global enabling trade report
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Global Enabling Trade Report 2012 finds Europe the most willing to allow the free flow of goods across borders. The report ranks 132 countries worldwide and measures their trade preparedness. Bangladesh jumps from position 113 to 109TRANSCRIPT
- 1. Insight ReportThe Global EnablingTrade Report 2012Reducing Supply Chain BarriersROBERT Z. LAWRENCE, MARGARETA DRZENIEK HANOUZ, AND SEAN DOHERTY, EDITORS
2. Insight ReportThe Global EnablingTrade Report 2012Reducing Supply Chain BarriersRobert Z. LawrenceMargareta Drzeniek HanouzSean DohertyEditors@ 2012 World Economic Forum 3. The Global Enabling Trade Report 2012 is published by World Economic Forumthe World Economic Forum within the framework of theGenevaGlobal Competitiveness Network and the Supply Chainand Transportation Industry Partnership.Copyright 2012by the World Economic ForumThe terms country and nation as used in this Report donot in all cases refer to a territorial entity that is a statePublished by World Economic Forumas understood by international law and practice. Thewww.weforum.orgterms cover well-defined, geographically self-containedeconomic areas that may not be states but for which All rights reserved. No part of this publication may bestatistical data are maintained on a separate and reproduced, stored in a retrieval system, or transmitted,independent basis.in any form or by any means, electronic, mechanical,photocopying, or otherwise without the prior permission ofthe World Economic Forum.ISBN-10: 92-95044-29-0ISBN-13: 978-92-95044-29-6This book is printed on paper suitable for recycling andmade from fully managed and sustained forest sources.The full version of the Report with profiles of all 132economies is available at www.weforum.org/getr. @ 2012 World Economic Forum 4. ContentsContributorsv1.5 Illicit Trade, Supply Chain Integrity, 57and Technologyby Justin Picard, Advanced Track & Trace;Partner Institutesviiand Carlos A. Alvarenga, AccenturePrefacexiii1.6 Business Perspectives on Obstacles 65by Brge Brende and Robert Greenhill, to Trade: Evidence from New Survey DataWorld Economic Forumby Julia Spies, International Trade CentreExecutive Summary xv 1.7 Expansion of Customs-Business 77by Sean Doherty, Margareta Drzeniek Hanouz, Partnerships in the 21st Centuryand Ronald Phillip, World Economic Forumby Kunio Mikuriya, World Customs Organization1.8 The Merchant Fleet: A Facilitator of 85World TradePart 1: Enabling Trade: Selected Issues1By Hans Oust Heiberg, DNB Bank ASA1.1 Reducing Supply Chain Barriers: 3The Enabling Trade Index 2012 1.9 Benefits of Trade Facilitation: 91The Case of Costa Ricaby Robert Z. Lawrence, Harvard University;by Carlos Grau Tanner, Global Express Associationand Sean Doherty and Margareta Drzeniek Hanouz,World Economic Forum1.2 The Rise of Global Supply Chains: 35Part 2: Country/Economy Profiles95Implications for Global Trade How to Read the Country/Economy Profiles...................................97by the Global Agenda Council on Index of Countries/Economies.......................................................101the Global Trade System, World Economic Forum Country/Economy Profiles.............................................................1021.3 The Global Value Chain, the 41Technical Notes and Sources367Enterprise-Based Operating Model,and Challenges to the Sovereign-BasedEconomic Measurement System About the Authors375by Gene Huang, FedEx CorporationAcknowledgments3791.4 Logistics Investment and Trade 47Growth: The Need for Better Analyticsby Donald Ratliff and Amar Ramudhin,Georgia Institute of TechnologyThe Global Enabling Trade Report 2012 | iii@ 2012 World Economic Forum 5. @ 2012 World Economic Forum 6. ContributorsProfessor Klaus Schwab, Executive Chairman,STRATEGIC ADVISORSWorld Economic Forum Jennifer Blanke, Senior Director, Lead Economist, GlobalBrge Brende, Managing Director, Government RelationsCompetitiveness Network, World Economic Forumand Constituents Engagement, World Economic ForumJohn Moavenzadeh, Senior Director, Head of Mobility Industries,Robert Greenhill, Chief Business Officer, World Economic Forum World Economic ForumLEAD ACADEMIC AND CO-EDITORDATA PROVIDERSRobert Z. Lawrence, Albert L. Williams Professor of TradeThe World Economic Forum is pleased to thank the followingand Investment, John F. Kennedy School of Government,experts who helped identify and provide data for the EnablingHarvard University Trade Index: Jean Franois Arvis, Senior Transport Economist, Trade LogisticsCO-EDITORS & Facilitation, International Trade Department, The World BankSean Doherty, Associate Director and Head of Supply ChainJean-Franois Bourque, Senior Legal Advisor, Businessand Transportation Industry, World Economic ForumEnvironment Section, Division of Business and InstitutionalMargareta Drzeniek Hanouz, Director, Senior Economist, Support, International Trade CentreWorld Economic Forum Carlos Grau Tanner, DirectorGeneral, Global Express Association Jan Hoffmann, Chief, Trade Facilitation Section, Trade LogisticsPROJECT MANAGER Branch, Division on Technology and Logistics, United NationsRonald Philip, Community Manager, Supply Chain and Conference on Trade and DevelopmentTransportation Industry, World Economic Forum Mondher Mimouni, Chief, Market Analysis and Research, International Trade CentrePROJECT TEAM AT THE WORLD ECONOMIC FORUM Monica Alina Mustra, Trade Facilitation and Logistics Specialist,Global Competitiveness Network GFP Coordinator, International Trade Department, The World BankBeat Bilbao-Osorio, Associate Director, Economist Andrea Navares Juanco, Analyst, Economics Department,Ciara Browne, Associate Director International Air Transport AssociationRoberto Crotti, Junior Quantitative EconomistXavier Pichot, Market Analyst, Market Analysis and Research,Thierry Geiger, Associate Director and Economist International Trade CentreTania Gutknecht, Senior Community AssociateAlexander Riveros, Trade Law Associate Expert, Business Environment Section, Division of Business and InstitutionalCaroline Ko, Junior Economist Support, International Trade CentreCecilia Serin, Team Coordinator Bismark Sitorus, Economic Affairs Officer, Trade FacilitationMobility IndustriesSection, Trade Logistics Branch, Division on Technology and Logistics, United Nations Conference on Trade and DevelopmentKaterina Soulounia, Senior Team Coordinator We thank Hope Steele for her superb editing work and Neil Weinberg for his excellent graphic design and layout.* The World Economic Forum is grateful for the support of the Industry Partners who served on the Advisory Board for this Report.The Global Enabling Trade Report 2012 | v @ 2012 World Economic Forum 7. @ 2012 World Economic Forum 8. Partner InstitutesThe World Economic Forums Global Competitiveness BangladeshNetwork is pleased to acknowledge and thank the Centre for Policy Dialogue (CPD)Mustafizur Rahman, Executive Directorfollowing organizations as its valued Partner Institutes,Khondaker Golam Moazzem, Senior Research Fellowwithout which the realization of The Global EnablingKishore Kumer Basak, Research AssociateTrade Report 2012 would not have been feasible:BelgiumAlbania Vlerick Leuven Gent Management SchoolInstitute for Contemporary Studies (ISB)Priscilla Boairdi, Associate, Competence CentreArtan Hoxha, PresidentEntrepreneurship, Governance and StrategyElira Jorgoni, Senior Expert and Project ManagerWim Moesen, ProfessorEndrit Kapaj, ResearcherLeo Sleuwaegen, Professor, Competence CentreEntrepreneurship, Governance and StrategyAlgeriaCentre de Recherche en Economie Applique pour le BeninDveloppement (CREAD) CAPODConception et Analyse de Politiques deYoucef Benabdallah, Assistant Professor DveloppementYassine Ferfera, Director Epiphane Adjovi, DirectorMaria-Odile Attanasso, Deputy CoordinatorAngolaFructueux Deguenonvo, ResearcherMITC InvestimentosEstefania Jover, Senior Adviser Bosnia and HerzegovinaSouth Africa-Angola Chamber of Commerce (SA-ACC)MIT Center, School of Economics and Business in Sarajevo,Roger Ballard-Tremeer, Hon Chief ExecutiveUniversity of SarajevoZlatko Lagumdzija, ProfessorArgentinaZeljko Sain, Executive DirectorIAEUniversidad AustralJasmina Selimovic, Assistant DirectorCristian Alonso, Project ManagerEduardo Luis Fracchia, ProfessorBotswanaBotswana National Productivity CentreArmeniaLetsogile Batsetswe, Research Consultant and StatisticianEconomy and Values Research CenterParmod Chandna, Acting Executive DirectorManuk Hergnyan, ChairmanPhumzile Thobokwe, Manager, Information and ResearchSevak Hovhannisyan, Board Member and Senior AssociateServices DepartmentGohar Malumyan, Research AssociateBrazilAustraliaFundao Dom CabralAustralian Industry GroupMarina Arajo, Economist and Researcher, TheCarola Lehmer, Senior Research CoordinatorCompetitiveness and Innovation CenterHeather Ridout, Chief ExecutiveCarlos Arruda, Executive Director, International AdvisoryNikki Wilson, Administrative AssistantCouncil and Professor, The Competitiveness andAustria Innovation CenterAustrian Institute of Economic Research (WIFO)Fabiana Madsen, Economist and Researcher, TheKarl Aiginger, Director Competitiveness and Innovation CenterGerhard Schwarz, Coordinator, Survey Department Movimento Brasil Competitivo (MBC)AzerbaijanErik Camarano, Director PresidentAzerbaijan Marketing SocietyNikelma Moura, Communications AssistantFuad Aliyev, Project ManagerTatiana Ribeiro, Project CoordinatorAshraf Hajiyev, ConsultantBulgariaBahrain Center for Economic DevelopmentBahrain Competitiveness Council, Bahrain Economic Anelia Damianova, Senior ExpertDevelopment Board Burkina FasoNada Azmi, Manager, Economic Planning and Development lnstitut Suprieure des Sciences de la Population (ISSP),Mohammed bin Essa Al-Khalifa, Chief Executive University of OuagadougouMaryam Matter, Coordinator, Economic Planning and Samuel Kabore, Economist and Head of DevelopmentDevelopment Strategy and Population Research The Global Enabling Trade Report 2012 | vii@ 2012 World Economic Forum 9. Partner InstitutesBurundi CyprusUniversity Research Centre for Economic and SocialCyprus College Research CenterDevelopment (CURDES), National University of BurundiBambos Papageorgiou, Head of Socioeconomic andBanderembako Deo, DirectorAcademic ResearchGilbert Niyongabo, Dean, Faculty of Economics &cdbbankThe Cyprus Development BankManagementMaria Markidou-Georgiadou, Manager, International BusinessCambodiaBankingEconomic Institute of CambodiaCzech RepublicSok Hach, PresidentCMC Graduate School of BusinessSeiha Neou, Research ManagerTomas Janca, Executive DirectorSokheng Sam, ResearcherDenmarkCameroonInnoption EMEA ApSComit de Comptitivit (Competitiveness Committee)Carsten Snedker, Managing PartnerLucien Sanzouango, Permanent SecretaryEcuadorCanadaESPAE Graduate School of Management, Escuela SuperiorThe Conference Board of Canada Politcnica del Litoral (ESPOL)Michael R. Bloom, Vice-President, OrganizationalElizabeth Arteaga, Project Assistant Effectiveness & LearningVirginia Lasio, DirectorAnne Golden, President and Chief Executive OfficerSara Wong, ProfessorP. Derek Hughes, Senior Research AssociateEgyptChadThe Egyptian Center for Economic StudiesGroupe de Recherches Alternatives et de Monitoring du ProjetIman Al-Ayouty, Senior EconomistPtrole-Tchad-Cameroun (GRAMP-TC)Omneia Helmy, Deputy Director of Research and LeadAntoine Doudjidingao, ResearcherEconomistGilbert Maoundonodji, DirectorMagda Kandil, Executive Director and Director of ResearchCeline Nnodji Mbaipeur, Programme OfficerEstoniaChileEstonian Institute of Economic ResearchUniversidad Adolfo IbezEvelin Ahermaa, Head of Economic Research SectorFernando Larrain Aninat, Director of the Master inMarje Josing, DirectorManagement and Public Policy, School of GovernmentCamila Chadwick, Project CoordinatorEstonian Development FundLeonidas Montes, Dean, School of Government Kitty Kubo, Head of ForesightOtt Prna, Chief Executive OfficerChinaInstitute of Economic System and Management EthiopiaNational Development and Reform CommissionAfrican Institute of Management, Development andZhou Haichun, Deputy Director and Professor GovernanceChen Wei, Research Fellow Tegegne Teka, General ManagerDong Ying, ProfessorFinlandChina Center for Economic Statistics Research,ETLAThe Research Institute of the Finnish EconomyTianjin University of Finance and Economics Petri Rouvinen, Research DirectorLu Dong, ProfessorMarkku Kotilainen, Research DirectorHongye Xiao, ProfessorPekka Yl-Anttila, Managing DirectorBojuan Zhao, ProfessorFranceHuazhang Zheng, Associate ProfessorHEC School of Management, ParisColombiaBertrand Moingeon, Professor and Deputy DeanNational Planning DepartmentBernard Ramanantsoa, Professor and DeanAlvaro Edgar Balcazar, Entrepreneurial Development DirectorGambia, TheHernando Jos Gmez, General DirectorGambia Economic and Social Development Research InstituteNelson Fabin Villareal Rincn, Advisor (GESDRI)Colombian Council of CompetitivenessMakaireh A. Njie, DirectorRosario Crdoba, PresidentGeorgiaCte dIvoire Business Initiative for Reforms in GeorgiaChambre de Commerce et dIndustrie de Cte dIvoire Tamara Janashia, Executive DirectorJean-Louis Billon, PresidentGiga Makharadze, Founding Member of the Board of DirectorsJean-Louis Giacometti, Technical Advisor to the President Mamuka Tsereteli, Founding Member of the Board of DirectorsMamadou Sarr, Director GeneralGermanyCroatia IW Consult GmbH, Cologne Institute for Economic ResearchNational Competitiveness CouncilAdriana Sonia Neligan, Head of DepartmentJadranka Gable, Project AdministratorWHUOtto Beisheim School of Management, VallendarKresimir Jurlin, Research AssociateRalf Fendel, Professor of Monetary EconomicsMira Lenardic, Senior AdvisorMichael Frenkel, Professor, Chair of Macroeconomics andInternational Economicsviii | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum 10. Partner InstitutesGhana IsraelAssociation of Ghana Industries (AGI) Manufacturers Association of Israel (MAI)Patricia Djorbuah, Projects Officer Shraga Brosh, PresidentCletus Kosiba, Executive Director Dan Catarivas, DirectorNana Owusu-Afari, President Amir Hayek, Managing DirectorGreeceItalySEV Hellenic Federation of EnterprisesSDA Bocconi School of ManagementMichael Mitsopoulos, Coordinator, Research and Analysis Secchi Carlo, Full Professor of Economic Policy, BocconiThanasis Printsipas, Economist, Research and Analysis UniversityPaola Dubini, Associate Professor, Bocconi UniversityGuatemalaFrancesco A. Saviozzi, SDA Assistant Professor,FUNDESAStrategic and Entrepreneurial Management DepartmentEdgar A. Heinemann, President of the Board of DirectorsPablo Schneider, Economic DirectorJamaicaJuan Carlos Zapata, General Manager Mona School of Business (MSB), The University of the WestIndiesGuyanaPatricia Douce, Project AdministratorInstitute of Development Studies, University of GuyanaEvan Duggan, Executive Director and ProfessorKaren Pratt, Research AssociateWilliam Lawrence, Director, Professional Services UnitClive Thomas, DirectorJapanHaitiKeio University in cooperation with Keizai Doyukai KeizaiPrivate Sector Economic Forum(Japan Association of Corporate Executives)Edouard Baussan, Deputy CoordinatorYoko Ishikura, Professor,Graduate School of Media Design,Reginald Boulos, CoordinatorKeio UniversityBernard Craan, Secretary GeneralKiyohiko Ito, Managing Director, Keizai DoyukaiHong Kong SAR Heizo Takenaka, Director, Global Security Research Institute,Hong Kong General Chamber of Commerce Keio UniversityDavid ORear, Chief EconomistJordanFederation of Hong Kong IndustriesMinistry of Planning & International CooperationAlexandra Poon, DirectorJordan National Competitiveness TeamMukhallad Omari, Director of Policies and Studies DepartmentThe Chinese General Chamber of CommerceAktham Al-Zubi, Senior ResearcherHungary Kawther Al-Zoubi, Head of Competitiveness DivisionKOPINT-TRKI Economic Research Ltd.KazakhstanPeter Vakhal, Project ManagerJSC National Analytical Centre of the Government of theva Palcz, Chief Executive Officer Republic of KazakhstanIceland Takhir Aslyaliyev, Project ManagerInnovation Center Iceland Ayana Manasova, ChairpersonKarl Fridriksson, Managing Director of Human Resources andAlikhan Yerzhanov, Expert AnalystMarketingKenyaArdis Armannsdottir, Marketing ManagerInstitute for Development Studies, University of NairobiThorsteinn I. Sigfusson, DirectorMohamud Jama, Director and Associate ProfessorIndia Paul Kamau, Senior Research FellowConfederation of Indian Industry (CII)Dorothy McCormick, Research ProfessorChandrajit Banerjee, Director GeneralKorea, Republic ofMarut Sengupta, Deputy Director GeneralCollege of Business School, Korea Advanced Institute ofGantakolla Srivastava, Head, Financial ServicesScience and Technology KAISTIndonesia Ingoo Han, Senior Associate Dean and ProfessorCenter for Industry, SME & Business Competition Studies,Byungtae Lee, Acting DeanUniversity of TrisaktiProfessor Kayla Jisoo Lee, Manager, Exchange ProgrammeTulus Tambunan, Professor and DirectorKorea Development InstituteIran, Islamic Republic of Joohee Cho, Senior Research AssociateThe Centre for Economic Studies and Surveys (CESS), IranYongsoo Lee, Head, Policy Survey UnitChamber of Commerce, Industries and MinesKuwaitHammed Roohani, DirectorKuwait National Competitiveness CommitteeIreland Adel Al-Husainan, Committee MemberCompetitiveness Survey Group, Department of Economics,Fahed Al-Rashed, Committee ChairmanUniversity College Cork Sayer Al-Sayer, Committee MemberEleanor Doyle, Professor, Department of EconomicsKyrgyz RepublicNiall OSullivanEconomic Policy Institute Bishkek ConsensusBernadette PowerLola Abduhametova, Program CoordinatorNational Competitiveness CouncilMarat Tazabekov, ChairmanAdrian Devitt, ManagerLatviaMichelle Nic Gearailt, Assistant EconomistInstitute of Economics, Latvian Academy of SciencesHelma Jirgena, DirectorIrina Curkina, ResearcherThe Global Enabling Trade Report 2012 | ix@ 2012 World Economic Forum 11. Partner InstitutesLebanonMexicoBader Young Entrepreneurs ProgramCenter for Intellectual Capital and CompetitivenessAntoine Abou-Samra, Managing DirectorErika Ruiz Manzur, Executive DirectorHiba Zunji, AssistantRen Villarreal Arrambide, President and Chief Executive OfficerLesotho Jess Zurita Gonzlez, General DirectorPrivate Sector Foundation of LesothoO.S.M. Moosa, Chaiperson Instituto Mexicano para la Competitividad (IMCO)Tiisetso Sekhonyana, ResearcherPriscila Garcia, ResearcherLindiwe Sephomolo, Chief Executive Officer Manuel Molano, Deputy General Director Juan E. Pardinas, General DirectorLithuania Ministry of the EconomyStatistics Lithuania. .Jose Antonio Torre, Undersecretary for Competitiveness andVilija Lapeniene, Director General StandardizationGediminas Samuolis, Head, Knowledge Economy and Special Enrique Perret Erhard, Technical Secretary for Surveys Statistics Division.CompetitivenessOna Grigiene, Deputy Head, Knowledge Economy and Narciso Suarez, Research Director, Secretary for Special Surveys Statistics Division CompetitivenessLuxembourg MoldovaChamber of Commerce of the Grand Duchy of Luxembourg Academy of Economic Studies of Moldova (AESM)Franois-Xavier Borsi, Attach, Economic Department Grigore Belostecinic, RectorCarlo Thelen, Chief Economist, Member of the ManagingBoardCentre for Economic Research (CER)Christel Chatelain, Attache, Economic DepartmentCorneliu Gutu, DirectorMacedonia, FYR MongoliaNational Entrepreneurship and Competitiveness CouncilOpen Society Forum (OSF)(NECC) Munkhsoyol Baatarjav, Manager of Economic PolicyDejan Janevski, Project CoordinatorErdenejargal Perenlei, Executive DirectorZoran Stavreski, President of the Managing Board MontenegroSaso Trajkoski, Executive Director Institute for Strategic Studies and Prognoses (ISSP)Madagascar Maja Drakic, Project ManagerCentre of Economic Studies, University of Antananarivo Petar Ivanovic, Chief Executive OfficerRavelomanana Mamy Raoul, DirectorVeselin Vukotic, PresidentRazato Rarijaona Simon, Executive Secretary MoroccoMalawi Universit Hassan II, LASAAREMalawi Confederation of Chambers of Commerce and Fouzi Mourji, Professor of Economics Industry General Confederation of Moroccan Entreprise (CGEM)Hope Chavula, Public Private Dialogue Manager Mounir Ferram, Delegate DirectorChancellor L. Kaferapanjira, Chief Executive Officer MozambiqueMalaysia EconPolicy Research Group, Lda.Institute of Strategic and International Studies (ISIS) Peter Coughlin, DirectorMahani Zainal Abidin, Chief Executive Donaldo Miguel Soares, ResearcherSteven C.M. Wong, Senior Director, Economics Ema Marta Soares, AssistantMalaysia Productivity Corporation (MPC) NamibiaMohd Razali Hussain, Director General Institute for Public Policy Research (IPPR)Lee Saw Hoon, Senior Director Graham Hopwood, Executive DirectorMali NepalGroupe de Recherche en Economie Applique et Thorique Centre for Economic Development and Administration (CEDA)(GREAT) Ramesh Chandra Chitrakar, Professor and CountryMassa Coulibaly, Coordinator CoordinatorMauritania Bharat Pokharel, Project Director and Executive DirectorCentre dInformation Mauritanien pour le Dveloppement Mahendra Raj Joshi, MemberEconomique et Technique (CIMDET/CCIAM) NetherlandsKhira Mint Cheikhnani, Director INSCOPE: Research for Innovation, Erasmus UniversityL Abdoul, Consultant and Analyst RotterdamHabib Sy, Analyst Frans A. J. Van den Bosch, ProfessorMauritiusHenk W. Volberda, Director and ProfessorJoint Economic Council of Mauritius New ZealandRaj Makoond, Director Business New ZealandBoard of InvestmentPhil OReilly, Chief ExecutiveKevin Bessondyal, Assistant Director, Planning and Policy The New Zealand InstituteDev Chamroo, Director, Planning and Policy Catherine Harland, Project LeaderRaju Jaddoo, Managing Director Rick Boven, Directorx | The Global Enabling Trade Report 2012@ 2012 World Economic Forum 12. Partner InstitutesNigeriaRussian FederationNigerian Economic Summit Group (NESG)Bauman Innovation & Eurasia Competitiveness InstituteFrank Nweke Jr., Director GeneralKaterina Marandi, Programme ManagerChris Okpoko, Associate Director, Research Alexey Prazdnichnykh, Principal and Managing DirectorFoluso Phillips, Chairman Stockholm School of Economics, RussiaNorway Igor Dukeov, Area PrincipalBI Norwegian School of ManagementCarl F. Fey, Associate Dean of ResearchEskil Goldeng, Researcher RwandaTorger Reve, Professor Private Sector FederationOman Roger Munyampenda, Chief Executive OfficerThe International Research FoundationVincent S. Safari, Director, Trade and Policy AdvocacySalem Ben Nasser Al-Ismaily, Chairman Saudi ArabiaPublic Authority for Investment Promotion and Export National Competitiveness Center (NCC)Development (PAIPED) Awwad Al-Awwad, PresidentMehdi Ali Juma, Expert for Economic Research Khaldon Mahasen, Vice PresidentPakistan SenegalCompetitiveness Support Fund Centre de Recherches Economiques Appliques (CREA),Maryam Jawaid, Communication SpecialistUniversity of DakarImran Khan, EconomistDiop Ibrahima Thione, DirectorShahab Khawaja, Chief Executive Officer SerbiaParaguay Foundation for the Advancement of Economics (FREN)Centro de Anlisis y Difusin de Economia ParaguayaMihail Arandarenko, Chairman of the Board of Directors(CADEP)Katarina Bojie, Project CoordinatorDionisio Borda, Research MemberBojan Ristic, ResearcherFernando Masi, Director SingaporeMara Beln Servn, Research Member Economic Development BoardPeru Angeline Poh, Director PlanningCentro de Desarrollo Industrial (CDI), Sociedad Nacional Cheng Wai San, Head, Research & Statistics Unitde Industrias Slovak RepublicNstor Asto, Project Director Business Alliance of Slovakia (PAS)Luis Tenorio, Executive Director Robert Kicina, Executive DirectorPhilippines SloveniaMakati Business Club (MBC) Institute for Economic ResearchMarc P. Opulencia, Deputy Director Sonja Uric, Senior ResearcherMichael B. Mundo, Chief Economist Peter Stanovnik, ProfessorPeter Angelo V. Perfecto, Executive Director University of Ljubljana, Faculty of EconomicsIn cooperation with the Management Association of Mateja Drnovek, Professor the Philippines (MAP) Ale Vahcic, ProfessorArnold P. Salvador, Executive Director South AfricaPoland Business Leadership South AfricaEconomic Institute, National Bank of Poland Friede Dowie, DirectorJarosaw T. Jakubik, Deputy Director Michael Spicer, Chief Executive OfficerPiotr Boguszewski, Advisor Business Unity South AfricaPortugal Coenraad Bezuidenhout, Executive Director for EconomicPROFORUM, Associao para o Desenvolvimento da PolicyEngenharia Jerry Vilakazi, Chief Executive OfficerIldio Antnio de Ayala Serdio, Vice President of the Board ofDirectorsSpain IESE Business School, International Center forFrum de Administradores de Empresas (FAE) CompetitivenessPaulo Bandeira, General Director Mara Luisa Blzquez, Research AssociatePedro do Carmo Costa, Member of the Board of Directors Enrique de Diego, Research AssistantEsmeralda Dourado, President of the Board of Directors Antoni Subir, ProfessorQatar Sri LankaQatari Businessmen Association (QBA) Institute of Policy StudiesIssa Abdul Salam Abu Issa, Secretary-General Ayodya Galappattige, Research OfficerSarah Abdallah, Deputy General Manager Saman Kelegama, Executive DirectorRomaniaDilani Hirimuthugodage, Research OfficerGroup of Applied Economics (GEA) SwedenLiviu Voinea, Executive Director International University of Entrepreneurship and TechnologyIrina Zgreaban, Program Coordinator Niclas Adler, President The Global Enabling Trade Report 2012 | xi @ 2012 World Economic Forum 13. Partner InstitutesSwitzerlandUnited Arab EmiratesUniversity of St. Gallen, Executive School of Management,Abu Dhabi Department of Economic DevelopmentTechnology and Law (ES-HSG)H.E. Mohammed Omar Abdulla, UndersecretaryBeat Bechtold, Communications Manager Dubai Economic CouncilRubn Rodriguez Startz, Head of Project H.E. Hani Al Hamly, Secretary GeneralSyriaEmirates Competitiveness CouncilPlanning and International Cooperation Commission (PICC) H.E. Abdulla Nasser Lootah, Secretary GeneralAmer Housni Loutfi, Head Institute for Social and Economic Research (ISER),Syrian Enterprise and Business Centre (SEBC) Zayed UniversityNoha Chuck, Chief Executive OfficerMouawiya Alawad, DirectorNational Competitiveness Observatory (NCO) United KingdomRami Zaatari, Team Leader LSE Enterprise Ltd, London School of Economics andTaiwan, ChinaPolitical ScienceCouncil for Economic Planning and Development, Executive Adam Austerfield, Director of ProjectsYuan Niccolo Durazzi, Project OfficerLiu, Y. Christina, MinisterRobyn Klingler Vidra, ResearcherHung, J. B., Director, Economic Research Department UruguayShieh, Chung Chung, Researcher, Economic Research Universidad ORTDepartment Isidoro Hodara, ProfessorTajikistan VenezuelaThe Center for Sociological Research Zerkalo CONAPRIVenezuelan Council for Investment PromotionQahramon Baqoev, Director Eduardo Porcarelli, Executive DirectorGulnora Beknazarova, Researcher Litsay Guerrero, Economic Affairs and Investor Services ManagerAlikul Isoev, Sociologist and Economist VietnamTanzania Central Institute for Economic Management (CIEM)Research on Poverty Alleviation (REPOA) Dinh Van An, PresidentJoseph Semboja, Professor and Executive Director Phan Thanh Ha, Deputy Director, Department ofLucas Katera, Director, Commissioned Research Macroeconomic ManagementCornel Jahari, Researcher, Commissioned Research Pham Hoang Ha, Senior Researcher, Department ofDepartment Macroeconomic ManagementThailand Institute for Development Studies in HCMC (HIDS)Sasin Graduate Institute of Business Administration, Nguyen Trong Hoa, Professor and PresidentChulalongkorn University Du Phuoc Tan, Head of DepartmentPongsak Hoontrakul, Senior Research Fellow Trieu Thanh Son, ResearcherToemsakdi Krishnamra, Director of SasinPiyachart Phiromswad, Faculty of Economics Yemen Yemeni Businessmen Club YBCThailand Development Research Institute (TDRI) Ahmed Abu Bakr Bazara, ChairmanSomchai Jitsuchon, Research Director Ali Saeed Mahmoud Al-Azaki, Executive DirectorChalongphob Sussangkarn, Distinguished Fellow Margret Arning, ConsultantYos Vajragupta, Senior Researcher ZambiaTunisia Institute of Economic and Social Research (INESOR),Institut Arabe des Chefs dEntreprises University of ZambiaMajdi Hassen, Executive Counsellor Patricia Funjika, Research FellowChekib Nouira, President Jolly Kamwanga, Senior Research Fellow and ProjectTurkey CoordinatorTUSIAD Sabanci University Competitiveness ForumMubiana Macwangi, Director and ProfessorIzak Atiyas, Director ZimbabweSelcuk Karaata, Vice Director Graduate School of Management, University of ZimbabweUganda A. M. Hawkins, ProfessorKabano Research and Development Centre Bolivia, Costa Rica, Dominican Republic, Ecuador,Robert Apunyo, Program Manager ElSalvador, Honduras, Nicaragua, PanamaDelius Asiimwe, Executive Director INCAE Business School, Latin American Center forCatherine Ssekimpi, Research Associate Competitiveness and Sustainable Development (CLACDS)UkraineArturo Condo, RectorCASE Ukraine, Center for Social and Economic ResearchLawrence Pratt, Director, CLACDSDmytro Boyarchuk, Executive Director Marlene de Estrella, Director of External RelationsVladimir Dubrovskiy, Leading Economist Vctor Umaa, Researcher and Project Manager, CLACDS Latvia, Lithuania Stockholm School of Economics in Riga Karlis Kreslins, Executive MBA Programme Director Anders Paalzow, Rectorxii | The Global Enabling Trade Report 2012@ 2012 World Economic Forum 14. PrefaceBRGE BRENDEManaging Director, Government Relations and Constituents Engagement, World Economic ForumROBERT GREENHILLChief Business Officer, World Economic ForumThe Global Enabling Trade Report 2012 reflects a worldall 132 economies covered this year. The profiles providein which trade has rebounded from its 2009 slump. It is a an overview of the results on all indicators included in theworld where trade is no longer dominated by developed Enabling Trade Index.economies but is now more concentrated in and among The Global Enabling Trade Report would not haveemerging economies. This shift highlights the virtuousbeen possible without the distinguished academicsrole trade can play in economic growth and povertyand practitioners who have shared with us theirreduction. With progress stalled in multilateral tradeknowledge and experience. We thank our Datanegotiations, the Reports practical focus on tacklingPartnersthe Global Express Association (GEA),barriers is increasingly important. the International Air Transport Association (IATA), theMany of this years contributions reflect a growing International Trade Centre (ITC), the United Nationsrecognition that trade facilitation is most effective Conference on Trade and Development (UNCTAD), Thewhen it is designed to support global value chains. World Bank, the World Customs Organization (WCO),Countries, like companies, increasingly specialize in and the World Trade Organization (WTO)for makingtasks rather than products, adding value to intermediatetrade-related data available.products that cross many borders. Consequently, whenWe also wish to thank the authors of the chaptercountries enable trade, the benefits are not just local orcontributions for their cutting-edge insight: the membersbilateral but global. But global disaggregation of valueof the Global Agenda Council on the Global Tradingchains through trade has brought challenges as well System, Gene Huang of FedEx Corporation, Donaldas opportunities. Cognizant of the need to safeguardRatliff and Amar Ramudhin of the Georgia Instituteadvances made, the Report considers the issue ofof Technology, Justin Picard of Advanced Track &supply chain integrity and the steps both countries and Trace, Carlos A. Alvarenga of Accenture, Julia Spiescompanies can take to ensure that quality, security,of the International Trade Centre, Kunio Mikuriya of theand trade are mutually reinforcing rather than opposing.World Customs Organization, Hans Oust Heiberg ofSeveral contributions also touch on the need to DNB Bank ASA, and Carlos Grau Tanner of the Globaltransform our perspectives on trade by updating the way Express Association. We are grateful to the Industrywe measure it. Because trade and investment go hand Partners supporting this Report: Agility, Brightstar Corp.,in hand, the Report has, since its inception, dealt withDeutsche Post DHL, DNB Bank ASA, FedEx Corp., APenabling factors beyond national borders. Mller-Maersk, the Panama Canal Authority, Stena AB,Fundamentally, the Reports assessment of factors Swiss International Airlines, Transnet, UPS, Volkswagen,that enable trade provides a reminder of the attributes and AB Volvo.that govern a nations ability to benefit from trade. These We wish to acknowledge the contributors to thisattributes are captured in the Enabling Trade Index,volume, Robert Z. Lawrence of Harvard University andwhich stands at the core of the Report and includes fourSean Doherty and Margareta Drzeniek Hanouz, as wellbroad categories: market access, border administration, as Roberto Crotti, Caroline Ko, and Ronald Philip, of theinfrastructure, and the business environment. World Economic Forum for their commitment. We wouldThe Global Enabling Trade Report arises from andlike to express our gratitude to Jennifer Blanke and Johnis supported by the World Economic Forums Supply Moavenzadeh for their guidance. Appreciation goes alsoChain and Transportation Industry Partnership program.to other team members of the Global CompetitivenessSince its introduction in 2008, the Report has become Network and the Supply Chain and Transportationa widely used reference, forming part of the toolboxIndustry teams: Beat Bilbao Osorio, Ciara Browne,of many countries in their efforts to increase trade andThierry Geiger, Tania Gutknecht, Cecilia Serin, andhelping companies with their investment decisions. TheKaterina Soulounia.Report is the basis for high-level public-private dialogues,Finally, this Report would have not been possiblefacilitated by the World Economic Forum around thewithout the hard work and enthusiasm of our networkworld, that focus on practical steps that can be taken by of over 150 Partner Institutes worldwide, who carry outboth governments and the private sector to overcome the Executive Opinion Survey, which is at the basis oftrade barriers in a particular country or region. this work.The complete Report can be downloaded atwww.weforum.org/getr. It contains detailed profiles for The Global Enabling Trade Report 2012 | xiii@ 2012 World Economic Forum 15. @ 2012 World Economic Forum 16. Executive SummarySEAN DOHERTYMARGARETA DRZENIEK HANOUZRONALD PHILIPWorld Economic ForumThe international trade agenda has seen many shifts over areas that are captured in subindexes A, B, C, and D andthe last several years. After the 2008 slump in global nine pillars that are attributed to the subindexes as follows:trade, international trade rebounded with and among A. The market access subindex measures the extentemerging markets faster than in other economies, to which the policy framework of the countryconfirming the move in economic activity away from the welcomes foreign goods into the country anddeveloped world. At the same time, events such as the enables access to foreign markets for its exporters.Japanese tsunami in 2011 highlighted the continued It includes the following pillar:international fragmentation of supply chains. Increasingly,goods are produced across a number of countriesPillar 1: Domestic and foreign market accesswithin the same company or groups of companies,B. The border administration subindex assesses theand countries specialize in tasks rather than products.extent to which the administration at the borderWith the Doha Development Agenda at an impasse,facilitates the entry and exit of goods through thethese developments raise the importance of practical following pillars:measures that countries can take to enable trade and Pillar 2: Efficiency of customs administrationbetter participate in the global division of labor, with the Pillar 3: Efficiency of import-export proceduresultimate aim of supporting economic growth. Pillar 4: Transparency of border administration Since its introduction in 2008, The Enabling TradeReport has become a widely used reference, forming C. The transport and communications infrastructurepart of the toolbox of many countries in their efforts subindex takes into account whether the countryto increase trade and helping companies with their has in place the transport and communicationsinvestment decisions. The Report is the basis for many infrastructure necessary to facilitate the movementhigh-level public-private dialogues facilitated around the of goods within the country and across the borderworld each year by the World Economic Forum. These through the following pillars:dialogues focus on practical steps that can be taken byPillar 5: Availability and quality of transportboth governments and the private sector to overcome infrastructureparticular trade barriers in a country or region.Pillar 6: Availability and quality of transport services The Enabling Trade Index (ETI) was developedPillar 7: Availability and use of ICTswithin the context of the World Economic ForumsSupply Chain and Transportation Industry Partnership D. The business environment subindex looks at theprogram and was first published in The Global Enabling quality of governance as well as at the overarchingTrade Report 2008. A number of Data Partners regulatory and security environment impacting theare collaborating in this effort: the Global Express business of importers and exporters active in theAssociation (GEA), the International Air Transport country through the following pillars:Association (IATA), the International Trade Centre Pillar 8: Regulatory environment(ITC), the United Nations Conference on Trade andPillar 9: Physical securityDevelopment (UNCTAD), the World Bank, the WorldCustoms Organization (WCO), and the World TradeEach of these pillars is made up of a number ofOrganization (WTO). We have also received significantindividual variables. The dataset includes both hardinput from companies that are part of the Supply data and survey data from the World Economic ForumsChain and Transportation Industry Partnership, namelyExecutive Opinion Survey (the Survey). The hard dataA.P. Mller Maersk, Agility, Brightstar, Deutsche Post were obtained from publicly available sources andDHL, DNB Nor, FedEx, the Panama Canal Authority, international organizations active in the area of tradeStena, Swiss International Air Lines, Transnet, UPS, (for example, IATA, the ITC, ITU, UNCTAD, the UN, andVolkswagen, and AB Volvo.the World Bank). The Survey is carried out annually by The ETI measures the extent to which individual the World Economic Forum in all economies coveredeconomies have developed institutions, policies, and by our research. It captures the views of top businessservices facilitating the free flow of goods over borders andexecutives on the business environment and providesto destination. The structure of the Index reflects the main unique data on many qualitative aspects of the broaderenablers of trade, breaking them into four overall issue The Global Enabling Trade Report 2012 | xv @ 2012 World Economic Forum 17. Executive Summarybusiness environment, including a number of specific spreading across the entire ETI sample. As highlightedissues related to trade. in past editions of the Report, the regions outstanding domestic and foreign market access continuous toTHE ENABLING TRADE INDEX 2012 RANKINGS be the main strength of many countries. However, theThe rankings from the ETI are shown in Table 1, whichoverall business environment remains as an area forcompares the 2012 rankings with those from the 2010improvement, particularly in terms of corruption andedition. the lack of physical security, which impose high costs As in previous years, the top 10 of the ETI 2012on exporting and importing enterprises. As in previouscontinues to be dominated by relatively small, openyears, Chile is an exception in the region, leading theeconomies for which trade is key to achieving efficiency regional rankings at 14th place. Costa Rica, anotherbecause their domestic markets are small. Singaporesmall, open economy, comes in at a good 43rd position.continues to lead the way by a large, and widening,The larger economies from the region perform less well,margin over second-ranked Hong Kong SAR. Bothwith Mexico occupying 65th place and Brazil 84th.economies deliver a strong performance across allThe Middle East and North African region maintainsthe components of the Index with open trade policies,a high degree of diversity in terms of enabling trade,excellent infrastructure, well-functioning borderwith the United Arab Emirates entering the top 20 whileadministration, and a business environment that is Algeria remains at the bottom of the rankings, at 120th.conducive to trade and investment. As in the previousIn many Gulf countries, such as Saudi Arabia at 27th,edition, two Nordic economiesDenmark and Swedenthe environment is favorable to trade because tradeoccupy the 3rd and 4th position, respectively, based policies are open, border administration is efficient,on their strong business environments, efficient borderand infrastructure is well developed. North Africanadministrations, and highly developed infrastructures. economies, led by Tunisia at 44th, face a differentFurther down in the top 10 we observe some movementset of challenges, with trade policies and businessas New Zealand continues its upward trend, gaining environments that are less conducive to trade and aone position to reach 5th place, while Finland and the need to upgrade infrastructure.Netherlands improve to occupy the 6th and 7th position,Sub-Saharan African countries enable trade torespectively. Switzerland, Canada, and Luxembourgdifferent degrees, and the trade liberalization efforts ofround up the top 10 rankings in this years ETI. recent decades have not been sufficient to significantly Asia and the Pacific is host to some of the fastest-improve the trade performance of the region as a whole.growing and largest economies worldwide. Many of the Many African countries have liberalized trade and nowcountries in the region have greatly benefited from tradeenjoy important preferences in target markets, butand made it a central part of their growth strategy. The major improvements in trade facilitation have not yetETI shows a wide gap between frontrunners Singapore, been achieved. As a result, it is still considerably moreHong Kong, and New Zealand and the rest of the expensive to trade with Africa than with other regions,region. Many agree that Asia has yet to fully leverage the and, in many cases, the cost of trading is a moreopportunities offered by trade; this situation is reflectedimportant obstacle to trade development than tradein the results of the ETI. Except for those in the top 10policies. The exception to the rule is Mauritius, at 36thand Australia (17th), countries stay outside the top 20, place, which benefits from one of the most open tradewith China at 56th position and India at a low 100th.policies globally. South Africa occupies the 63rd position,The key challenge for both these countries is to liberalizewhich reflects its well-developed infrastructure andrestrictive trade policies. Thailand (57th), Indonesia efficient logistics services.(58th), and the Philippines have benefitted from trade This year the Report introduces for each country aliberalization within the Association of Southeast Asian set of direct measurements of the factors seen as theNations (ASEAN) and improved in the rankings this year.most problematic for exporting and importing, based on A number countries within the European Union (EU) a survey of business executives. These results, which arerank within the top 20 of the ETI rankings, reflecting reported in the Country/Economy Profiles in Part 2 of thistheir well-developed infrastructures, widely available Report, show that, globally, tariff and non-tariff barriers,transport services, and efficient border administrations.along with burdensome customs administration, remainHowever, their trade performance is constrained by the the most important obstacles for importing. Exporting isoverly restrictive common trade policy of the European hindered primarily by the difficulty of identifying marketsUnion. The United States ranks 23rd this year, continuingand buyers and by insufficient access to trade finance.its downward trendthe result of a deterioratinginfrastructure and a less conducive regulatory EXPLORING ISSUES OF ENABLING TRADEenvironment. The Russian Federation, at 112th place, In addition to the Index rankings and the relatedranks below other large emerging markets such as analysis, the Report contains a number of chapterBrazil, India, and China. The country would benefit from contributions that focus on issues relevant to thea freer trade policy, more efficient border administration,current trading environment. The chapters range fromand a less burdensome regulatory environment.discussions of how the globalization of value chains The average performance of the countries in Latin impacts measurement of trade and overall trade policiesAmerica and the Caribbean places most of them in the to considerations of logistics investments, customsmiddle of the ETI rankings, with individual countriesxvi | The Global Enabling Trade Report 2012@ 2012 World Economic Forum 18. Executive SummaryTable 1: The Enabling Trade Index 2012 rankings and 2010 comparisonETI 2012 ETI 2010ETI 2012ETI 2010 Country/EconomyRankScore Rank*Country/EconomyRankScore Rank* Singapore16.141 Greece674.07 55 Hong Kong SAR2 5.67 2 Vietnam 684.02 71 Denmark35.413 Romania 694.0254 Sweden 45.394 El Salvador 70 3.9957 New Zealand5 5.34 6 Serbia713.97 67 Finland65.34 12 Philippines 723.96 92 Netherlands75.32 10 Sri Lanka 73 3.95 99 Switzerland85.295 Bulgaria743.93 78 Canada 95.228 Namibia 753.92 70 Luxembourg105.209 Moldova 763.92n/a United Kingdom11 5.1817 Guatemala 773.9069 Norway125.177 Honduras783.89 66 Germany 135.13 13 Jamaica 793.89 74 Chile 145.12 18 Bosnia and Herzegovina80 3.8780 Austria 155.12 14 Azerbaijan813.85 77 Iceland 165.08 11 Nicaragua 823.83 79 Australia 175.08 15 Ecuador 833.8389 Japan 185.08 25 Brazil843.79 87 United Arab Emirates19 5.0716 Malawi853.7983 France205.03 20 Ukraine 863.79 81 Belgium 214.96 24 Dominican Republic87 3.7873 Ireland 224.96 21 Zambia883.78 85 United States 23 4.9019 Colombia893.78 91 Malaysia244.90 30 Egypt 903.78 76 Oman254.86 29 Gambia, The 91 3.7482 Estonia 264.85 23 Senegal 923.72 90 Saudi Arabia27 4.8440 Lebanon 933.71n/a Israel284.82 26 Tanzania943.69 97 Taiwan, China 29 4.8128 Bolivia 953.6898 Bahrain 304.80 22 Argentina 963.68 95 Spain 314.79 32 Mozambique973.6593 Qatar 324.74 34 Uganda983.64 94 Slovenia334.65 35 Ghana 993.5996 Korea, Rep. 34 4.6527 India1003.55 84 Portugal354.63 36 Paraguay 1013.53 103 Mauritius 364.62 33 Cambodia 1023.52 102 Cyprus374.61 31 Kenya1033.52 105 Georgia 384.58 37 Guyana 1043.52 109 Montenegro394.46 43 Kazakhstan 1053.5088 Uruguay 404.44 50 Ethiopia 1063.49 107 Czech Republic41 4.4242 Madagascar 1073.4886 Jordan424.42 39 Syria1083.47 104 Costa Rica43 4.4144 Bangladesh 1093.46 113 Tunisia 444.39 38 Tajikistan 1103.45 108 Lithuania 454.39 41 Kyrgyz Republic111 3.45100 Croatia 464.39 45 Russian Federation 112 3.41114 Hungary 474.39 49 Lesotho1133.41 101 Poland484.37 58 Mongolia 1143.40 116 Albania 494.36 59 Benin1153.39 106 Italy 504.36 51 Pakistan 1163.39 112 Rwanda514.35n/a Iran, Islamic Rep. 117 3.31 n/a Latvia524.31 46 Cameroon 1183.28 115 Peru534.31 63 Yemen1193.25n/a Botswana544.31 53 Algeria1203.22 119 Slovak Republic 55 4.2947 Mali 1213.18 111 China 564.22 48 Burkina Faso 122 3.15110 Thailand574.21 60 Nigeria1233.13 120 Indonesia 584.19 68 Nepal1243.07 118 Armenia 594.19 52 Mauritania 1253.06 117 Panama604.16 61 Cte dIvoire126 3.02123 Macedonia, FYR61 4.1356 Angola 1273.01n/a Turkey624.13 62 Haiti1282.97n/a South Africa63 4.1072 Zimbabwe 1292.96 122 Morocco 644.08 75 Venezuela1302.95 121 Mexico654.08 64 Burundi1312.95 125 Kuwait664.07 65 Chad 1322.63 124*The 2010 rank is out of 125 countries. Seven new countries were added to the 2012 Index: Angola, Haiti, Iran, Lebanon, Moldova, Rwanda, and Yemen.The Global Enabling Trade Report 2012 | xvii @ 2012 World Economic Forum 19. Executive Summaryadministration, the state of the merchant fleet, and afor the measurement of value-added in trade statisticscountry case study of Costa Rica. along with more direct measurement of cross-borderChapter 1.2, The Rise of Global Supply Chains: linkages, knowledge infusion, and intangibles trade toImplications for Global Trade, summarizes recent workbetter illustrate where nations have real advantages andby the Global Agenda Council (GAC) on the Globalchallenges.Trade System, a group of experts formed by the WorldIn Chapter 1.4, Logistics Investment and TradeEconomic Forum. The GAC analyzes the consequences Growth: The Need for Better Analytics, Donald Ratliffof the rise of global value chains that will require newand Amar Ramudhin from the Supply Chain andapproaches, such as adjustments to ways that tradeLogistics Institute at the Georgia Institute of Technologyflows are measured and changes in global trade rulesmake the case for a new generation of trade data.and in the economic and trade policies of developingTraditional data collections were designed to supportcountries. The authors note that governments clearlycustoms functions and are no longer appropriate in aneed to recognize that exports are only part of the world of global supply chains. Trade-supporting logisticsdevelopment story. It is important for policymakers investment decisions are made by public entities, byto develop better measures of trade flows net ofprivate enterprises for public use in the sense that theseintermediate imports, and more generally to develop a decisions support services offered on the market, andbetter appreciation of how the national economy fits into for specific enterprises. In all cases, decision makingglobal production chains. According to GAC members, could be dramatically improved through the availability ofa failure to do so could lead to inaccurate policybetter data. Excellent data exist in proprietary systems:conclusions about the importance of bilateral trade geographic information systems, origin and destinationimbalances, to significant underestimates of the cost ofdatabases for goods, logistical properties, serviceprotection, and to a failure to appreciate the importance schedules, and so forth. Given the billions of dollarsof bilateral or regional trading relationships. Furthermore,of public and private investment and return at stake,the existence of large and growing trade in intermediates,an effort to develop new systems for data exchangewhich is associated with foreign direct investment (FDI)and analysis would be worthwhile. The authors reviewand the globalization of production, greatly raises the trends in trade flows revealed by currently availablestakes for countries to have open and predictable trade data and their influence on investment decisions. Theirand investment regimes, including efficient logistics. Thework highlights in particular the growth of intra-Asiaauthors conclude that the rise of value chains will require and Asia-Europe trade and the implications of thatthe WTO to focus more strongly on pursuing plurilateral growth for investment. However, they caution againstnegotiations. At the same time, preferential tradingrelying too heavily on trend data by illustrating the effectagreements will need to adjust negotiation approaches of the 2009 downturn on trade, and conclude thattoward a reduction in transaction costs, rather thanmodeling scenarios with better data would improve riskerecting new barriers to trade. management in investment for trade.In Chapter 1.3, The Global Value Chain, theIn Chapter 1.5, Illicit Trade, Supply Chain Integrity,Enterprise-Based Operating Model, and Challenges to and Technology, Justin Picard of Advanced Trackthe Sovereign-Based Economic Measurement System, & Trace and Carlos A. Alvarenga of Accenture pointGene Huang of FedEx Corporation argues that there out that one of the principal concerns of supply chainis a mismatch between sovereign-based economicmanagers is, increasingly, supply chain integrity. Foractivity measurement systems and globalized operating decades the complexity and opacity of global supplymodels. A new method of measurement is needed tochains meant that undesirable activities could oftenfacilitate access to opportunity, to highlight areas of be hidden or ignored. A convergence of security,risk, and to avoid unintended policy consequences. Theconsumer activism, and corporate interests, togetherauthor notes that we tend to underestimate the level of with new technologies, is leading to greater traceabilityglobal integration, highlighting the fact that 60 percent and transparency. Retailers, logistics companies,of global trade is in intermediate goods and intra-firm and suppliers are all held increasingly accountabletrade makes up 30 percent of world trade. Distributionfor unethical practices and illegal goods in the supplysystems are built around global value flows directedchain. Incentives to infiltrate and defend supply chainsat the customer, so national income accounting canare ever-present. Increasingly commoditized productionbe only imprecise. However, accounting must followmeans that high margins are captured throughinnovation. We currently face various difficulties: trade innovation, brand, and ethical business practices.credits are created where profits are registered, which isSecurity concerns increasingly focus on securing theoften different than where the trade is taking place; the entire chain, as evidenced by the US National Strategyimpact of time is under-measured; non-equity models for Global Supply Chain Security, which aims to enhanceof foreign investment through contract manufacturing, the integrity of goods as they move through the globaloutsourcing, and licensing are not recorded in FDIsupply chain. Beyond regulatory compliance, theinvestments; massive transfers of intangible assets and private sector has an interest in demonstrating oversightknowledge are occurring without appropriate records;of supply chains to prevent overreaction by securityand measures of gross goods flow distort the pictureagencies to cases of illicit trade. Product tracking andof bilateral relationships. To conclude, the author calls authentication technologies need to progress fasterxviii | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum 20. Executive Summarythan fraudsters and counterfeiters can catch up. There voluntary compliance can help improve trade securityare numerous new products on the market that workand customs enforcement in particular. Public-privatewith mobile technologies to provide ubiquitous digital partnerships in electronic single-window systems arefootprinting. The authors conclude that supply chain riskincreasingly prevalent. Contracting specific activitiesmanagement must be able to answer four questions to the private sector provides customs administrationsconcerning product-level supply chain integrity: Doeswith more time and resources to focus on core activitiesthis product come from where I think it did? Is it madeas well as allowing customs to gain access to outsidethe way I think it is? Did it travel the way I think it did? Isexpertise. In conclusion, customs-business partnershipsit going to do what I think it will? have expanded and evolved to a new phase, with moreIn Chapter 1.6, Business Perspectives on Obstaclesproactive engagement of the private sector in traditionalto Trade: Evidence from New Survey Data, Julia Spiescustoms work so as to share the responsibility with thefrom the ITC analyzes how non-tariff measures (NTMs) public sector. The author argues that customs authoritiesaffect trade based on the most recent enterprise-level should work with business in order to achieve theirsurvey data. The analysis confirms that NTMs represent common and respective goals, introducing performanceobstacles to trade and therefore influence market access indicators to regularly monitor outputs and outcomesconditions. In countries that trade less, a higher share to serve as feedback to improve the commitment. Withof firms reports burdensome NTMs than in countries diligent work, the author believes there is an opportunitythat trade more. Differences between sectors are alsofor the business perception of customs to be improved.considerable, with agricultural firms among the most This belief is reflected in improvements in businessseriously affected by obstructive NTMs. Evidence fromperception data, including those in the ETI.the ITCs recent firm-level surveys on NTMs suggests,In Chapter 1.8, The Merchant Fleet: A Facilitatorhowever, that not all firms in the same sector are of World Trade, Hans Oust Heiberg of DNB Bank ASAaffected to the same extent. Even within a sector and aanalyzes the state of the world merchant fleet to explaincountry, substantial differences persist. Rather, a firms the industry dynamics at work and to consider howperception of its exposure to burdensome NTMs is atshipping costs and complexity can work as potentialleast partly influenced by its particular situation. Whether trade barriers. The chapter opens with a brief overviewa firm produces is strongly correlated with the incidenceof world trade and the cost of seaborne trade, beforeof NTMs. Furthermore, there is some evidence thatdelving into an analysis of the opportunities to be foundthe smallest and the largest firms are more affected byin terms of coping with three key issues: increasingNTMs than medium-sized companies. The results implyfuel costs, an expected decade of environmentalthat policymakers who would like to successfully reduceregulation, and fleet renewal. The author argues thatthe incidence of NTMs should opt for approachescontinued high oil prices and requirements for cleaneraimed at reducing the impact of trade obstacles that fit fuel are expected to place an upward pressure ondifferent firm types rather than for sector- or countrywidetransportation cost. More fuel-efficient tonnage will easemeasures.this pressure somewhat over time. However, becauseIn Chapter 1.7, Expansion of Customs-Business of capital constraints and low earnings, the renewal ofPartnerships in the 21st Century, Kunio Mikuriya of the fleet in any meaningful way is likely to take time.the WCO makes the case that customs authoritiesThe current low earnings rates, coupled with highin both developed and developing countries are scrap prices, will increase demolition to new peaks. Aincreasingly recognizing that productive interaction reduction in speed will further reduce the availabilitywith business is essential for effective and efficient of tonnage and put upward pressure on rates. A bitcustoms administrations, which in turn can leadfurther out in time, tonnage availability is likely to reduceto increased trade and economic development. somewhat because of ships going to shipyards to beEffective business-customs partnerships can driveupgraded with emissions and ballast water treatmentimproved trade security, effective enforcement, prompt systems. Once financing is more available, tonnageclearances, lower transaction costs, and transparencyrenewal will accelerate. Clarity on emissions technologyand predictability of customs. The author undertakes a and improved fuel efficiency will also be catalystsreview of international instruments and tools related to for accelerated renewal, and a pattern of a two-tiercustoms-business partnerships, highlights key activities merchant fleet will evolve. The author expects the actualof the WCO intended to strengthen the relationship ofcost of the shipping assets to be lower than it was in thecustoms with the business community, and presentslast decade. Operating cost inflation is not expected toseveral lessons learned from customs administrations.be high. Thus the cost of the ship itself is not expectedIn many countries, the private sector plays an important to put upward pressure on the cost of transportationrole as a stakeholder, a partner, and a service provider,unless there is a shortage of tonnage. For the dry cargoand customs is able to benefit from the private sectors business, better infrastructure around ports will reduceinvolvement through consultation, collaboration, and the cost of transportation because ships will wait lesscontracting. The author highlights several successfultime for cargo, thus making the fleet more efficient.examples of consultation mechanisms that have been These factorsincreased transportation costs andinstitutionalized, including in the European Union and increased complexitycould serve as significant tradePeru. Collaboration through information-sharing andbarriers in the future. The Global Enabling Trade Report 2012 | xix @ 2012 World Economic Forum 21. Executive SummaryIn Chapter 1.9, Benefits of Trade Facilitation: TheCase of Costa Rica, Carlos Grau Tanner of the GEAreviews how Costa Rica has benefitted from improvedtrade facilitation. According to the author, the case ofCosta Rica supports the findings of numerous academicstudies that demonstrate the benefits of trade facilitationfor increased trade, and emphasizes that these benefitsflow to all players. Costa Rica has successfully takenadvantage of its inclusion into global value chains, andimproved trade facilitation measures have significantlycontributed to this outcome. Customs revenues havegrown manifold; the employment situation has alsoimproved, both in quantity and quality, as have exports.This in turn led to further increases in foreign investment.The country, its citizens, and its corporationsbothdomestic and internationalall gained in the process.This case study also shows, however, that even in thepresence of strong and well-executed policies, setbackscan occur and facilitating trade is a process that requiresconstant improvement and continuous policy attention.The author closes by saying that the case of Costa Ricapresents a very strong, practical argument for furthermultilateral trade facilitation measures, such as thosediscussed under the aegis of the WTO.PART 2: COUNTRY/ECONOMY PROFILESPart 2 presents comprehensive profiles for each ofthe 132 economies in the sample.CONCLUSIONBy analyzing issues related to international trade andranking economies according to the barriers to tradethey have in place, The Global Enabling Trade Reportprovides key information on measures that could enableeconomies to further benefit from trade in a constantlyrenewing and rapidly changing global environment. TheReport is intended to be a motivator for change anda foundation for dialogue, providing a yardstick of theextent to which economies have in place the factorsfacilitating the free flow of goods and identifying areaswhere improvements are most needed.xx | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum 22. Part 1Enabling Trade:Selected Issues @ 2012 World Economic Forum 23. @ 2012 World Economic Forum 24. CHAPTER 1.1 As measured by the International Monetary Fund (IMF),the volume of global trade in goods and servicesplummeted in the face of the global financial crisis,Reducing Supply Chain dropping by 10 percent between 2008 and 2009. As of2011, however, global trade had more than recoveredBarriers: The Enablingand was 8.2 percent higher than its 2008 peak. Yetthe geographic composition of that trade has shiftedTrade Index 2012to reflect the divergent growth performance of thedeveloped and emerging economies. In 2008, forexample, emerging economies accounted for only aROBERT Z. LAWRENCEthird of world trade, but in the subsequent three yearsHarvard Universitythey contributed almost 60 percent of the growth seenSEAN DOHERTYin imports of goods and services and 52 percent ofMARGARETA DRZENIEK HANOUZ the growth seen in exports. This rise reinforced a trendWorld Economic Forumalready evident prior to the crisis, and that trend isexpected to become even more important in the future:it is clear that global trade is increasingly concentrated inand among emerging economies.A second striking feature of the evolution apparentin todays global trade environment is the changing waytrade is organized. Traded commodities are increasinglycomposed of intermediate products. Reductionsin transportation and communication costs andinnovations in policies and management have allowedfirms to operate global supply chains that benefit fromdifferences in comparative advantage among nations,both through international intra-firm trade and throughnetworks that link teams of producers located in differentcountries. Trade and foreign investment have becomeincreasingly complementary activities. Awareness ofthese chains has been heightened by eventssuchas the tsunami in Japan, which affected supply chainsin the automotive industry and in electronics, and thefloods in Thailand, which impaired a substantial portionof global hard-drive productionthat occurred in 2011.Increasingly, countries specialize in tasks ratherthan products. Value is now added in many countriesbefore particular goods and services reach their finaldestination, and the traditional notion of trade asproduction in one country and consumption in another isincreasingly inaccurate. As the World Economic ForumsGlobal Agenda Council on the Global Trade Systemelaborates in Chapter 1.2 of this Report, the growingimportance of these chains has major implicationsfor both how we understand world trade and how wepromote it. In particular, conventional methods of trademeasurement may double- and triple-count products asthey pass along the chains, which explains in part whythese numbers are often far greater and more volatilethan data based on value-added. Policies such as thoseconcerned with rules of origin that require productionin particular countries to be eligible for preferentialagreements also need to be rethought. Policies thatemphasize trade facilitation should receive high priority.Taken together, the growing role of developingcountries and the emergence of global supply chainsThe authors would like to thank Roberto Crotti and Caroline Ko from theWorld Economic Forum for their excellent contribution to the quantitativeanalysis on which this chapter is based. The Global Enabling Trade Report 2012 | 3@ 2012 World Economic Forum 25. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012help explain why the global trading system currentlyhortatory and vague and more symbolic and diplomaticpresents some strikingly contrasting pictures. Judged than practical in character.by the state of the Doha Round, the system seems to These changes in the locus of global growth andbe in serious trouble. Despite the repeated lip service the nature of global production have increased thepaid by the Group of Twenty (G-20) leaders instructingrelevance of the measures captured by our globaltheir negotiators to reach an agreement, the Round is Enabling Trade Index. The Index is based on theclearly at an impasse. It has missed every deadline thatrecognition that there is a complementary set of policieshas been set, and the prospects for resolution are bleak. that enable trade. These policies include not only thoseAlthough the causes for the impasse are complex, onethat reduce border obstacles, such as tariffs and non-key issue is the reluctance of the advanced economies tariff barriers, to improve market access, but also ato support an agreement that fails to provide them with broader set of policies that facilitate trade with moresignificantly increased access to the large emergingefficient border administration, better infrastructureeconomies that will be the markets of the future. A and telecommunications, and improved regulatory andbyproduct of the impasse has been an unfortunate failuresecurity regimes that secure property rights and reduceto implement the relatively uncontroversial agreement ontransactions costs. Policies that enable trade work bothtrade facilitation. ways. Low trade costs are important, not only for theYet, despite the Doha impasse, in many respects welfare of the country that implements the policies butthe system is vibrant and thriving. The dispute settlementalso for the welfare of those that trade with it. Outsiderssystem at the World Trade Organization (WTO) is benefit from such policies in two ways. First, as countriesworking well, with active participation by both developed lower their export costs they can provide foreignersand developing countries. Partly because, with only a with cheaper imports. Second, as they reduce theirfew exceptions, they are integrated in supply chains, trade costs, they provide foreigners with more exportcountries have shown great forbearance by not raising opportunities. Thus, whether countries are makingtrade barriers in the face of the global financial crisis.improvements in enabling trade is not simply a matter ofIn the case of most developing countries, this restraintparochial or national interest, but is also significant forhas involved maintaining applied tariff rates at levels far the international community at large. This is especiallylower than actually required by WTO rules under their true for countries with large and growing markets.tariff bindings. Strikingly, especially in the advanced As our Index shows, not unexpectedly, developedeconomies, the demand for protection throughcountries generally rank higher in enabling trade thanmeasures such as anti-dumping has been remarkably emerging ones. They have lower trade costswithrestraineda development that can be explained by the noteworthy exceptions in labor-intensive manufacturinggrowing integration of domestic and foreign production. (e.g., clothing and agriculture)not only because theirBut countries are not merely avoiding the erectiontariffs are low, but also because economic developmentof new barriers. They are also actively taking steps to itself is intimately associated with enhanced capabilitiespromote trade. In addition to unilateral liberalization in administration, infrastructure and telecommunications,in several nations, new preferential agreements are and regulation. When the developed countries were thebeing concluded with great vigor. Between January dominant actors in world trade, from a global standpoint2008 and March 2012, the WTO was notified of 61 ofthe issues highlighted by our Index were somewhat lessthese agreements. Of these, only 5 were between two relevant (although they were very important for individualdeveloped countries, 32 involved both developed and developing countries). But as developing countriesdeveloping economies, and 24 were between developingbecame the drivers of trade, these issues are bound tocountries.assume increasing significance.A cumulative process has been set in motion asIn the decade to come, the consensus forecastscountries compete to become export platforms andare for strong global growth centered on developingincrease their role in the supply chains. Because somecountries. With slow-growing demand in the advancednations offer foreign and domestic investors favorablecountries, the emergence of large middle classes indomestic production environments combined withChina and India will drive global demand. It is alsopreferential access to foreign markets, others feel expected that Chinese growth will shift away frompressured to do the same. This has led to agreementsexports and toward domestic demand. The opportunitiesin which countries agree to rules (e.g., for investment,these developments will provide for other countries willcompetition policies, or intellectual property protection)in no small measure depend on how well developingand market openings (in goods and services) that go countriessuch as the BRICs,1 with their large andconsiderably further than the agreements they havegrowing marketsenable trade within their nationalmade under the umbrella of the WTO. As we have noted, borders.a second key driver of the rise in preferential agreementsIn addition to changing demand patterns, ashas been flourishing South-South trade. In response,Chinese wages rise and Chinas currency appreciates,developing countries have been signing agreements some of the supply chains currently based in China arebetween themselves to regularize and promote theirseeking to relocate. This creates opportunities for less-interactions. These South-South agreements have varieddeveloped countries in Asia, Africa, Latin America, andin depth and scope: some are quite comprehensiveelsewhere to service international markets by becomingand detailed and likely to stimulate trade, but others arepart of these manufacturing supply chains. Companies4 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum 26. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012Box 1: The most problematic factors for tradeThis years edition of The Global Enabling Trade Reportthe responses are reported in the country/economy profilesincludes an important innovation that aims to shed additionalat the end of the Report. In addition, the results can providelight on the obstacles that businesses face at the national levelinsight about the most important bottlenecks to trade globallywhen exporting and importing.and inform multilateral trade negotiations about priority areas Two questions that capture the most problematic factors for liberalization. As shown in Figure 1, the most importantfor exporting and importing were added to the Executivebottleneck to increasing exports is difficulty in identifyingOpinion Survey 2011. Respondents were asked to choose andpotential markets and buyers; this is considered far morerank in order of importance from a list of factors (ten factorsimportant than the next-placed factor, insufficient accessfor exports and eight for imports) those five that they believeto trade finance. Other factorssuch as transport costshave the highest impact on the ease of exporting and importing or burdensome customs procedures and corruptionplayin the country in which they operate. For exports we includeda much less important role. On the import side (Figure 2),a wide range of factors that may inhibit export development, burdensome customs procedures emerge as the second mostsuch as supply-side constraints, technical requirements, rules ofimportant impediment to trade, nearly on a par with tariffsorigin, and administrative procedures. The import factors mirror and non-tariff barriers. The cost of international transportationthe structure of the Enabling Trade Index (ETI) to the extentis the third most important factor; crime and theft, as wellpossible, thus providing an indication of the importance of theas telecommunications, all play a much smaller role. Thispillars of the ETI for the trading environment of these countries. result underlines not only the importance of trade facilitation These two questions identify the most important at multilateral and bilateral levels, but also the potential ofbottlenecks to trade and supply chain connectivity acrosscountries for facilitating trade through practical measures withinthe economies covered in the Executive Opinion Survey, and their governments purview. Figure 1: The most problematic factors for exporting Identifying potential markets and buyers Access to trade nanceAccess to imported inputs at competitive prices Inappropriate production technology and skillsTechnical requirements and standards abroad Difculties in meeting quality/quantity requirements of buyers High cost or delays caused by international transportation High cost or delays caused by domestic transportation Burdensome procedures and corruption at foreign bordersRules of origin requirements abroad0 5 1015 20 Percent Source: World Economic Forum, Executive Opinion Survey 2011; authors calculations. Notes: From a list of ten factors, respondents were asked to select the five most problematic for exporting in their country and rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. The figure shows the average across the 142 economies covered by the World Economic Forums Executive Opinion Survey (because of data shortages, only 132 of these are covered in the ETI). Figure 2: The most problematic factors for importingTariffs and non-tariff barriers Burdensome import procedures High cost or delays caused by international transportationCorruption at the borderHigh cost or delays caused by domestic transportation Domestic technical requirements and standardsCrime and theftInappropriate telecommunications infrastructure0 5 10 1520 25 Percent Source: World Economic Forum, Executive Opinion Survey 2011; authors calculations. Notes: From a list of eight factors, respondents were asked to select the five most problematic for importing in their country and rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. The figure shows the average across the 142 economies covered by the World Economic Forums Executive Opinion Survey (because of data shortages, only 132 of these are covered in the ETI). The Global Enabling Trade Report 2012 | 5 @ 2012 World Economic Forum 27. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012considering relocation will undoubtedly take labor costsStena AB, Swiss International Air Lines, Transnet, UPS,in these countries into account. But at least as importantVolkswagen, and AB Volvo.will be the other factors that affect trade costs, including The ETI measures the extent to which individualoperating efficiency as measured by factors such as economies have developed institutions, policies, andcustoms administration, infrastructure, logistics, and theservices facilitating the free flow of goods over borderscountries regulatory and security environments. Thus and to destination.2 The structure of the Index reflectsthe ability of countries to reap gains by participating inthe main enablers of trade, breaking them into fourthese supply chains will in no small part depend on their overall issue areas, captured in the subindexes:performance in enabling trade. 1. The market access subindex measures the extentIn sum, we expect the adoption of policies that to which the policy framework of the countryenable trade will become increasingly important in welcomes foreign goods into the economythe years to come, not only for enhancing economic and enables access to foreign markets for itsdevelopment in individual countries but also for exporters.generating prosperity in their trading partners. Our hopeis that by highlighting the importance of these trade2. The border administration subindex assesses thedeterminants, and by providing ways to measure the extent to which the administration at the bordersituation that allow for benchmarking, we can assist facilitates the entry and exit of goods.countries to identify the areas that need to be improved 3. The transport and communications infrastructurefor them to take advantage of the benefits of full subindex takes into account whether the countryparticipation in the global supply chains. has in place the transport and communicationsUSE OF THE GLOBAL ENABLING TRADE REPORTinfrastructure necessary to facilitate the movementThe Global Enabling Trade Report has become a widely of goods within the country and across theused reference since its introduction in 2008. It formsborder.part of the toolbox of many countries in their efforts 4. The business environment subindex looks atto increase trade, and it helps companies with their the quality of governance as well as at theinvestment decisions. The Report is the basis for many overarching regulatory and security environmenthigh-level public-private dialogues facilitated around the impacting the business of importers andworld each year by the World Economic Forum. These exporters active in the country.dialogues focus on practical steps that can be taken byboth governments and the private sector to overcomeEach of these four subindexes is composed in turnparticular trade barriers in a country or region. In building of a number of pillars of enabling trade, of which therea coalition for change, it has become evident thatare nine in all. These are:establishing an open borders mindset in a joint effort 1.Domestic and foreign market accessto tackle obstacles to the movement of both goods and 2.Efficiency of customs administrationpeople is often the most effective approach. 3.Efficiency of import-export procedures To assist these practical dialogues, this year the 4.Transparency of border administrationReport introduces for each country a set of direct 5.Availability and quality of transportmeasurements of the factors seen as the mostinfrastructureproblematic for exporting and importing (see Box1). 6.Availability and quality of transport servicesIn response to user requests, the research team has 7.Availability and use of ICTsembarked on a multi-stakeholder effort to relate a 8.Regulatory environmentfinancial cost to the barriers and illustrate the financial 9.Physical securitycase for easing them. The domestic and foreign market access pillarTHE ENABLING TRADE INDEXmeasures the level of protection of a countrys markets,The Enabling Trade Index (ETI) was developed within thethe quality of its trade regime, and the level of protectioncontext of the World Economic Forums Transportationthat a countrys exporters face in their target markets.Industry Partnership program, and was first publishedThe measures taken into account include averagein The Global Enabling Trade Report 2008. A numberapplied tariffs but also the share of goods imported duty-of Data Partners have collaborated in this effort: thefree, the variance of tariffs, the frequency of tariff peaks,Global Express Association (GEA), the International Airthe number of distinct tariffs, and the like. ProtectionTransport Association (IATA), the International Tradein foreign markets is captured by tariffs faced, but alsoCentre (ITC), the United Nations Conference on Tradethe margin of preference in target markets negotiatedand Development (UNCTAD), The World Bank, the Worldthrough bilateral or regional agreements or granted inCustoms Organization (WCO), and the WTO. We havethe form of trade preferences such as the Everything butalso received significant input from companies that areArms (EBA) program.3part of this industry partnership program, namely Agility, The efficiency of customs administration pillarBrightstar, Deutsche Post DHL, DNB Bank ASA, FedExmeasures the efficiency of customs procedures asCorp., A.P. Mller Maersk, the Panama Canal Authority,perceived by the private sector, as well as the extent of6 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum 28. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012Figure 1: Composition of the four subindexes of the ETI Transport and MarketBordercommunications access administration infrastructure Domestic and foreign Efficiency of customsAvailability and quality of market accessadministrationtransport infrastructure DestinationBorder Efficiency of import- Availability and quality ofexport procedures transport servicesTransparency of Availability andborder administration use of ICTs Businessenvironment Subindex Regulatory Physical Pillar environment securityservices provided by customs authorities and relatedof shipments in reaching destination, general postalagencies. efficiency, and the overall competence of the localThe efficiency of import-export procedures pillar logistics industry (e.g., transport operators, customsextends beyond customs administration and assessesbrokers). This pillar also takes into account the degree ofthe effectiveness and efficiency of clearance processes openness of the transport-related sectors as measuredby customs as well as related border control agencies,by countries commitments to the General Agreement onthe number of days and documents required to import Trade in Services (GATS).and export goods, and the total official cost associatedGiven the increasing importance of informationwith importing as well as exporting, excluding tariffs andand communication technologies (ICTs) for thetrade taxes.management of shipments, as well as the central roleGiven the significant hindrance that corruption these technologies play in facilitating customs clearancecan provide in trade, the transparency of borderand communication, the availability and use of ICTsadministration pillar assesses the pervasiveness of pillar includes the penetration rates of these toolsundocumented extra payments or bribes connected withincluding mobile phones, Internet, and broadbandinimports and exports, as well as the overall perceived each country. We add measures of the perceived use ofdegree of corruption in each country. Internet by business for buying and selling goods and anThe availability and quality of transport index of the online readiness of government services.infrastructure pillar measures the state of transport The regulatory environment pillar captures theinfrastructure across all modes of transport in eachextent to which the countrys regulatory environment iscountry, as demonstrated by the density of airports conducive to trade. Included are indicators that captureand the percentage of paved roads as well as thethe general quality of governance, but also indicatorsextent of transshipment connections available toconcerned with openness to foreign participation, whichshippers from each country. Also captured is the qualitycovers the ease of hiring foreign labor in the countryof all types of transport infrastructure, including air, rail,(important for companies moving goods across borders),roads, and ports.4the extent to which the policy environment encouragesThe availability and quality of transport servicesforeign direct investment, the availability of trade finance,pillar complements the assessment of infrastructure and an index of multilateral treaties signed by the countryby taking into account the amount and the quality ofpertaining to trade.services available for shipment, including the quantity The security environment is of great importanceof services provided by liner companies, the ability to for ensuring the delivery of goods to destination withouttrack and trace international shipments, the timeliness major frictions. In this context, the physical securityThe Global Enabling Trade Report 2012 | 7@ 2012 World Economic Forum 29. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012(such as IATA, the ITC, ITU, UNCTAD, the UN, and theBox 2: Non-tariff measuresWorld Bank). The Survey is carried out annually bythe World Economic Forum in all economies coveredNon-tariff measures have become a major impediment to by our research. It captures the views of top businessinternational trade and market access, and are of particularexecutives on the business environment and providesconcern to exporters and importers. Non-tariff measures unique data on many qualitative aspects of the broaderrefer to a wide range of requirements and regulations thatbusiness environment, including a number of specificcountries must apply to import and export goods, andissues related to trade. For detailed descriptions of all theinclude technical regulations and customs procedures.Non-tariff measures also reflect the increasing sophisticationindicators included, please see the Technical Notes andof markets, as consumers demand more informationSources at the end of this Report.about the products they buy. Although non-tariff measuresThe nine pillars are grouped into the fourmay be introduced for legitimate reasons, they may also subindexes described above,5 as shown in Figure1,distort trade by reducing export opportunities and divertingand the overall score for each country is derived as antrade to those suppliers best placed to comply with theunweighted average of the subindexes. The details of therequirements. It is therefore vital to capture non-tariffcomposition of the ETI are shown in Appendix A.measures in the Enabling Trade Index (ETI) to ensure thatthe Index presents an accurate view of countries abilities to As econometric tests of the ETI 2009 demonstrated,enable trade. the ETI has explanatory power with respect to a However, given that non-tariff measures are oftencountrys trade performance.6 The analysis hasqualitative in nature and frequently do not relate to trade shown that a 1 percent increase in the ETI score indirectly, compiling adequate data to capture the tradethe exporting country is associated with an increaserestrictiveness of these measures is a major undertakingof 1.7 percent in that countrys exports. This effect isfraught with many difficulties. Until recently, the Trainseven higher with respect to the importing country: thedatabase compiled by the United Nations Conference onTrade and Development (UNCTAD) (http://r0.unctad.org/ model predicts that a 1 percent improvement in the ETItrains_new/database.shtm#) was the only source that score would lead to a 2.3 percent rise in imports. Takencaptured non-tariff measures. This database was usedtogether, these two effects predict that a 1 percentby the International Trade Centre (ITC) for calculating the increase in the average ETI score of any given countryrelated indicator (variable 1.02) until the 2010 edition of pair would be associated with a 4 percent increase inthis Report. However, the data were not being updatedbilateral trade, all else being equal.regularly. Currently the ITC, UNCTAD, and the World Bankare engaged in a multi-agency initiative with the objectiveCHANGES TO THE INDEX METHODOLOGYof increasing transparency and understanding about non-The Index methodology