Trade and Transport Facilitation

1. Trade and Transport Facilitation Jean Francois Arvis International Trade Department The World Bank Teheran April 27 2004

2. Trade and Transport Facilitation(TTF) • TTF: definitions, area of focus and importance for growth. • TTF policies: the case of transit • World Bank Programs: the trade and transport facilitation audit. 04/27/2004

3. 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

4. Scope of TTF (2) • Efficiency of logistics services (handling, storage) • Regulations and governance. • Security • Market structure and business practices

5. 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)

6. 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)

7. 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)

8. Facilitation and growth 2 % growth differential

9. 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”)

10. 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 mitigationmeasures, transit guarantees (e.g.TIR system, bonds)

11. 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)

12. 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.

13. Transit lessons from experience • A working guarantee system (preferably carnet) • Engage the private sector • Customs modernization: • automation, • enforcement • International cooperation: corridor agreements, regional technical agreements

14. Flow of Documents

15. Trade Facilitation Network(Single Window) 1

17. 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.

18. Peru Export promotion institutions Export credit Logistics: import/export procedures EDI Key infrastructure Examples of recent projects • Tunisia • Development of SMEs (ex. training) • Pre-export finance (ECA) • EDI and “single document” • Phase 2 in preparation

19. 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

20. Trade and Transport Facilitation Audits (of TTFAs) • Practical approach to problems encountered by exporters and importers. • Users’ perspective: based on interviews of participants to trade activities • Diagnostic + remedial actions. • Potentially provide the groundwork for cross-cutting projects

21. The Focus Effectiveness 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

22. Forwarder/Agent/Broker Multimodal Transport Operator or 3rd party logistics provider Exporter Importer Shipping Line and Ships’ Agents Road Carrier Airline/Airport Express Operator Railway Company Port Authority Key Border Crossing Point Customs (central) Commercial Bank Exchange Control/Central Bank PSI Agency Chambers of Commerce The Interviewees

23. 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.

24. FY04 TTFA program. • Trade diagnostic: Benin , Chad, Laos, Malawi, Mozambique , Tajikistan, Zambia • Export competitiveness: Dominican Republic, Bangladesh • Self standing: Morocco