Small and Medium Size Businesses Call on Asia-Pacific Governments to Reduce Hidden Trade Barriers

Beijing forum says reducing red tape could increase trade and help in crisis recovery

Reducing the red tape and complex export procedures in trade should be a major priority for governments in attempts to revive the small and medium size enterprises (SME) that have been hard hit by the current global crisis. This was one of the major recommendations discussed in Beijing at a regional policy forum on trade facilitation and SMEs.

The forum, which was held from 20-22 May, brought together governments, enterprises, and trade facilitation experts and practitioners to discuss how to help the SMEs in the Asia-Pacific region to deal with the current crisis.

“The hidden costs of trade are high – in some cases up to 15 per cent of the value of goods traded,” Ravi Ratnayake, Director of the Trade and Investment Division of the United Nations Economic and Social Commission for Asia- Pacific (ESCAP) told the forum. “This is particularly hard for SMEs because they simply do not have the capacity to deal with complex and opaque procedures.”

John S. Wilson, Lead Economist at the World Bank’s Research Department noted that, “trade facilitation reform matters a great deal to development. Out of crisis is opportunity – the opportunity to reform now for the future. World Bank research estimates, for example, gains of over $400 billion in global GDP with increased transparency in trade in the Asia Pacific Economic Cooperation bloc alone.”

The recommendations that have been discussed during the three day forum include accelerating the computerization and automation of trade documentation and procedures to reduce the time, cost and uncertainties associated with moving goods across borders. The special needs of SMEs for assistance in understanding and completing export procedures clearly and succinctly must also be addressed.

“Recent research at ESCAP finds that a 5 per cent reduction in the cost associated with preparing export documents and moving goods from the factory to the ship may lead to increase in exports of 4 per cent or more,” said Mr. Ratnayake.

In discussing the impact of the financial crisis on Chinese SMEs that are heavily dependent on foreign trade, Yu Ping, Vice Chairman of China Council for the Promotion of Trade and Investment (CCPIT) said, “To meet the challenge, it is of critical importance that governments come up with practical and effective policy packages that facilitate foreign trade and reinvigorate SMEs.”

Participants noted that, as SMEs are typically not well represented in policy making forums, and that SMEs in different industries and countries face different constraints and bottlenecks, it is important to establish strong institutional mechanisms for early identification of problems.

The forum was organized by ESCAP – the regional arm of the UN - and World Bank in collaboration with CCPIT.