A new APEC study has found that reducing unnecessary cross-border administrative costs is becoming more and more important in expanding regional trade.
The study reveals that if APEC economies were to reduce transaction costs by 5% over the next five years, APEC's total GDP would be likely to increase by nearly 1%.
The 'Benefits of Trade and Investment Liberalization and Facilitation (TILF) in APEC' report highlights the cost to regional business imposed by extraneous customs procedures, incompatible industry standards and impediments on the mobility of business people.
Compiled over a two-year period, the report is being presented to Ministers and Leaders from APEC's 21 economies who are meeting this week in Los Cabos, Mexico.
Dr. Ahn Choong Yong, Chair of the APEC Economic Committee, said that as traditional trade barriers are reduced, facilitating the removal of administrative impediments both to trade and trade facilitation and liberalisation takes on greater importance.
"While the reduction of tariffs in the Asia-Pacific region has been significant in recent years, the results of trade facilitation appear to be increasingly important in the region and are mutually reinforcing each other" Dr. Ahn said.
"Reducing red tape will further open trade between our economies and make it more cost-effective for small and medium enterprises to trade across borders."
On the issue of customs procedures Dr. Ahn said there was a balancing act required between cutting red tap and ensuring legitimate social protections were maintained.
We must seek ways to reduce inefficiencies that needlessly slow down the movement of goods, services and people across our borders. At the same time we must recognize and respect the regulations that are in place to protect the social health of regional economies and people.
"Increased trade facilitation will bring about closer communication and the development of consistency of customs procedures between economies. Improved trade facilitation will reduce the time it takes to move a product from the factory in one economy to the marketplace in another."
The area of standards and product certification has also been highlighted as a problem for regional businesses wishing to trade beyond their own economic borders.
"Creating common standards and certification criteria will further reduce the red tape of trading between economies," Dr. Ahn said.
In doing so it is hoped that once a product has been certified in one economy, that certification will be recognized in all APEC economies.
"Delays in verification procedures create unnecessary delays for business and in the end wastes money that could be better used for reinvestment and creating new jobs."
The study also revealed immigration procedures for business people travelling between APEC economies added unnecessary delays and frustrations to conducting cross-border business.
Almost half of the business people consulted felt that inadequate travel documentation processes obstructed business mobility.
"Complex and time consuming application procedures for business visas, work permits and residency permits were also found to be major impediments to business flexibility."
Dr. Ahn said the net benefit from breaking down barriers and impediments to trade would become apparent through closer communication and working relations between regional economies and the business community.
The TILF study was initiated at the request of Ministers and Leaders from APEC member economies. The study was also strongly endorsed by business leaders who wish to see APEC take a stronger role in promoting a more free and open business environment in the region.
"There are great opportunities for big, medium and small businesses in all APEC economies. Ultimately expanded trade will also create more jobs and ensure greater personal prosperity for the people who live in all APEC economies."