trade and transport facilitation jean francois arvis international trade department the world bank...

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