Intra-regional and extra-regional trade within Europe and the CIS countries 6 7 March, 2014 David Gould, Lead Economist Chief Economist Office Europe and Central Asia Region The World Bank 1
Summary CIS countries have been expanding trade outside their region, particularly with Europe Nonetheless, growth of trade as a share of GDP has been sluggish for CIS countries and mainly driven by commodity exports internal structural reform is key, not just trade liberalization Measuring the trade restrictiveness of NTMs by country and region is doable 2
CIS is already trading less inside its region, EU intraregional trade has been fairly constant 3
Correcting for size bias, intra-regional is still highest for CIS, Sub-Saharan Africa, and Europe 4
Moldova s and Georgia s Trade with the EU and ROW has been on the rise 5
Belarus and Ukraine trade more within the CIS, but Ukraine s trade is oil based imports 6
Russia and Kazakhstan trade more outside CIS, but for Kazakhstan this is due to oil exports to EU 7
CIS trade primarily with Russia and EU Country Rank Top Exports Partners (2008-2012) Share of Total Export (%) Rank s Partners Share of Total Import (%) Armenia 1 Russia 20.76 1 Russia 13.15 Armenia 2 Germany 17.03 2 China 9.70 Armenia 3 United States 8.48 3 Ukraine 5.93 Armenia * EU27 39.09 * EU27 26.49 Azerbaijan 1 Turkey 1.88 1 Russia 16.61 Azerbaijan 2 Russia 1.58 2 Turkey 13.41 Azerbaijan 3 Kazakhstan 0.45 3 Germany 8.57 Azerbaijan * EU27 61.32 * EU27 28.40 Belarus 1 Russia 44.79 1 Russia 21.16 Belarus 2 Ukraine 4.64 2 Germany 6.46 Belarus 3 Brazil 3.72 3 Ukraine 4.59 Belarus * EU27 21.75 * EU27 20.79 Georgia 1 Turkey 11.49 1 Turkey 16.73 Georgia 2 Bulgaria 8.23 2 Ukraine 8.97 Georgia 3 United States 7.41 3 Germany 6.73 Georgia * EU27 35.15 * EU27 28.96 Kazakhsta 1 Russia 10.07 1 Russia 25.44 Kazakhsta 2 China 8.51 2 China 14.06 Kazakhsta 3 Turkey 2.31 3 Germany 6.18 Kazakhsta * EU27 46.97 * EU27 22.22 Kyrgyz Re 1 Russia 40.06 1 Russia 21.71 Kyrgyz Re 2 Kazakhstan 18.18 2 China 20.78 Kyrgyz Re 3 China 9.43 3 Kazakhsta 7.77 Kyrgyz Re * EU27 11.57 * EU27 11.16 Moldova 1 Russia 22.97 1 Ukraine 11.33 Moldova 2 Romania 13.11 2 Russia 9.32 Moldova 3 Italy 11.39 3 China 7.62 Moldova * EU27 50.62 * EU27 43.75 Russia 1 Germany 3.96 1 China 15.17 Russia 2 Turkey 3.83 2 Germany 12.15 Russia 3 China 3.10 3 Ukraine 5.51 Russia * EU27 51.21 * EU27 42.16 Ukraine 1 Russia 22.49 1 Russia 11.72 Ukraine 2 Turkey 6.53 2 Germany 8.08 Ukraine 3 Italy 4.27 3 China 7.58 Ukraine * EU27 28.02 * EU27 32.11 8
CIS: resources exports, manufacturing imports Country Rank Top Exports Products (2008-2012) Share of Total Export (%) Rank Top Imports Products (2008-2012) Share of Total Import (%) Armenia 1 Beverages, spirits and vinegar 14.36 1 Oils & products 18.22 Armenia 2 Iron and steel 13.03 2 Boilers, machinery & mechanical appliances 9.29 Armenia 3 Natural/cultured pearls, prec stone 12.88 3 Electrical mchy equip parts thereof 6.74 Azerbaijan 1 Oils & products 94.28 1 Boilers, machinery & mechanical appliances 20.90 Azerbaijan 2 Edible fruit and nuts; peel of citr 0.74 2 Vehicles o/t railw/tramw roll- stock 9.81 Azerbaijan 3 Articles of iron or steel 0.37 3 Electrical mchy equip parts thereof 9.42 Belarus 1 Oils & products 23.44 1 Oils & products 37.75 Belarus 2 Fertilisers 10.34 2 Boilers, machinery & mechanical appliances 10.57 Belarus 3 Vehicles o/t railw/tramw roll- stock 4.18 3 Iron and steel 5.63 Georgia 1 Oils & products 29.17 1 Oils & products 15.74 Georgia 2 Iron and steel 18.68 2 Vehicles o/t railw/tramw roll- stock 9.97 Georgia 3 Ores, slag and ash 8.87 3 Boilers, machinery & mechanical appliances 9.10 Kazakhstan 1 Oils & products 65.33 1 Boilers, machinery & mechanical appliances 16.94 Kazakhstan 2 Iron and steel 5.77 2 Oils & products 11.08 Kazakhstan 3 Copper and articles thereof 4.73 3 Articles of iron or steel 9.40 Kyrgyz Republic 1 Edible fruit and nuts; peel of citr 13.34 1 Oils & products 15.90 Kyrgyz Republic 2 Art of apparel & clothing access 13.16 2 Vehicles o/t railw/tramw roll- stock 8.42 Kyrgyz Republic 3 Edible vegetables and certain roots 11.16 3 Boilers, machinery & mechanical appliances 7.19 Moldova 1 Iron and steel 14.03 1 Oils & products 17.49 Moldova 2 Beverages, spirits and vinegar 9.29 2 Boilers, machinery & mechanical appliances 7.56 Moldova 3 Art of apparel & clothing access 8.19 3 Electrical mchy equip parts thereof 7.50 Russia 1 Oils & products 60.98 1 Boilers, machinery & mechanical appliances 16.99 Russia 2 Iron and steel 5.14 2 Vehicles o/t railw/tramw roll- stock 12.98 Russia 3 Fertilisers 2.29 3 Electrical mchy equip parts thereof 10.84 Ukraine 1 Iron and steel 27.02 1 Oils & products 28.05 Ukraine 2 Oils & products 6.15 2 Boilers, machinery & mechanical appliances 8.96 Ukraine 3 Cereals 5.80 3 Vehicles o/t railw/tramw roll- stock 7.81 9
Overall CIS Trade flows as a share of GDP has increased since 1995 but less so since 2005 10
Trade in the Balkans and EU is slightly more dynamic 11
Resources dominate trade for Balkans but only dominates imports for EU Country Rank Top Exports Products (2008-2012) Share of Total Export (%) Albania 1 Mineral fuels, oils & products 12.43 1 Mineral fuels, oils & products 15.94 Albania 2 Footwear, gaiters and the like 11.03 2 Boilers, machinery & mechanical appliances 7.76 Albania 3 Iron and steel 8.62 3 Electrical mchy equip parts thereof 6.65 Bosnia and Herzegovina 1 Aluminium and articles thereof 9.00 1 Mineral fuels, oils & products 18.66 Bosnia and Herzegovina 2 Mineral fuels, oils & products 8.46 2 Boilers, machinery & mechanical appliances 8.25 Bosnia and Herzegovina 3 Boilers, machinery & mechanical appliances 8.21 3 Vehicles o/t railw/tramw roll- stock 6.14 Croatia 1 Mineral fuels, oils & products 12.78 1 Mineral fuels, oils & products 19.52 Croatia 2 Electrical mchy equip parts thereof 10.10 2 Boilers, machinery & mechanical appliances 10.54 Croatia 3 Boilers, machinery & mechanical appliances 8.69 3 Electrical mchy equip parts thereof 7.45 EU27 1 Boilers, machinery & mechanical appliances 13.75 1 Mineral fuels, oils & products 14.89 EU27 2 Vehicles o/t railw/tramw roll- stock 11.18 2 Boilers, machinery & mechanical appliances 10.98 EU27 3 Electrical mchy equip parts thereof 8.93 3 Electrical mchy equip parts thereof 9.64 Macedonia, FYR 1 Iron and steel 23.46 1 Mineral fuels, oils & products 17.72 Macedonia, FYR 2 Art of apparel & clothing access, not knitted 15.74 2 Iron and steel 8.00 Macedonia, FYR 3 Miscellaneous chemical products 8.41 3 Boilers, machinery & mechanical appliances 6.99 Montenegro 1 Aluminium and articles thereof 37.50 1 Mineral fuels, oils & products 15.25 Montenegro 2 Mineral fuels, oils & products 11.83 2 Boilers, machinery & mechanical appliances 7.71 Montenegro 3 Iron and steel 11.05 3 Vehicles o/t railw/tramw roll- stock 6.69 Turkey 1 Vehicles o/t railw/tramw roll- stock 13.55 1 Mineral fuels, oils & products 11.91 Turkey 2 Boilers, machinery & mechanical appliances 9.05 2 Boilers, machinery & mechanical appliances 11.38 Turkey 3 Art of apparel & clothing access, knitted 8.13 3 Iron and steel 9.02 Serbia 1 Iron and steel 10.46 1 Mineral fuels, oils & products 18.05 Serbia 2 Electrical mchy equip parts thereof 7.18 2 Boilers, machinery & mechanical appliances 9.54 Serbia 3 Boilers, machinery & mechanical appliances 5.55 3 Electrical mchy equip parts thereof 6.69 12 Rank Top Imports Products (2008-2012) Share of Total Import (%)
Major trading partners for Balkans and EU are the EU Country Rank Top Exports Partners (2008-2012) Share of Total Export (%) Rank Top Imports Partners (2008-2012) Share of Total Import (%) Albania 1 Italy 33.47 1 Italy 28.68 Albania 2 Greece 5.37 2 Greece 12.61 Albania 3 China 5.37 3 China 6.75 Albania * EU27 53.72 * EU27 63.17 Bosnia and Herzegovina 1 Croatia 15.63 1 Croatia 15.26 Bosnia and Herzegovina 2 Italy 13.41 2 Germany 11.11 Bosnia and Herzegovina 3 Serbia 12.60 3 Serbia 10.06 Bosnia and Herzegovina * EU27 57.94 * EU27 47.00 Croatia 1 Italy 17.05 1 Italy 16.30 Croatia 2 Bosnia and Herzegovina 14.19 2 Germany 12.98 Croatia 3 Slovenia 10.39 3 Russia 8.88 Croatia * EU27 61.66 * EU27 62.45 EU27 1 Germany 12.78 1 Germany 13.37 EU27 2 France 7.47 2 China 7.29 EU27 3 United States 7.01 3 Netherlands 6.32 EU27 * EU27 64.59 * EU27 58.23 Macedonia, FYR 1 Germany 24.57 1 Germany 10.18 Macedonia, FYR 2 Italy 9.24 2 Russia 9.79 Macedonia, FYR 3 Bulgaria 9.08 3 Greece 8.96 Macedonia, FYR * EU27 68.51 * EU27 53.24 Montenegro 1 Serbia 28.51 1 Serbia 26.75 Montenegro 2 Italy 14.41 2 Greece 7.37 Montenegro 3 Greece 13.02 3 Germany 7.13 Montenegro * EU27 51.94 * EU27 38.84 Turkey 1 Germany 12.43 1 Russia 12.26 Turkey 2 United Kingdom 7.56 2 Germany 9.42 Turkey 3 France 6.60 3 China 8.80 Turkey * EU27 56.05 * EU27 38.03 Serbia 1 Italy 11.17 1 Russia 13.05 13
What are the bilateral tariff and non-tariff barriers to trade? Methodology based on a study we did for South Asia (Kee, 2013) What we did: Undertook a large survey in the 39 countries to carefully account for all NTM barriers. Tariffs (for the most part) are easier to observe. Utilizing global trade data (over 5000 goods) estimated the impact of tariff and non-tariff barriers on bilateral trade flows. 14
Estimation of Ad Valorem Equivalent of NTMs Let m nij denote the quantity imported, then using the gravity model m nij =exp(α nij +ε nij t nij +β nij NTM1 nij + µ nij NTM2 nij +u nij ) (1) NTM1 nij is a dummy on SPS and TBT measure, NTM2 nij is a dummy on non-sps and non-tbt measure, t nij are tariffs, and α nij is the standard gravity model variables: α nij = a n + a n1 ln(gdp i )+a n2 ln(gdp j )+a n3 ln(distance ij )+ +a n4 common_border ij + +a n5 landlock i +a n6 landlock j (2) Then we can calculate the ad valorem equivalent of the NTMs as: AVE1 nij =(exp(β nij )-1)/ε nij (3) AVE2 nij =(exp(µ nij )-1)/ε nij (4) where ε nij is the bilateral import elasticity of good n between country i and j 15
Estimates of AVE of NTMs, and its Trade Impacts SPS or TBT measure non- SPS or non- TBT measure Country NTM Coverage Percent of Goods with Binding NTM Ad valorem equivalent of avg. NTM Average estimated NTM ad valorem rate NTM Coverage Percent of Goods with Binding NTM Ad valorem equivalent of avg. NTM Average estimated NTM ad valorem rate ARG 52.1 23.1 1.4 6.1 87.1 46.8 2.5 5.5 CHL 37.8 18.0 1.2 7.4 15.3 8.5 0.5 5.2 ECU 27.4 14.8 1.1 8.7 34.3 18.6 1.3 7.3 EGY 93.4 35.9 1.7 4.8 43.7 19.5 1.4 6.8 EUN 84.7 18.5 0.5 3.3 10.4 2.0 0.2 8.5 GTM 23.0 10.9 0.8 8.0 95.6 60.3 2.7 5.0 HND 95.6 53.7 2.0 4.3 95.6 64.4 3.1 5.6 IDN 32.5 14.7 0.8 5.1 24.6 10.2 0.7 6.4 JPN 39.0 13.2 0.3 2.7 8.7 3.4 0.1 3.6 KAZ 40.6 19.2 1.1 7.1 33.0 18.5 0.7 4.1 KEN 86.9 34.3 1.6 5.0 57.3 24.8 1.2 5.5 KHM 14.8 6.1 0.4 6.6 29.4 17.0 0.8 5.3 LBN 12.4 4.2 0.3 7.0 6.9 2.1 0.1 4.8 MEX 43.1 17.6 0.9 3.8 34.9 16.4 0.9 5.2 MUS 33.0 8.8 0.1 1.6 14.7 3.5 0.0 1.4 NAM 49.4 28.0 1.3 5.7 49.7 32.0 1.8 7.3 NIC 94.8 51.3 2.4 5.5 92.5 54.5 3.0 10.7 PER 6.4 3.8 0.2 5.3 0.9 0.8 0.1 10.7 UGA 95.0 53.3 2.2 4.3 94.9 65.1 3.5 6.2 URY 6.9 3.9 0.4 8.3 0.2 0.3 0.0 4.1 VEN 31.0 13.7 1.0 7.6 34.0 17.7 1.2 7.5 AFG 17.6 8.9 1.0 20.5 25.3 9.9 0.5 4.4 BGD 12.3 5.9 0.4 6.3 83.0 43.4 2.7 6.7 IND 100.0 41.8 2.0 4.6 96.7 40.2 2.3 5.7 LKA 96.7 39.0 1.7 4.6 96.7 49.0 2.7 6.2 NPL 96.6 38.4 1.9 5.3 96.6 51.7 3.1 6.6 PAK 36.0 17.2 1.2 6.4 96.6 51.7 3.0 6.1 Average 41.0 18.2 1.0 6.8 44.8 24.0 1.3 6.0 16
Estimating OTRIs The OTRI captures the trade policy distortions that each country imposes on its import bundle. It measures the uniform tariff equivalent of the country tariff and non-tariff barriers (NTB) that would generate the same level of import value for the country in a given year and implicitly defined by: OTR I i = n m ni ε ni T ni / n m ni ε ni (5) where m ni is the import value of good n in country i evaluated at exogenous world prices, T ni is the overall level of protection that country i imposes on imports of good n, ε ni is the import demand 17
Estimates of OTRIs, and its Trade Impacts Country Overall Trade Restr. OTRI of the AVE of OTRI of the AVE of non- OTRI based on Index SPS and TBT SPS and non- TBT Tariff ARG 5.8 0.3 0.6 4.9 CHL 6.2 0.1 0.0 6.0 CHN 2.8 0.3 0.2 2.4 COL 5.8 0.0 0.1 5.7 CRI 2.3 0.4 0.2 1.7 ECU 3.5 0.4 0.4 2.8 EGY 5.4 1.3 0.5 3.6 EUN 1.8 0.5 0.0 1.3 GTM 5.4 0.6 1.6 3.2 HND 9.4 0.9 1.8 6.6 IDN 1.8 0.1 0.1 1.7 JPN 0.9 0.3 0.1 0.5 KAZ 4.5 0.8 0.4 3.3 KEN 7.2 0.6 1.1 5.5 KHM 8.7 0.0 0.3 8.4 MDG 5.4 0.3 0.2 4.8 MEX 2.4 0.1 0.1 2.2 MUS 2.6 0.6 0.2 1.8 NAM 3.3 0.3 0.9 2.0 NIC 5.2 0.7 1.2 3.3 URY 1.4 0.0 0.0 1.4 VEN 4.0 0.1 0.1 3.8 AFG 4.8 0.0 0.0 4.7 IND 7.0 0.3 0.2 6.5 LKA 6.3 0.4 1.0 4.9 NPL 9.1 0.4 0.3 8.4 PAK 6.6 0.1 0.5 6.0 Average 5.2 0.3 0.5 4.4 18
Thank You 19