Trade and Transport Facilitation

Jean Francois ArvisInternational Trade Department

The World Bank

Teheran April 27 2004

Trade and Transport Facilitation(TTF)

1. TTF: definitions, area of focus and importance for growth.

2. TTF policies: the case of transit

3. World Bank Programs: the trade and transport facilitation audit.

04/27/2004

Scope of TTF

Rationalisation, optimization and harmonization of procedures and services for international trade looking for reduction in costs and delays. Areas of focus thus include:• Transportation networks (road, rail, maritime and air)

• Customs and import procedures

• Transit procedures and infrastructure

• Communication and information management

Scope of TTF (2)

• Efficiency of logistics services (handling,

storage)• Regulations and governance.• Security• Market structure and business practices

Issues

• The TTF should be put in the context of international competitiveness and growth

• Today, potential gains from trade facilitation >= gains from tariffs

• The TTF can be undertaken at the country level by the government and stakeholders

• Multilateral framework can help (only topic of consensus at WTO 2003 Meetings in Cancun)

Cost and Gains from TTF

• Logistics= 1/3 cost of cargo• Excess inventory resulting from poor

logistics can increase the cost of final product by 20%

• Time factor: – 1 day = 0.5 point tariff equivalent– 1 week delay for Imports = 0.5% GDP (in Iran)

Cost and Gains from TTF (2)

• Role of IT: 10% reduction in cost of telecommunication = 1% impact on total trade

• WB study shows that improving trade and transport services like ports and customs increases trade volume by around 400 billion USD. (Mostly South-South trade)

Facilitation and growth

R2 = 0,1245

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

0 0,2 0,4 0,6 0,8 1

facilitation index

10 y

rs g

row

th in

GD

P/c

ap

2 % growth differential

The Potential Measures in TTF

• Policy reforms (e.g., removal of price interventions/controls, adoption of ‘economic’ pricing etc.)

• Regulatory and public sector reforms

• Enterprise reform in the area of services

• Reengineering of procedures and documentation( “single document”)

The Potential Measures in TTF (2)

• Introduction of modern information and communication technologies related to transport and trade (EDI)

• Key investments in infrastructure that could remove bottlenecks to trade

• Financial system: risk mitigation measures, transit guarantees (e.g.TIR system, bonds)

Transit facilitation

• Transit is an internationally recognized right

• Transit objectives:

• Safeguard the interests (notably customs revenue) of the country of transit.

• Allow smooth and speedy movement of the goods to the country of destination. This means:– No duties or inspection on good in transit

– Adequate transit customs procedures (bonds)

Transit facilitation(2)

• Transit = most difficult issues in facilitation:– Extended in space and time and vulnerable to

inadequate procedures and practices– Requires International cooperation

• Transit may be an opportunity for growth in the country of transit.

Transit lessons from experience

1. A working guarantee system (preferably carnet)

2. Engage the private sector3. Customs modernization:

• automation,• enforcement

4. International cooperation: corridor agreements, regional technical agreements

Flow of Documents

Customs

Customs Brokers

CargoHandling

Port Authority

Traders

Ministry ofCommerce

Freight Forwarders

Shipping Agents

Banks

Figure A

CustomsCustoms

Customs Brokers

CargoHandling

Port Authority

Traders

Ministry ofCommerce

Freight Forwarders

Shipping Agents

Banks

Figure A

Trade Facilitation Network(Single Window)

1

Customs

Customs Brokers

CargoHandling

Port Authority

Traders

Ministry ofCommerce

Freight Forwarders

Shipping Agents

Banks

EDI Server

Figure B

CustomsCustoms

Customs Brokers

CargoHandling

Port Authority

Traders

Ministry ofCommerce

Freight Forwarders

Shipping Agents

Banks

EDI Server

Figure B

Resources from the World Bank Available for Assistance in TTF

• GFP and Web based resources

• Increasing knowledge base : indicators, best practice, reform examples

• Diagnostics and audits: trade and transport facilitation audit

• Projects: technical assistance or hardware.

Examples of recent projects

• Tunisia1.Development of

SMEs (ex. training)2.Pre-export finance

(ECA)3.EDI and “single

document”• Phase 2 in

preparation

• Peru 1.Export promotion

institutions

2.Export credit

3.Logistics: • import/export

procedures

• EDI

• Key infrastructure

A Global Resource: “Global Facilitation Partnership”

• Global forum for trade facilitation• WTO, WCO, WB• Regulators (e.g.. Ministry of transport)

• Operators

• Information exchange

• Distance learning for professional in logistics sector (e.g. GFPDLI)

• www.gfptt.org

Trade and Transport Facilitation Audits (of TTFAs)

o Practical approach to problems encountered by exporters and importers.

o Users’ perspective: based on interviews of participants to trade activities

o Diagnostic + remedial actions.

o Potentially provide the groundwork for cross-cutting projects

The FocusEffectiveness of procedures and cost of services available to international trade including:– Inland, sea, and air transport costs – Procedural and documentary requirements needed to

move goods through borders– Quality and range of logistic services and infrastructure– Information exchange and coordination between

private and public participants

The Intervieweeso Forwarder/Agent/Brokero Multimodal Transport

Operator or 3rd party logistics provider

o Exportero Importero Shipping Line and Ships’

Agentso Road Carriero Airline/Airporto Express Operator

o Railway Companyo Port Authorityo Key Border Crossing

Pointo Customs (central)

Commercial Banko Exchange

Control/Central Banko PSI Agencyo Chambers of Commerce

The Toolkit

• John Raven: “Trade and Transport Facilitation – An Audit Methodology”, World Bank, April 2000.

• Based on experience of practical application in a variety of Bank lending and project assessments.

FY04 TTFA program.

• Trade diagnostic: Benin , Chad, Laos, Malawi, Mozambique , Tajikistan, Zambia

• Export competitiveness: Dominican Republic, Bangladesh

• Self standing: Morocco