Corridor/Border Management: examples from outside the Caucasus

1. Corridor/Border Management: examples from outside the Caucasus Gerald Ollivier Transport Specialist

2. Overview • Time as a trade barrier • Corridor Approach • Integrated Border Management and Single Electronic Window

3. Developing countries are moving up the technology ladder…(GEP 2004) Low income countries: Share of exports, 1981-2001 (percent) Middle income countries: Share of exports, 1981-2001 (percent)

4. Time is a Trade Barrier (1) • Trade occurs in physical space and moving goods requires time. • Trade logistics costs are as important as tariffs • Each day saved is equivalent to 0.5% tariff (Hummels) • 7% of value of world trade is cost of administration of trade logistics (UNCTAD) • Time/reliability/adaptability more important in multi-stage production (global supply chain) • % of vertical specialization in trade (use of imported inputs for exports) has grown 30% in the past 20 yrs and accts for half of overall trade growth. • Willingness to pay to save time: • Share of airfreight in US grew from 7% in 65 to 30% in 98 • Airfreight 7 times as expensive as ocean shipping.

5. Time is a Trade Barrier (2) • Imagine if the contents of a ship can be processed in half a day instead of a day …or a truck can do 6 roundtrips instead of 2 a month • Infrastructure capacity increased • Twice the cargo, twice the # of ships serviced, twice the number of containers, increased harbor fees, considerably lower cost to traders • …even more benefits: • These efficiencies offer wider attraction to trading partners • Efficiency in vessel turnaround attracts new trading, market center, distribution business.

6. Time is a Trade Barrier (3) • A wide-body jet can carry fresh produce from supplier in one hemisphere to the buyer in the other hemisphere on the same or next day. • BUT it can take 10 days to : • Process orders • Obtain customs and border agency approvals • Book and schedule transport and distribution • Obtain payment approvals • Complete the transaction • This means removing 10 days from the selling season, revenue that cannot be replaced

7. Corridors Definition • A linear system of transport infrastructure and related services connecting centers of economic activity and bounded by transport gateways which provide access to sources and destinations outside the corridor Construction • Corridors are usually created through back-to-back bilateral agreements which are framed for international or regional protocols Management • Corridors are not managed in an operational sense as most of the activities are performed by individual logistics service providers operating in the private sector. The important management function is coordination of policies between adjoining countries

8. Examples • West Bengal • GMS • Maputo • Transkalihari • North Borneo • Northern Corridor • EWEC • Asian Highway • Can-Mex

9. Corridor Components • Physical • Gateways and Border Crossings • Designated Routes, Single and Multimodal • Regulatory • Trade and Transit Policy • Cargo Inspection and documentation • Security, Entry and Enroute • Transport Services and Equipment • Cargo Ownership • Liability and Arbitration Rules • Duties and Taxes • Cost Recovery Mechanism

11. Functions • Access to Landlocked Countries • Integrate Trading Communities • Economic Development Corridors • Coordinate Infrastructure Development • Control Smuggling

12. Corridor Economic Benefits • Domestic Transport Services • Complementary Logistics Services • Toll Revenues/user charges • Trade Facilitation • Regional Economic Development

13. Traditional Practices Lack of Transparency Technical Controls Regulations Paper Documents Payment Methods ICT and E-Commerce Infrastructure and Experience Physical Space and Capital Costs of Admin/logistics 14% Customs-Centric Systems but other agencies Customs only 15% of Trade Data Post 911 Cultural Issues Inhibitors to Trade Facilitation

14. Integrated Border Management • Enhancing services to users • WTO TF discussion • Geneva/Kyoto Conventions • Organizing processing by function (an agency can apply regulations for another one at low cost) • Coordination across border (joint crossing points)

15. Source: M. Zarnowiecki

16. Electronics Replaces Paper Reengineer Processes: Codes and Standards Upgrade Customs ICT Systems and Processes Transparency Electronic Payment Pre and Post Event Audits Container Scanning Straight-Through Processing Risk Management Create Facilitation Agency Provide a Gateway to Customs Systems Automate Communities Principles of Electronic Trade Facilitation

17. “Single Window” • A facility providing standardized information and documents with a single body to fulfill requirements for import, export and transit regulations and clearance. • Expedite and simplify information flows between trading community and the government

18. SEW Success Factors • High political mandate (Tunisia) • First detailed analysis, followed by process and documentary reengineering/streamlining with all key players (border agencies, transport, traders…) • Baseline indicators and performance measurement • Needed minimum infrastructure • Facilitating exchange of information: Common and intelligent network, international standards,regulatory framework for e-signature

19. Models of “Single Window” • Single Authority • Sweden, Sokhna for its clients • Single automated system for the collection and dissemination of information • Integrated system: data is processed through the system (USA) • Interfaced system: data is sent to the agency for processing (Tunisia, but elements of transactions) • Combination of the above • Automated information transactions system • Singapore, Mauritius

20. ICT reduces Time and Increases Efficiency - Examples • Mauritius Trade Net has reduced average clearance times of goods from 4 hours to 15 minutes • Tunisie Trade Net (TTN) has reduced processing times of trade documents from max of 18 to 7 (3.5 days in cases not requiring technical controls). • Time savings in Singapore (STN) translate into 1% of GDP per year.

21. Implementation Approach • Phased Approach • Complexity • Quick wins to secure confidence • International Standards (UN EDIFACT, WCO Data Model, etc.) • International information exchange requires standards • Pilot users • Surveys / evaluation / fine –tune • Implementing body

22. Issues • Trade Processes - Chain effect • As good as weakest link in the chain • Benefits only visible when everything works • Complex • Many details that must fit together • Resistance to change • Organizational • Shift from paper to electronic processes • Prepare to manage project risks -Multiple activities / issues to address Inter-institutional dependencies

23. Importer/Exporter Trade Professionals Customs Broker Freight Forwarder Shipping Agent Container Terminal Ports and Harbours Storage Transport Shippers Customs Revenue Technical Controls PIAs Cert. of Origin PSI “Legal Invoices” Banks Insurers etc. Players in the Trade Value Chain

24. IMPORT Pay Taxes Clear Customs Release Goods MANUFACTURING/ VALUE ADDED EXPORT Air, Sea, Land International Transport DOMESTIC SUPPLY CHAIN /Dues Customs Storage Port Raw Materials Packaging Transport Storage • Port Processes • Internal Transport • Storage • Container Handling • Loading Ship’s Documents “Informal Processes” IMPORTER • Manifest • Bills of Lading • Sea/AW Bill • Container Plans • Quotations • P.O.s • Delivery Notes • Con. Notes • Invoices • Statements • Invoice • Packing List • Declaration • Delivery Note • Payments • Remittance • Advice Book/Confirm Transport Shipping Documents Pay Taxes Clear Customs Release to Port /Dues Foreign Chambers Commerce • Certificates • Of Origin MANUFACTURER Port Port Customs Customs • P.O. • Contract Terms • Delivery Instructions • L.O.C. Informal Processes • Invoice • Packing List • Declaration • Delivery Note Receive Goods Overseas Embassies • “Legal • Invoices” EXPORTER FOREIGN BUYER Post/ Courier • Certificates • Of Origin • Form A • EUR.1 Chamber of Commerce Finance Ministry Pay Bank Bank • Licenses • Certificates • Government • Approvals • Licenses • Certificates • Government • Approvals Government Departments L.O.C. Packing List Invoice LOC Approval LOC Courier

29. Trade Facilitation Network 1

30. Port Computerized Systems: Some examples • Spain  Portal Servicios Telemàticos • UK  CNS Port Community Systems and Martime Cargo Processing • Germany  DAK OSYS • Belgium  DEAGHA • Netherlands  PCR • France  ADEMAR 2000/PORTIS 2001 • Singapore  PORTNET • Finland  PORTNET

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33. Thank you! • Gerald Ollivier (golliver@worldbank.org) • GFP Website : www.gfptt.org • (to register as a partner click on Become a Partner on the home page; as an individual, click on Register as a person)