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THE
World Economic Forum (WEF) suggests lifting
supply chain barriers to boost global trade.
Its recent report entitled "Enabling
Trade – Valuing Growth Opportunities"
indicates that diminishing supply chain
barriers "could increase world GDP
six times more than merely eliminating tariffs".
The
report identifies four key areas that impact
on the freedom of the global supply chain—market
access, border administration, transport
and communications infrastructure, and business
environment.
Additionally,
the report estimates that by reducing supply
chain barriers global GDP could increase
by US$2.6 trillion or 4.7 per cent and exports
by $1.6 trillion or 14.5 per cent.
In
contrast, removing tariffs could only raise
global GDP by $0.4 trillion or 0.7 per cent,
and exports by $1.1 trillion or 10.1 per
cent...
Referring
to maritime shipping, the report says cabotage
– the movement of goods between two points
within a country's borders – complicates
logistics and raises both the costs and
environmental impact of delivering those
goods.
According
to the figures from maritime analyst Alphaliner,
domestic cabotage trades worldwide absorb
a total of 550,000 TEU in container shipping
capacity.
Among
the top 10 countries with a significant
cabotage fleet, seven are Asian countries.
Except
for the US and Japan, the rest are all emerging
countries including China, Indonesia, Brazil,
the Philippines, Malaysia, India, Vietnam
and Russia.
China
has the largest cabotage fleet, accounting
for 45 per cent of the total worldwide figure.
Indonesia follows with 24 per cent, while
the US comes next with 10 per cent and Brazil
the fourth with nine per cent.
The
vessels involved all fly the flags of the
countries they serve, with exemptions under
some restrictions.
Though
cabotage policies are justified under the
banner of national security, the report
criticizes this argument stating that national
security is simply a pretext used to disguise
the real issue, protectionism.
"Although
the historic justification for these restrictions
has been national security, the clear intent
of many cabotage regulations today, particularly
those affecting transportation of goods
by water, is to protect local industries
and labour interests," said the WEF
report.
The
report urges the US and China, the two biggest
economies in the world, to set an example
for other nations by abolishing some restrictions,
though it believes "neither country
is likely to deregulate unilaterally".
The
WEF says the US Merchant Marine Act of 1920,
better known as the Jones Act, and China's
international relay regulations are typical
examples.
These
cabotage policies damage local economies
and add considerable costs to companies
and consumers as a result of lacking competition.
As
the US Jones Act requires all ships to be
US built, while most other countries do
not have a similar requirement, it has become
"the most restrictive of global cabotage
laws", says the WEF.
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