The Global Enabling Trade Report 2009

August 31 2009

East Asian economies – Singapore and Hong Kong SAR – occupy the top two positions in the Enabling Trade Index ranking, followed by Switzerland, Denmark and Sweden, according to The Global Enabling Trade Report 2009, released today by the World Economic Forum. Canada, Norway, Finland, Austria and the Netherlands complete the top-10 list.

The Global Enabling Trade Report 2009 measures and analyzes institutions, policies, and services enabling trade in national economies around the world, highlighting for policymakers a country’s strengths and the challenges to be addressed. The Report includes the most current data and recent analysis of the factors enabling trade in industrialized and emerging economies, as well as the latest thinking and research from trade experts and industry practitioners.

EXECUTIVE SUMMARY
Launched in the midst of a dramatic slump in world trade that has been driven by declines in overall economic activity, lowered sales, and unwanted inventories, The Global Enabling Trade Report’s assessment of obstacles to trade may seem less acute than before.

However, as businesses take on fewer trading risks, as the psychological barriers to serving new markets mount, and as the trade financing to bridge the time between production and delivery has become harder to obtain, the continued importance of smoothing the path between buyers and sellers and reducing the cost of the transaction itself is evident.

As trade volumes fall and public authorities adopt countercyclical stimulus policies and institutional reform, it is worth remembering the fundamental attributes that govern nations’ ability to benefit from trade, be they market access, border administration, infrastructure, or the business environment.This reminder is particularly timely, as measures of some countries overtly favor domestic industries while other countries impose barriers to trade to protect companies and jobs at home.

Although these measures are not the main driver of the present slump in world trade, the risk of protectionism is still present. By ranking countries according to the barriers to trade they have in place, the Report serves as a reminder both of the risks of protectionism demonstrated in previous downturns and of the widespread prosperity and poverty reduction associated with the expansion of international trade in the years leading up to 2008.

The Report is intended to be a motivator and a foundation for dialogue, providing a yardstick of the extent to which countries enjoy the factors facilitating the free flow of goods, and identifying areas of the Index where improvements are most needed.The contributions from industry and leading international trade organizations highlight current priorities and tools to manage the rapidly changing situation. ...

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Robert Z. Lawrence, Harvard University
Margareta Drzeniek Hanouz, World Economic Forum
John Moavenzadeh, World Economic Forum
© 2009 World Economic Forum

PREFACE
The Global Enabling Trade Report 2009 is being launched at a crucial time for global trade. As overall economic activity has declined and liquidity has become scarce, trade finance has dried up alongside mounting insecurity about the future. According to some estimates, trade volumes have seen a larger decline than during the Great Depression. And as governments have responded through countercyclical policies, calls for protecting local profits and jobs have been on the rise.

Despite pledges to keep markets open, some countries have reverted to protectionist measures. Protectionism is not the cause of the crisis, but it could be one of its most important consequences.When 17 of the G-20 countries acted against their pledge to keep markets open and World Trade Organization (WTO) members increased protection without breaking trade rules, it became apparent that the present global institutions are not able to prevent a larger protectionist backlash if the recession continues. Limiting global trade would not only amplify the current downturn, in the longer term it would also reduce growth—in particular in developing countries—plunging millions of people back into poverty.

In today’s highly interdependent world, recovery will necessitate that countries increase the amount of goods that they purchase from each other, thus spurring demand. Further lowering barriers to trade would support this process, while raising barriers would reduce demand. Against this background, The Global Enabling Trade Report 2009 provides an assessment of the obstacles to trade in 121 countries around the world. At the core of the Report is the Enabling Trade Index (ETI), which has been developed by the World Economic Forum for the purpose of this Report.

Beyond tariffs and quotas, the Index captures barriers to trade related to border administration, infrastructure, logistics, and the business environment, all of which can have a significant effect on trade.The aim of this Report is to provide countries with a yardstick on how they do in terms of enabling trade and to spur discussion among stakeholders about how to improve the situation in order to better benefit from trade. ...

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