Regional Trade Integration: Opportunities and Challenges for Central Asia

1. SPECA Aid-for-Trade Geneva, 10 July 2013 Regional Trade Integration: Opportunities and Challenges for Central Asia Mario Apostolov, Regional Adviser UNECE Trademario.apostolov@unece.org

2. Lower barriers to trade – higher growth, more consumption Lower cost of communication and transport Global value chains to which producers and consumers in less developed transition economies can connect Eurasian East-West Integration Combine benefits from global and regional trade liberalization (art.XXIV of the GATT 1994) Opportunities created by trade liberalization

3. Falloutfrom the world financialcrisis/ protectionism Overlyconcentration on 1-2 commodities Dutch disease (relationship between increase in exploitation of natural resources and a decline in the manufacturing sector) e.g. KZ oil exports → high revenue → importation of manufacturedgoodsproducedatlowercost in China and South Asia → no stimulus for production Lowintegrationwithregional and global value chains No sense of regionalism& will for cooperation Variousschemes of cooperationwithneighbours: EEC, CAREC, ECO, TRACECA Challenges for the SPECA countries

4. Eurasia: 3 trading blocs

5. Annual GDP growth rates in the SPECA region (in %) Source: Global Economic Outlook 2013

6. Risks: Gross average monthly wages by SPECA country (US$»at current exchange rates) Source: UNECE statistical data (http://w3.unece.org/pxweb/)

7. Growth in wages and labour productivity in Eastern Europe and Central Asia, 2008–11 (%)

8. Integrate with the global rules-based trading system Plug into global and regional value chains / increase the value-added of your exports Regional trade liberalization Trade facilitation The way forward

9. Need for modernization (CA development strategies) Integrated regional market → attractive for investors Investments bring new technologies, innovation, resources, jobs, linkages to the world economy… Scope: Only Central Asian or broader integration with bigger neighbours? ECE Analysis – FTAs have reduced tarriff barriers in Central Asia => need for trade facilitation Why regional trade liberalization

10. Trade facilitation is high on the political agenda The simplification, harmonization, standardization and automation of trade procedures and the accompanying flows of information. Benefits SMEs and LDCs • Over 2000 trade facilitation (TF) reforms in the world in the last 8 years. Why? • From tariff barriers to non-tariff barriers • Emergence of global value chains • Need for more efficient, simple and transparent trade transactions • Evidence of benefits: • Expected WTO Agreement based on art. V, VIII, and X of WTO.A trade facilitation deal could give a $1 trillion boost to world economy – Pascal Lamy, 1 February 2013 Source: WTO 2012, OECD 2012, WB DB Report 2013

11. National Trade Facilitation strategy “as is” situation “to be” situation • Start with pre-Customs and Customs procedure reform • Build interagency cooperation • A Single Window/PCS – tools: elements of broader reform • Change management Sample strategy goals (over 5 years) • Cut timetoexport(a container) by 50%; cost by 20% • Cut rate of physical/documentary checks (to EU bestpractice rates) • IncreasenumberofregisteredAuthorisedEconomicOperators (e.g. to 50% of all traders) • Createindexonexportcompetitivenessofcompanies in the country

12. Streamlining trade information exchange (UNLK, codes, UNTDED, Single Window recommendations) PPPs for trade facilitation (Recommendation 4) Transit facilitation (TIR Convention) Border-crossing facilitation UNECE Instruments in 4 Areas of TTF

13. 3rd Country Regulation EU Regulation Data & Document layer Consignor or Exporter Freight Forwarder or 3PL Freight Forwarder or 3PL Consignee or Importer Organisational layer CARGO CARGO CARGO CARGO Container/Carrier Port 1 Port 2 Physical layer Trade Facilitation and inclusion in global value chainsData Pipeline: Future Customs and International Trade Systems (David Hesketh, Customs-UK & Frank Heijmann, Customs-NL) Country A Country B

14. Value chains in the agri sector in CA • Agri-sector in CIS: a mixture of small and large producers • 5 types of processing companies: • Large, vertically integrated holdings • International manufacturers with headquarters in Moscow (eg.Danon) • Russian companies with foreign participation (e.g. Baltika) • Regional food companies from the Soviet times • Small regional producers • Integration and enlargement (following Western models); growing supply chain management sector • Problem - low quality of materials (often due to slowdown in exports of fresh produce) and companies such as Danon close the manufacturing and supply chain • Begin with Business Process Analysis

15. Dry fruit exports (apricots) • Exports into • Europe • Russia • USA Tajikistan: 8.1% of export – dried apricots Kyrgyzstan: 3,1% of export

16. Exports into EU • Production / preparations for export • Where to find information on Customs requirements? • Customs number(TARICcode for driedapricots: 0813100000), tarriff rates and quotas, import requirements? • Whatinport limitations exist? • Food safetylimotations? • What package and markings are required? • What documents are needed for export? • Invoice • Transport documents • Packing List • Insurance • Certificate of Origin and confirmation • Form A • Declaration of Customs Value • Import License, • Import Quota Declaration • Document on public control • Certtificates of inspection: sanitary, veterinary, phytosanitarycertificates, smokedwoodcertificate, etc. Source: EU programme «Central Asia – InvestII»:http://www.namsb.tj

17. FormА

19. Safety and packingrequirements

20. Thanks ! Mario ApostolovRegional Adviser UNECE TradePalais des Nations, Room 431CH-1211 Geneva 10, Switzerlandtel.: +41 22 9171134fax: +41 22 9170037e-mail: mario.apostolov@unece.org www.unece.org/trade & www.unece.org/cefact