Reference: Hidden trade barriers cost APEC billions, Bangkok Post, September 4, 2007

It is proposed that bribes paid to customs agents to ease import-export transactions in poor Asian countries are a form of non-tariff trade barrier that increases the cost of doing business and therefore reduces trade among APEC countries. The analysis is incomplete and therefore the conclusion is not valid. Bribes are paid to customs agents to receive better than fair treatment in terms of rapid clearance, low duties, or in trading contraband. In most of these cases, it is the government and not the trader that loses. In countries with corrupt governments that may misuse the taxes anyway, it is not obvious that such a redirection of revenues is a bad thing. Moreover, corrupt governments in poor Asian countries tend to be funded mostly by excise taxes and so these rates are set according to budgetary requirements more than economic policy. Also these countries are well known for protectionism. Therefore a lot of the foreign trade of these nations does not show up in the data either because they are not recorded properly by bribed agents or because they are simply smuggled outright. For example, Indian versions of Viagra are readily available in Burma in any quantity you want and at incredibly low prices although there is no record in the books for World Bank economists to see that any of these pills were ever imported from India or exported to Thailand. The gray and black economies in poor Asian countries are very large relative the formal economy. The recorded and available trade data do not always tell us the truth. In many cases, what they do tell us is an outright lie. In most corrupt Asian nations, bribery in the customs department is actually and exit strategy for traders and not a barrier to trade.

Cha-am Jamal