Regional overview: Europe and North America
Europe and North America remains the best set up for trade in particular, with Western Europe, one of the most integrated economies in the world. Yet both North America and the European Union have slowed their path to further integration, especially when it comes to providing market access. The vast majority of European countries have improved their score with respect to 2014; in particular, Central and Eastern European members of the EU, EFTA economies (Norway, Switzerland and Iceland) and countries within the Balkan Peninsula (with the exception of Montenegro, down 13 places to 62nd, and Bosnia and Herzegovina, down eight to 83rd), where the significant improvements in terms of market access were only partially outweighed by the deterioration in transport services. The most improved countries in Europe are Serbia (up 18 places to 64th), Lithuania (up eight, to 29th) and Italy (up seven, to 36th). Switzerland and the United States are the countries with the worst access to domestic and foreign markets, respectively; while Luxembourg can boast the best operating environment and transport services, the United Kingdom the highest level of ICT adoption, and the Netherlands the most efficient and transparent border administration.
Focus on selected economies in Europe and North America (in rank order)
The Netherlands retains its 2nd rank globally and best in Europe in enabling trade across borders. The country remains a strong performer in terms of both border administration (2nd globally, but losing the top rank to Singapore) and infrastructure (3rd), coming in the top 10 worldwide for transport infrastructure (9th), services (4th) and ICT adoption (3rd). A global shipping hub, the Netherlands can boast the best port infrastructure in the world, with the ninth-best connectivity, complemented by an air transport system that links it to the furthest markets, and an extensive road network with the rest of Europe. Since 2014, its access to foreign markets has improved—in large part due to both a decrease of its trade-weighted faced tariff from 4 to 3.5 percent and improvement in its margin of preference vis-à-vis other countries. However, this improvement is partially outweighed by the deterioration in its domestic market access and an increase in the average applied tariff, common to other members of the European Union, from 0.8 to 1 percent.
A small open economy at the heart of Europe, Luxembourg loses the lowest step of the podium to Hong Kong SAR and ranks 4th in this year’s Report. The country’s performance in terms of both market access and border administration has stalled, losing ground to other countries (down 12 to 27th and 4th to 8th, respectively). Conversely, Luxembourg has further improved the quality of transport services it can offer to its businesses, moving up nine notches and gaining the top position globally. In fact, the country now ranks in the top 10 across all the available indicators in this area and 1st for ease and affordability of shipments and their timeliness in reaching destinations. The quality of its operating environment has also further improved, making Luxembourg the 3rd best country in the world for companies to operate in and the most open to foreign participation.
Sweden ranks 5th overall in the ETI, driven by its streamlined border processes and excellent ICT infrastructure. As its main trading partners are within the European Union, documentary and border compliance procedures are minimal. Irregular customs payments are extremely rare, and the country receives among the best ratings for the time predictability of border procedures. Sweden also scores well in terms of the availability of transport services, particularly in terms of the capacity of logistics operators and the timeliness and traceability of shipments. At the same time, the EU’s common external tariff structure remains complex, making access to Sweden’s market difficult for exports outside of the region and its exports—primarily industrial goods—face significant tariffs abroad.
Finland ranks 6th overall, thanks largely to its strong performance in terms of border administration and overall operating environment. Finland brings a strong track record on the rule of law and effective public institutions, and remains one of the world’s safest countries. In terms of trade facilitation, it ranks 1st (along with fellow EU members) in terms of import procedures and 3rd in the predictability of import procedures. Finland performs less strongly when it comes to compliance with border and documentary export, with procedures taking, on average, 38 hours. This is not surprising as the type of exports considered by the World Bank for producing this estimate are industrial products destined for China, outside of the EU. As with its EU neighbours, Finland performs poorly in terms of market access, given the EU’s complex external tariff structure, and its exports face fairly high tariffs abroad.
Austria further strengthens its position in the top 10, climbing two notches to 7th. The country benefits from improved border administration procedures (up two, to 5th) and transport services (up 15, to 8th): customs are efficient (3rd) and transparent (1st) and shipments are affordable, timely and traceable, thanks to a well-functioning and competent local logistics sector. Its deep integration with regional partners allows Austria to have one of the best market access scores among advanced economies, with 95 percent of all imports entering the country free of duty (4th highest share globally). A high rate of ICT adoption (18th) and a well-functioning operating environment (12th) complement Austria’s capacity to enable trade; in particular public institutions are efficient in enforcing contracts (10th) and able to leverage online tools to provide services to the population (11th, up 15).
The United Kingdom slips two positions to 8th but remains the best performer among large European economies. The results predate the referendum held in June 2016 and therefore do not reflect any change potentially triggered by the country’s exit from the EU. As of today, the country continues to benefit from integration with its European partners, with 84 percent of goods imported free of duty. Access to other markets also improved over the past two years, but more slowly than elsewhere causing a drop of two positions to 90th. The United Kingdom continues to rely on one of the most efficient and transparent border administration systems (6th). Its government is also one of the best at providing online services to its citizens and the country having adopted ICT technologies more than anywhere else in the world. Transport infrastructure and services are also widely available, with British businesses and citizens enjoying the second best international air connectivity in the world, after the United States. Finally, the country’s operating environment remains solid (16th, down four), especially when it comes to protection of property rights (7th) and efficiency of public institutions (13th).
A slight increase in score is not enough for Germany to retain its position and the country slips down one rank to 9th. Similar to other advanced economies, market access is its main weakness, although the country improved its possibility to penetrate foreign markets since 2014 thanks to an improved margin of preference and lower average faced tariff (3.5 percent, down from 4.2). In line with other EU members, Germany’s average applied tariff slightly increased but thanks to the country’s deep integration within the Union, 88 percent of goods are imported without duty. Germany also enjoys the second most efficient clearance process in the world (14th when it comes to overall border administration) and the best logistics sector globally. Yet, both transport infrastructure and services have deteriorated in recent years (down four and three to 8th and 6th, respectively), showing the need for the country to increase investment to keep the pace of its economic and trade growth. Finally, the country can boast a strong rate of ICT adoption (17th, up four) and a welcoming operating environment (19th, down five), only marginally disrupted by concerns over terrorism and security over the past years.
Belgium climbs one notch and enters the top 10 this year. Located in the heart of Europe and with great maritime connectivity with the rest of the world (10th), the country has one of the most open economies globally. Efficient and transparent border administration procedures make the clearance of goods particularly quick (13th), while approximately 88 percent of all imports enter the country free of duty. Belgium can rely on good transport infrastructure, particularly ports (4th) and railroads (17th), which allows for timely, easy and affordable shipments. Overall, Belgium can also rely on a good level of ICT adoption (26th), although there is room for improvement, especially in the uptake of mobile broadband (48th) and on the provisions of online services by the government (43rd). Finally, the country offers a good operating environment for businesses (13th), thanks primarily to a strong protection of property rights (15th) and a well-developed financial sector (14th). Public institutions (30th) are characterized by low levels of corruption (17th), but they are also saddled with burdensome regulation (87th, although improving) and inefficient procedures to enforce contracts (46th).
Switzerland ranks 11th in the 2016 edition of the Enabling Trade Index. Although it performs well across five pillars, Switzerland’s domestic market remains fairly closed, with one of the world’s most complex tariff structures, and its exports face, overall, low levels of margin preferences. Agricultural imports face particularly high barriers, with an average applied tariff of 55 percent. Its customs and border procedures are efficient, with very high ratings for predictability coupled with low levels of irregular payments. Switzerland has world-class transport infrastructure and is ranked 2nd globally for its rail network, with $23 billion in investment in the Rhine-Alpine transport corridor, Switzerland’s largest construction project to date. The overall operating environment is also a strong enabler of trade, with a 1st place rank on the protection of property rights as well as high marks for the efficiency of public institutions.
France places 13th in this year’s global rankings and 10th among the EU economies. France retains high scores on the transport infrastructure pillar, with the world’s best road infrastructure and 4th best railroad network for trade. Its border administration also scores well, driven by the virtually barrier-free intra-EU trade. However, the transparency of customs and predictability of import procedures are issues routinely flagged by businesses. Goods entering France outside of Europe face a complex tariff structure, with close to 2,000 distinct tariffs. Similarly, French exports face relatively high tariffs, ranking 58th on the foreign market access pillar.
The United States holds the 22nd rank globally, although with an improved score. At 105th globally, market access continues to be the country’s weakest spot. Unlike other members of NAFTA or the EU countries, the United States is less integrated within its own trading block and relatively more open to partners from other parts of the world. In 2014, NAFTA represented only 28 percent of its imports and 30 percent of exports, against figures of 60 and 75 percent for Canada and 53 and 79 percent for Mexico. Asia and Europe together accounted for 63 percent of US imports and 55 percent of its exports, which may explain the importance attached to agreements with these regions. As of today, the United States continues to be penalized by poor access to foreign markets, with the seventh highest average faced tariff in the world (4.9 percent, slightly lower than in 2014) and a very low margin of preference vis-à-vis other countries (108th globally). On the domestic front, only 77 percent of its imports enter the country without duty, against a rate of 89 and 93 percent for Canada and Mexico, respectively. Across the other pillars of the ETI, the United States scores relatively better, being in the top twenty across most dimensions of border administration and transport infrastructure and services, and 22nd in terms of operating environment, with physical security and openness to foreign participation pulling down its performance.
Dropping six places, Canada ranks 24th overall on the ETI. As highlighted in the 2014 Report, Canada is a fairly open economy for industrial goods, albeit with a complex tariff structure, but its exports face relatively high tariffs abroad. Canada’s trade facilitation environment, although generally positive in terms of efficiency of customs processes, features high costs for documentary compliance, both for imports and exports. Its score on the key infrastructure for enabling trade are good, especially given its geographical size, with excellent marks especially in terms of air transport and road quality. The number of active mobile broadband subscriptions has also increased markedly, though that remains behind high-income country peers.
Italy climbs up seven positions to 36th in this year’s ranking and makes significant steps to close its gap with other advanced European countries. The country’s advancement in the overall ranking is the third largest in Europe and its improvement in border administration was the second widest globally. Since 2014, Italian customs have become more efficient and transparent, allowing clearance at sea in most ports and broadening the use of online procedures. The overall quality of infrastructure has also improved, driven by advancement of the air transport system (up three to 18th), of the road network (up five to 35) and in the availability and use of ICTs (up 13, to 32nd). The low efficiency of the port system remains one of Italy’s missed opportunities, with the country slipping further down in terms of sea connectivity (down three, to 16th) and stalling across most dimensions of logistics and transport services (34th). The current process of reform of port authorities and regulations promises to tackle these issues and trigger investments in this area. The operating environment (81st, down 10) remains Italy’s greatest weakness, particularly in terms of the efficiency and accountability of public institutions and access to finance.
Turkey slips 11 positions to place 59th in this year’s rankings. This outcome is mainly the result of the more restricted access to its domestic market granted by the country, and of the deterioration in its operating environment. Since 2014, the average tariff rate applied by Turkey increased from 5.1 to 6 percent, with a lower number of goods entering the market free of duty (70.6 percent, down from 79). The country has also increased the number of distinct tariffs it applies, including those levied per unit and not ad valorem, thus further increasing the complexity of its tariff structure (99th). Its operating environment (73rd, down 20) has suffered from reduced physical security (112th) and decreased access to finance (68th). The country did not make significant improvements in its border administration procedures (45th, up one), as border and documentary compliance still cost a total of US$ 797 when importing 15 tons of automotive components. Turkey has further consolidated its role as an international air transport hub (15th, up four places), contributing to the improvement in its overall transport infrastructure (27th, up three places).