Bribes and hidden trade barriers are costing Apec member states at least 148 billion US dollars in lost economic activity, according to a World Bank report published Monday.
The report, released for an Asia-Pacific Economic Cooperation (Apec) summit in Sydney, said some poorer countries could increase trade by a quarter to 50 percent if they could eliminate bad practice. At the same time, it added, companies also badly need more transparent and predictable rules to reduce the uncertainty of trading.
The World Bank said Apec economies generally had a good record on reducing regular trade barriers such as tariffs but called for more action to address "hidden" barriers and "unofficial payments" or bribes. The report's co-author John Wilson said removing the problem would benefit poorer Apec countries the most.
"The Philippines' trade could expand by 25 percent, trade in Vietnam could expand by 50 percent," Wilson told reporters. In comparison, Australian trade would rise less than four percent. The report is important because of the sheer size of Apec, whose economies account for 56 percent of world gross domestic product and nearly half global trade.
They include China, Japan and the United States as well Indonesia, Malaysia and poorer nations such as Papua New Guinea. Studies showed that improving transparency would save at least 148 billion dollars, equivalent to 7.5 percent of Apec's trade in 2004.
The World Bank analysis said companies might need to pay bribes to customs agents to ease import and export transactions, adding to the overall cost of doing business. "Regular traders may need to engage in such negotiations repeatedly, with a variety of different personnel," the report said.
"The outcome of the negotiations, whether or not a bribe is required and its amount, may differ in each case, thereby leading to unpredictability for private actors (companies) as to the level of effective costs they will face." It said there were also hidden trade barriers, separate from the formal network of tariffs and quotas, that added to the costs of doing business.
"In many economies, the flow of goods and services remains hindered by complicated customs regulations, insufficient use of modern technology in customs, the lack of handling and transportation infrastructure, or by other shortcomings," it said.
"In economies which still face problems facilitating trade, traders must consider additional costs when selling or buying goods and services on international markets." Australian Trade Minister Warren Truss said the report showed there was more Apec could do to open up trade and investment within the region.
"Greater transparency and predictability boost trade and reduce costs to business and ultimately to the consumer," Truss said. Truss also released a separate report that found removing restrictions on investment would help Apec's poorer nations boost economic activity, thereby reducing poverty.
The report, prepared for Apec by the Canberra-based Centre for International Economics, found that restrictions on investment were greater in lower-income Apec countries.
It said they included excessive regulation, unclear property rights, poor legal systems and inadequate competition laws. "They increase costs and risks and limit business competition, leading to lower productivity and growth," Truss said.
"The report concludes that if investors in Apec economies faced fewer barriers, investment would be higher and of a better quality, economic growth would rise and the incidence of poverty across Apec would fall."