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Pierre latrille, WTO SADC transport forum , Durban 11-12 September 2012

The case against transport protectionism as seen by several honourable academics and one humble ex-practitioner…. Pierre latrille, WTO SADC transport forum , Durban 11-12 September 2012. outline.

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Pierre latrille, WTO SADC transport forum , Durban 11-12 September 2012

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  1. The case against transport protectionism as seen by several honourable academics and one humble ex-practitioner… Pierre latrille, WTO SADC transport forum , Durban 11-12 September 2012

  2. outline • Protectionism an economic diabetis :How I fell into the trap and then spend my life expiating • Protectionism in road transport • protectionism in maritime transport • Protectionism in air transport • Protectionism in services auxiliary to all modes of transport • Protectionism in rail and pipelines transport • The TIS protocol: a good way to prevent oneself to fall into the trap as I did

  3. Road transport • What about you ? How many operators, regulators and customers in the room? How many other people directly interested at road transport and why? • Initially (’30) the malthusian regulations essentially stemmed form a domestic intermodal issue • Then when international transport developed post WW2 it got its external component… • That newly independent states immediately imitated and still imitate nowadays

  4. Domestic road transport:If Malthus has had a truck… • quotas and tariffs had been originally introduced to prevent the erosion of the modal split share of rail traffic. • By way of partial compensation, established road transport operators were protected from new entrants, with tariffs fixed at a level that enabled the least competitive to survive.

  5. Domestic Road transport :the OECD benchmark • (a)a licence or permit from the government is needed to establish a road freight business; No:2, Yes: 31 • (b) criteria other than financial fitness and compliance with the road safety regulations are considered in decisions authorizing the entry of new operators into the market; No:15, Yes:18 • (c) the regulator has any power to limit industry capacity; No:27 , Yes: 6 • (d) representatives of trade and commercial interests are involved in specifying or enforcing entry regulations; No: 24, Yes: 9 • (e) representatives of trade and commercial interests are involved in specifying or enforcing pricing guidelines or regulations; No:31, Yes:2 • (f) retail prices of road freight services are regulated by the government; • No:31, Yes: 2 • (g) the government provides pricing guidelines for road freight companies. No: 29, Yes:4

  6. Road transport:the GATS weaponry • economic needs tests, • restrictions on foreign participation, • obligations to set up a domestic law corporation, • permit systems closed to vehicles registered abroad, • emergency safeguard measures with respect to the number of service providers, • limitations on the total number of service operations or on the total quantity of service output, • limitations on the use of hired vehicles, • fulfilment of establishment obligations in order to be authorized to participate in certain types of traffic, • restrictions on the types of cargo that can be transported, • prior authorization procedures, • and obligations to use locally registered vehicles.

  7. Results: quantitative regulations failed • They did not succeed in : -regulating capacity -nor preventing the erosion of rail transport, • they encouraged -fraud -and the development of transport on own account • They were thus largely dismantled in developed countries

  8. Effects of domestic road transport liberalization: • fall in prices • decline of profitability • creation of new enterprises (but also bankruptcies), • acceleration of concentration and specialization, • network development, • services customisation, • job creation • relative decline in wages. • Controversial impact on safety and working conditions • liberalization clearly meets short-term policy objectives, such as lower prices and diversification of supply, • but is less efficient less in pursuing medium-term objectives, such as reduced congestion of the road infrastructure, pollution control and energy conservation

  9. And if you do not believe me, just read…

  10. International road transport: bilateral weaponry A system built to prevent competition and trade: • Prohibition of cabotage :prices up, quality down(but...) • Thridapty rules /traigalaurquotas . Noreal seventh (but…) • Quotas permits /below needs ( key problem…if implemented) • Transit permits (logistical nightmare …if implemented) • fixed routes and loading/unloading points (cherry on the pie)

  11. International road transport protectionism: effects • higher transport costs, • inability to run a "seamless supply chain", • environmental damage, • trade diversion. • Failure to attract investors as they are scared by the logistical difficulties to export their products • Example:According to the Association of Turkish Road Hauliers, road transport quotas (bilateral and transit) cost the Turkish economy as a whole US$6 billion in 2008, with 90 per cent of Turkish exports being carried by road.

  12. International road transport protectionism: effects • distortion of competition and even fraud seems to be exacerbated by the extreme complexity of managing the scarcity of bilateral authorizations at national level … • But are they really scarce ? - If yes do they really protect local carriers and is worth it? - if no then why do you need all these complications ?

  13. Protectionism in services auxiliary to all modes of transport services: weaponry • Two main tools: - reservation of the activity to nationals (the”I wannabe a hub …but” syndrom - Joint ventures

  14. Protectionism in services auxilary to all modes of transport :effects • The “I wanna be a hub …but” syndrom • Let me come in your office, sleep there while you work and take half of your salary then let’s see how it improves your efficiency…

  15. Maritime protectionism: weaponry • Cargo sharing • Shipper councils • Limitations to onshre establishment • discrimination on berthing pilotage priorities and fees • Tool ports • Private monopoly in a landlord port unsufficiently regulated etc

  16. Maritime protectionism: effects • My Damascus path • A tale of two cities • There is no sector like the maritime sector

  17. And to conclude with: aviation, the most protectionist of all: • Bermuda 2 : The mother of all cartels … • But to protect what exactly ? • the Geneva bridge syndrom • Thank you

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