As in their article on Australian exports (in the May 1977 issue of this Journal), the authors find that the incidence of transport costs on exports from the United Kingdom to the United States is greater than that of tariffs. Savings in freight costs would stimulate international trade.
The author refutes the common belief that developing countries bear the burden of freight rates on both imports and exports. He concludes that a reduction in export rates would actually harm them, as it would lead to an increase in freight charged to importers, who cannot pass it on.
The authors find that the ad valorem incidence of transport costs on Australian exports is two or three times as high as that of most-favoured-nation tariffs. This is probably true of any developing countries. Suggestions are made for reducing transport costs.
