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The study examines trade costs and global value chains as a special chapter for East Asia and Pacific Update of World Bank. It covers border and behind-the-border trade costs, value chains, and new database measures of international trade. It finds that the region’s developing economies suffer from trade costs well above those of the newly industrialized countries and of developed economies, owing to the large number of inefficient border and behind-the-border procedures. Countries have been adding to their stock of non-tariff measures, which now account for as much as 90 percent of (non-transportation) trade costs.

It also finds that the World Trade Organization’s new Agreement on Trade Facilitation has the potential to significantly reduce East Asia’s trade costs along the entire supply chain, increasing regional gross domestic product (GDP) by 2.7 percent and employment by 1.2 percent. The ATF reform agenda can therefore have far-reaching effects on private sector development, especially for small businesses that need greater transparency and simplification of procedures to enable them to readily access regional and global value chains.