports (60 th ). On a less positive note, Costa Rica would benefit from upgrading the quality of its transport and communications infrastructure (78 th ). In particular, the quality of roads and ports needs to be improved (ranked 100 th and 121st, respectively), and ICTs are still not widely available or used (ranked 71 st ). Mexico comes in at 64 th place, moving up in the ETI rankings by 10 positions. Mexico considers trade facilitation and global integration to be areas of focus in its national competitiveness plan Among the main trade-related policies is the intention to make a thorough analysis of existing tariff rates to avoid discrepancies and reduce tariff dispersion, as well as the elimination of those tariffs affecting goods with low volumes of trade; as for non-tariff measures, simplification and automatization processes are under way. viii One of the main areas of improvement identified is Mexico s domestic and foreign market access (21 st ), as the country significantly increased its share of duty-free imports (11 th ) while keeping tariffs relatively low (25 th ). Likewise, the availability and quality of Mexico s transport infrastructure also improved greatly, climbing 24 positions up to 61 st place. Concerning transport services, advantages such as the competence of the logistics industry (43 rd ), the ability to track shipments (44 th ), and the timeliness of shipments reaching destination (51 st ) also helped Mexico s overall performance. Last, Mexico s business environment (106 th ) is still assessed poorly as a consequence of low levels of physical security (114 th ), limited reliability of police services (116 th ), and high business costs of crime and violence (117 th ). Meanwhile, the regulatory The Global Enabling Trade Report World Economic Forum 6

7 environment pillar (77 th ) captures how, despite Mexico s openness to foreign participation (40 th ), the country is strongly affected by both corruption (92 nd ) and low levels of domestic competition (105 th ). Brazil maintains its 87 th position in the ETI. A G-20 member and major exporter of agricultural products, the country has been much involved in global trade negotiations, representing the interests of both MERCOSUR and developing countries more generally. ix Despite the importance of trade for its economy, Brazil s main weakness remains high and rising protectionism, as captured by the market access pillar (104 th ). This is mainly due to high tariffs (105 th ), which are imposed on the vast majority of imports (90 th ) as well as to the prevalence of non-tariff measures (79 th ). The border administration could also be made more efficient (80 th ), particularly in areas such as customs administration, which remains burdensome (115 th ), and the overall cost of import and export procedures (81 st and 97 th, respectively). The overall assessment of Brazil s infrastructure is fairly positive (66 th ), although the quality of transport infrastructure could be improved (105 th ), especially the country s ports (120 th ). Brazil also displays some strength with regard to the quality and availability of its transport services (42 nd ) as well as the availability and use of ICTs (54 th ). As it is the case for other countries in the region, the general business environment (83 rd ) could be improved by having more friendly regulations (83 rd ) and by reducing the business costs of crime and violence (111 th ). Argentina, at 95th, improves by two positions, presenting a mixed picture across the different areas of the ETI. In order to improve its trade performance, Argentina should address different aspects affecting the country s business environment (109 th ). In particular, regulations affecting property rights (117 th ), domestic competition (121 st ), and openness to foreign participation (103 rd ) increase the difficulty of doing business in the country. At the border, procedures are perceived as a burden by businesses (117 th ), who encounter difficulties in areas related to the efficiency of import-export procedures (86 th ), such as the high cost of importing goods (100 th, with US$1,810 in fees on a 20-foot container) and numerous documents required to export (106 th ). Other areas of concern include a lack of transparency at the border (96 th ), related to the frequent irregular payments in exports and imports (100 th ).Similar to Brazil, the high and increasing tariff rates (98 th ) and the pervasive non-trade barriers (85 th ) continue to affect Argentina s ability to trade, although tariffs faced by exporters in Argentina (32 nd ) are relatively easy to overcome, allowing them to introduce their products in global markets. Among the country s strengths are transport and communications infrastructure (61 st ) and the availability and use of ICTs (49 th ). In fact, the Argentinean government provides many online services (42 nd ), and, similarly, businesses use the Internet to carry out commercial transactions (55 th ). Middle East and North Africa Over the past year, all countries from the region bar three Algeria, Morocco, and Jordan have improved their position in the ETI. The region continues a high degree of diversity in terms of enabling trade, with the United Arab Emirates (UAE) entering the top 20 while Algeria maintains its position at the bottom of the rankings. The United Arab Emirates leads the region at a very strong 16 th position, ahead of the United Kingdom, Chile, and the United States. The country improves by two positions over the past year by building on its strengths. Clearance of goods at the border, already efficient in previous years, becomes even easier in international comparison (12th), although the assessment of the transparency of border administration (at 21 st ) lags behind these excellent results somewhat. In terms of the availability and quality of transport infrastructure, the UAE moves up to be among the best countries in the world (4th). Another distinct advantage, high levels of physical security (4th), has been equally strengthened. All these factors provide a basis for further strong growth of trade in the country and a strengthening of its positioning as a key international logistics hub. Despite progress achieved in these areas, if transport services were further developed and liberalized, the UAE could further benefit from its favorable geographic location on the Europe-Asia trade route. The country presently occupies the 29 th position in the related category. The government could equally place higher priority on putting more public services online (88th). This would not only facilitate trade in a direct way for example, by expediting and facilitating customs clearance through online procedures but also would lead the way in Internet use, given that the business sector presently lags behind a number of other countries in this area (27 th ). However, the main constraint remains high domestic tariffs (53rd) as well as the high trade barriers faced by the country s exporters abroad (117 th ). Israel occupies the 3rd position in the region in terms of enabling trade and 26 th worldwide, moving up by three places this year. The improvement in rankings mirrors important advances in maintaining physical security and in increasing the use of ICTs, which on balance outweigh the deterioration in the efficiency of customs procedures. Overall, Israel s border administration is efficient and transparent compared with that of many other countries (25 th ). As last year, the formal import and export procedures appear de jure fairly simple, and neither particularly time-consuming nor very costly. However, in their replies to the Executive Opinion Survey, business leaders identified customs procedures as rather burdensome, ranked 64 th out of 125 countries. This result, which is significantly lower than that of last year (when the country ranked 31 st ) could point to bottlenecks in the implementation of official procedures. Other strengths that contribute to an The Global Enabling Trade Report World Economic Forum 7

8 environment that is conducive to trade are the high penetration of ICTs, which are widely used by both businesses for transactions (6th) and the government for online services (19th). Despite the slight improvement over the past year, the difficult security situation remains the most important single drawback in Israel s trade environment; this is ranked 75 th overall. In addition, trade could be further enabled by more efficient transport services (49th). More openness to foreign participation (93rd) could also contribute to raising the performance of this sector by intensifying competition and thereby raising efficiency and stimulating innovation. Tunisia, moving up by three positions to 38 th, remains the leading country in North Africa for enabling trade. The country s association agreement with the European Union, which has created a free trade area between the two traders as of 2008, has contributed significantly to liberalizing imports into Tunisia. Nevertheless, Tunisia maintains fairly high tariffs (120 th for the tariff rate), although the complexity has been reduced over the past year. Tariff peaks and specific tariffs have been completely eliminated and the share of duty-free imports rose from 24.1 to 76.3 percent. It must be noted, however, that the simplification of the tariff structure was accompanied by more burdensome customs procedures, which can partially offset the effect of tariff reforms on trade. Tunisia now ranks 57 th for the burden of customs procedures. Overall, Tunisia benefits from a business environment that is conducive to trade (24th) and is supported by a solid institutional framework and high levels of physical security (20th). Nevertheless, openness to foreign participation remains restricted (65th), and a more efficient financial market (65th) could further contribute to developing trade. The country s exporters and importers also benefit from high-quality and widely available infrastructure across all modes of transport (37th). Room for improvement remains with respect to the availability and quality of transport services (79th), a sector that would benefit from further liberalization and opening up to foreign participation. Last but not least, and in contrast to domestic tariffs, Tunisia enjoys fairly easy access to foreign markets (41st), supported by an important preference margin (27th). Saudi Arabia, up by two positions, occupies the 40 th rank. Consistent improvements in all the pillars except for the market access component contributed to this result. The efficiency of Saudi Arabia s customs services (27th) and border administration (26th) are important factors in facilitating trade across the country s borders. Customs procedures are not very burdensome, and it is not costly to import and export goods, although it may be time consuming (e.g., it takes 18 days to import goods, which corresponds to 58 th rank). Saudi Arabia also benefits from a solid institutional framework with transparent (20th) and efficient (31st) government institutions, well-defined property rights (32nd), and high levels of domestic competition (16th). The country s recent accession to the WTO was an important step in opening up to foreign participation, yet Saudi Arabia remains closed to foreign ownership (101st) and has signed only a small share of tradeenabling multilateral treaties (109 th ). This applies equally to the transportation sector, where it did not commit to opening up under the GATS provisions (69th). Such a move would support the development of a more efficient logistics and transport industry in the country, thereby raising the competitiveness of exports, which the country wishes to diversify. Other than that, Saudi Arabia s exporters and importers face the same challenge as in many other countries in the region: high costs resulting from the threat of terrorism (96th). Morocco, ranked 75 th, sees the most significant deterioration in rankings this year s Report among the countries from the region. The weaker assessment is derived from all of the pillars of the ETI. Morocco s trade policy remained rather protectionist over the past several years. The country currently ranks 112 th on the market access pillar. A rise in protectionism is indicated by the steeply declining share of duty-free imports (14 th to 85th) and in the rising complexity of the tariff structure (58th to 61st). At the same time, Morocco s exporters benefit from easy access to their main target markets (31st), in large part because of a high preference margin with the European Union. Exports are further enabled by clearance procedures, which are more efficient for exports than for imports. For example, it takes 17 days to import goods, but only 14 to export them. Yet, by and large, the customs administration is not the most critical bottleneck, as it is fairly efficient (44th) and provides appropriate services (42nd). Similarly, the quality and availability of infrastructure in particular railroads and maritime services is an advantage on which to build. Further fostering Morocco s trade performance would additionally require continuing the liberalization process. Openness to foreign participation is limited (92nd), and Morocco committed to opening up only a small share of transport-related subsectors under the GATS agreement (54th). Further liberalization of these sectors would help improve the quality of transport services, which currently lags behind many countries (77th). Sub-Saharan Africa Sub-Saharan African countries enable trade to different degrees, and the trade liberalization efforts of recent decades have not been sufficient to significantly improve the trade performance of the region as a whole. Many African countries liberalized trade and enjoy significant preferences in target markets, but significant improvements in trade facilitation have not yet been achieved. As a result, it is still significantly more expensive to trade with Africa than with other regions. In many cases, the cost of trading is a more important obstacle to trade development than trade policies. The Global Enabling Trade Report World Economic Forum 8

9 Mauritius, one of the African countries best harnessing the benefits of international trade, maintains the top position in sub-saharan Africa at 33 rd place, ahead of the rest of the region by a wide margin. With very low tariff and non-tariff barriers and low tariffs in target markets, the country is among the top performers in the entire sample on the market access pillar (8 th ). Yet, although tariffs are being reduced, complexities in their structure (85th) make it difficult to navigate for business. With rather efficient and transparent border agencies, potential bottlenecks in getting goods across borders can arise with respect to the availability and quality of transport services, as well as the quality of transport infrastructure, ranked 86 th and 71 st, respectively. International shipments are easy and not costly to arrange from Mauritius, but timeliness of delivery, tracking and tracing ability, and overall logistics competence are low in international comparison (ranked 104th, 93rd, and 91 st, respectively). The country s high level of openness to foreign participation (16th), be it foreign labor, FDI, or capital flows, highlights the country s commitment to participating in the global economy. Additionally, Mauritius benefits from, in regional comparison, very transparent and efficient governance structures and manageable levels of physical security (45 th ). The second-highest ranked African country is Botswana, placed at 53 rd as it enters this Report for the first time. Botswana has made great strides in opening its market, as shown by its excellent 16 th position in terms of domestic market access. Although the country ranks 68 th for its average tariff rate (of 5.62 percent), tariffs are applied to only a fraction of imports, about 5 percent, and very few non-tariff measures are in place. On the other hand, the assessment of access to foreign markets is less favorable than that of domestic access, ranked 69 th overall. Another key strength, in international comparison, is Botswana s solid institutional framework, with an efficient government, fair jurisdiction and political decisions, and low levels of corruption, all of which contribute to rendering border administration transparent (35th) and customs clearance fairly efficient (44th). Yet, although transparent, the border clearance process remains somewhat cumbersome, costly, and time-consuming, for both imports and exports. On the efficiency of import export procedures pillar, Botswana ranks a low 111 th. Other than import-export procedures, transport services as well as the availability and use of ICTs constitute important bottlenecks to trading across borders in Botswana, and are ranked at 99 th and 92 nd, respectively. The country s logistics services sector is not on a par with international standards, ranking, for example, 106 th for logistics competence. At the same time, transport infrastructure appears to be available and in good shape. By making further use of ICTs (114th), businesses in Botswana could enter new markets abroad. The government could also foster the use of ICTs by providing more services online and creating conditions to develop the necessary infrastructure, such as telephone lines, which are not commonplace in Botswana (93 rd ). South Africa, a G-20 member and the region s most advanced economy, places 72 nd with respect to enabling trade across borders, down by 11 positions from last year s Report. As the country s score remained roughly the same, the drop in rankings indicates that although South Africa s overall situation has not changed, other countries have advanced. The drop is mainly attributable to a poorer comparative assessment of the country s transport infrastructure and the related services as well as little progress in the use of ICTs. Similar to Botswana, South Africa boasts a very efficient and transparent customs administration (28 th and 46 th, respectively) and a fairly strong institutional framework. It has to be noted, however, that the country is less open to foreign participation and trade than Botswana, as witnessed by the lower share of duty-free imports (36th), more restrictive regulations on capital flows (105th), and FDI (75th). South Africa also has an important number of non-tariff measures in place. Albeit declining, the state of transport infrastructure (29 th for quality of infrastructure) and the availability of transport services receive good assessments. However, the simplification of import and export procedures appears overdue and would make trading across the border more efficient, as their current complexity constitutes the most important bottleneck. Importing goods into South Africa takes 35 days, requires 9 documents, and costs (for a standardized container) US$1,807. Tanzania drops five places in this year s Report to 97 th place. A number of areas are assessed more poorly in this year s edition; in particular, customs clearance has become more burdensome and progress in ICT availability and usage is slower than in other countries. Despite the deterioration since last year s Report, market access remains the key advantage in Tanzania s trade environment. Tanzanian exporters face very low tariffs in target markets (6th), and the country managed to secure additional preferential access. Other advantages include a fairly secure environment and relatively efficient procedures for import and export (77th). However, business leaders assess customs procedures as extremely cumbersome (113th) the customs administration provides only very few services to business (110th). And while exporting only requires a few documents (28th), it remains very costly given the country s level of GDP (94th). Enabling trade in Tanzania will also necessitate serious investment in transport infrastructure and efforts to encourage the use of ICTs. Roads, ports, and airports are in poor condition and do not sufficiently support the country s participation in international trade. Last but not least, Tanzania still imposes some of the highest tariffs in the world, in particular on agricultural products. The Global Enabling Trade Report World Economic Forum 9