Even when tariffs are zero, if firms confront high and uncertain border costs and inefficient and unpredictable logistics they will not be able to compete with firms in other countries that benefit from operating in a more efficient economic environment.
Recent research has shown that the different dimensions of national logistics efficiency – as measured by the World Bank’s Logistics Performance Indicators – are the most important determinants of the trade costs that prevail between any given pair of countries (World Bank 2012). Improving Logistics Performance Indicators performance would reduce average bilateral trade costs ten times more than an equivalent percentage reduction in average tariffs (Arvis et al. 2013). The key factor for the ability of a country to participate in supply chains is the efficiency of local trade facilitation and logistics services. Every extra day it takes in Africa to get a consignment to its destination is equivalent to a 1.5% additional tax (Freund and Rocha 2011).Which would seem to argue for eliminating privileged positions that have the effect of impeding, or driving up the cost of, the movement of goods. As does this;
A key problem highlighted by the [World Economic Forum] case studies is that many different policies and administrative procedures can artificially ‘break’ the supply chain by introducing discontinuity and affecting reliability. Supply-chain efficiency is not simply about trade facilitation at the border; it also involves the ability to invest in facilities and protect intellectual property, and the costs of complying with regulatory requirements regarding health, product safety, security, etc. The exercise of market power by a dominant entity that controls access to key services or a lack of competition may hinder the functioning of some parts of a supply chain; examples include port operations, airport cargo handling and freight transport providers.Emphasis by HSIB.