Infrastructure and Trade Facilitation in Asian APEC

The sharp decline in trade volume and value during the recent economic crisis has temporarily reduced the urgency of progress on trade facilitation due to lower demand and costs for transportation and reduced waiting times at border crossings. However, as trade is important for the recovery and sustained growth, pressure on transport systems is likely to increase again. The crisis and recovery offer an opportunity for progress on facilitating intra-Asian trade and boosting the region’s contribution to global economic growth. This paper examines trade facilitation among the Asian members of Asia-Pacific Economic Cooperation, and the roles of hard and soft infrastructure in improving its performance. Computable general equilibrium analysis indicates even a modest reduction in trade costs can yield significant gains. Gross domestic product in the region grows and countries’ trading patterns diversify. Of particular policy relevance is that the results vary considerably across bilateral trade routes and commodity categories.