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Trade facilitation - An introduction

Presentation by Maxence Orthlieb, UNCTAD, 2002

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Presentation on how to improve transport services and promote trade efficiency in developing countries. It analyses the problems faced by developing countries, UNCTAD's work on trade facilitation and WTO rules. Could be used by teachers in their courses.

1


08/08/2002 1United Nations Conference on Trade and Development


Trade Facilitation


Maxence Orthlieb
Trade Logistics Branch


Services Development Division
08/08/2002 2


Operational
Issues


Regulatory
Issues


Bank &
Insurance


Issues
Customs


Issues


The scope
of Trade Facilitation


08/08/2002 3


Trade Facilitation:
Improving the environment


of trade transactions


Operational
Issues


Regulatory
Issues


Bank &
Insurance


Issues


Customs
Issues


Trade
Facilitation


08/08/2002 4


Contents


1. What are the problems?


2. Back to basics…


3. What can be done for Dev.ing Countries?


4. Trade Facilitation at UNCTAD


5. WTO Rules on TF




2


08/08/2002 5


What are the problems faced
by an international trade


transaction?


08/08/2002 6


An international trade transaction


Country A


Country B


Country C


International link


Origin


Destination
Transport


Transit


Border crossing


08/08/2002 7


Domestic transport issues


• Domestic transport (by mode)
– Links, nodes & interfaces
– Connectivity
– Transport means
– Traffic regulations
– Terms & conditions of carriage
– Tariffs and level of service
– Ownership and management


08/08/2002 8


Border crossing issues


• Customs-related
– Documentation
– Tariffs
– Other administrative requirements


• Police-related
– Visas for drivers


• Transport-related
– Availability of interfaces
– Inter-operability of transport networks and means




3


08/08/2002 9


International transport issues


• By mode:
– Links between countries
– Border crossing inter-operability
– Transport means
– Traffic regulations
– Terms & conditions of carriage
– Tariffs and level of service
– Ownership and management


08/08/2002 10


Cost of Transporting Electrical
Machinery from Baltimore, USA


(40 Foot Container)


0


1000


2000


3000


4000


5000


6000


7000


8000


Nouakchott, Mauritania Hong Kong


US
d


ol
la


rs


08/08/2002 11


Too many documents


08/08/2002 12


Poor packaging of cargo




4


08/08/2002 13


Poor packaging of cargo


08/08/2002 14


Poor handling of cargo


08/08/2002 15


Poor organization
of storage areas


08/08/2002 16


Customs & transit issues


• Local conditions
– Customs laws & regulations
– Qualified modal operators
– Certified transport means




5


08/08/2002 17


Old & poorly maintained vehicles


08/08/2002 18


Old & poorly maintained vehicles


08/08/2002 19


Poor road conditions


08/08/2002 20


Poor organization at
Border crossings




6


08/08/2002 21


Poor organization at
Border crossings


08/08/2002 22


Poor professional organization


08/08/2002 23


…and a number of others !!!


• Outdated laws and regulations;
• Outdated commercial practices;
• Limited number of qualified civil servants;
• Lack of coordination between Government


entities and the private sector; and
• ….. many other issues.


08/08/2002 24


This is a tough real world !!!


Maybe we should get back to


BASICS




7


08/08/2002 25


GOODS


PAYMENT


The trade transaction


S BINFORMATION


08/08/2002 26


GOODS


Let’s focus on …


S B


08/08/2002 27


Moving Goods…


GOODS


SERVICES


The movement of goods
relies on …


VEHICLES


Transport services
using …


Vehicles operated on …


WAYS & TERMINALS
Ways between


terminals


08/08/2002 28


Ways and Terminals…


WAYS & TERMINALS


All are subject to standards and policies regarding
infrastructure development, maintenance and inter-operability,


through appropriate legal instruments.


Terminals
Ports
Airports
Stations
Border-crossings


Ways
Road/rail links


As well as related
Communications & handling


equipment




8


08/08/2002 29


Vehicles


VEHICLES


Furthermore, there are
traffic laws and regulations


regarding the operation of these vehicles
on ways and terminals,
to make the best use of


available facilities and equipment


Trucks and trailers
Locomotives and rolling stock
Vessels and barges
Airplanes


All are subject to
standards and policies regarding


physical characteristics and maintenance,
through appropriate legal instruments.


08/08/2002 30


Services


SERVICES


Furthermore, there are
national commercial laws and regulations,


as well as international instruments
regarding the provision of transport services


(modal & multimodal).


Own-transport option
Modal transport services
Freight forwarding services
3rd party logistics services
Others (banking & insurance)


All are subject to
commercial practices,
operational features
and national policies
through appropriate


legal instruments.


08/08/2002 31


Goods


GOODS


Furthermore, there might be
national laws and regulations,


as well as international instruments
regarding the movement of certain goods


(e.g. dangerous goods).


Physical characteristics
Packaging
Packing and labeling
Palletization
Containerization


All are subject to
standards,


logistics organization,
operational features


and national policies.


08/08/2002 32


The international dimension
of


a trade transaction




9


08/08/2002 33


The Trade Facilitation Process
Harmonization


of laws & regulations


Simplification
of procedures


Standardization
of means 08/08/2002 34


Border-crossing issues


GOODS


SERVICES


VEHICLES


WAYS & TERMINALS


Country A


GOODS


SERVICES


VEHICLES


WAYS & TERMINALS


Int’l Practice


TFP


TFP


TFP


TFP


TFP: Trade Facilitation Process


08/08/2002 35


Building with common standards


WAYS & TERMINALS


Country A


WAYS & TERMINALS


Int’l Practice


TFP


Use of international standards on
infrastructure development, maintenance and inter-operability


08/08/2002 36


Common Traffic Management
Standards


VEHICLES


Country A


VEHICLES


Int’l Practice


TFP


Harmonization of Customs & Transport laws
related to vehicles and drivers


Simplification of border crossing procedures
Standardization of transport vehicles & unit loads
Standardization of communications protocols
Use of Information Technology (ACIS)




10


08/08/2002 37


Aligning services standards


SERVICES


Country A


SERVICES


Int’l Practice


TFP


Harmonization of Trade & Transport laws
Simplification of commercial and


border crossing procedures
Standardization of commercial practices
Use of EDI/EDIFACT & Internet
Implementation of transit agreements


08/08/2002 38


Goods across Borders


GOODS


Country A


GOODS


Int’l Practice


TFP


Harmonization of Customs laws (e.g. use of H.S.)
Standardization of packing and labeling
Use of bar-coding and Unique Reference Number
Standardization of unit loads
Use of Information Technology (ASYCUDA)


08/08/2002 39


EFFICIENT
MOVEMENT


FLEXIBLE


FAST


SAFE


RELIABLE


Movement of Goods


???


Don’t ask for too much!


08/08/2002 40


What can be done
for Developing Countries?




11


08/08/2002 41


Main concerns
of Developing Countries


• To maintain/increase the competitiveness of
national products (goods and services).


• To secure the participation of national companies
in the provision of trade & transport services in
the country and the sub-region.


• To assist national commercial partners in
implementing modern and agreed practices of
international trade.


08/08/2002 42


What is needed…


• To improve the quality and environment of
international trade, transport and logistics;


• To adapt national commercial practices
to international standards, and


• To remove unnecessary trade barriers
(e.g. by avoiding “dead-weigh” losses).


08/08/2002 43


The Challenge
• Not only to focus on improving the physical


features (the “hardware”) of transport networks,
• But also to foster the “software” dimension of


international trade and transport by:
– improving the performance of transport operators and auxiliary


services,
– changing the commercial behaviour of users, and
– introducing innovative relations between public institutions and


transport providers and users


• As well as eliminating outdated procedures, and
multiple, non-standardised documents, which
increase transaction costs and create unnecessary
delays.


08/08/2002 44


Areas


• Transport
– Ports and Shipping
– Rail & Road (thru ACIS)
– Multimodal Transport


• Trade Facilitation
– Documents & Procedures
– Border crossing
– Transit agreements




12


08/08/2002 45


What we must recognize


• Issues in most LDCs are far more « basic » than in
developed countries;


• Different levels of development call for distinct
(but coherent) TF measures;


• The benefits of new technologies need time to be
reaped;


• TF can help developing countries to « leap-frog »
into the most effective measures and technologies.


08/08/2002 46


SPEED OF DEVELOPMENT


TIME
Today


EDI/Internet


Container


Efficiency


Time lag


POOR


RICH


Trade Facilitation
at UNCTAD


08/08/2002 48


Long-lasting experience
• From 1974, initial work under FALPRO


(with UN-ECE/WP4)
– UN layout key
– Recommendations


• Related issues
– MT Convention
– UNCTAD/ICC Rules on MT Doc.


• UN International Symposium on Trade Efficiency;
• Experts’ Group meetings


– Multimodal Transport
– E-Commerce & international transport services




13


08/08/2002 49


Cooperative work


• With UN regional Commissions;
• With other UN agencies


(WTO, ITC, UNIDO, IMO, WB, etc.);
• With intergovernmental organizations


(WCO);
• With non-governmental institutions


(ICC, FIATA, IAPH, etc.).


08/08/2002 50


Objective of Trade Facilitation


To provide a world-wide accepted,


consistent, transparent and


predictable environment


for international trade transactions.


08/08/2002 51


Aims of Trade Facilitation


• To improve the quality of international
transport and logistics,


• To adapt commercial trade and transport
practices to international standards, and


• To remove obstacles to trade.


08/08/2002 52


(1) Reduce administrative impediments, in both public
& private sectors, and seek concerted solutions to
international trade and transport issues;


(2) Encourage best practice, including IT, throughout
trade, transport, and financial services, according
to international standards; and


(3) Develop staff skills through advisory services,
information-sharing and training.


Key measures




14


08/08/2002 53


The three dimensions


Trade
Facilitation


TRADE TRANSPORT


CUSTOMS
08/08/2002 54


CUSTOMS dimension


Customs Facilitation


Customs Reform
and Modernization


Support automated
data systems


faster clearance
of cargo


Increased Customs
revenues


Simplify/harmonize
documents & procedures


Implement modern
Customs laws


ASYCUDA


08/08/2002 55


TRADE dimension


Trade Facilitation


Best-recommended
commercial practices


faster RoI
for IMP


Competitive
exports


Simplify IMP/EXP
documents & procedures


Create awareness on
best practices


Promote
Trade Point concept


Tra
nsit


Agr
.


08/08/2002 56


TRANSPORT dimension


Transport Facilitation


Faster turn-over
of means


smooth movement
of goods


Create awareness on
modern transport & logistics


Establish norms
(incl. liability insurance)


Implement modern
Transport laws


Implement logistics tools


Best-recommended
transport practices


ACIS




15


08/08/2002 57


Effective cooperation
is required


• with the authorities involved in foreign
trade: Finance, Trade, Communications;


• with the trading community
(importers and exporters);


• with the service providers
(transport operators, banks, insurance cos.)


08/08/2002 58


Ministry of
Transport


Ministry of
Trade


Ministry of
Finances


Reduce transaction costs Monitor external trade flows


Customs reform
& modernization


Trade facilitation
measures


Door-to-door
Logistics


Private Sector


Promotion of Trade Facilitation


08/08/2002 59


N.T.T.F.C.


A national forum to propose, discuss, consult
and search consensus


between commercial parties
and governmental authorities


on facilitation measures
to improve international trade & transport.


UNCTAD Technical Assistance




16


08/08/2002 61


Awareness Workshop
Recommendations & PoA


PHASE I


Diagnostic
Institut’al, legal, operat’al, HRD
Seminars
Issues identified, Plan of Action


PHASE II


Elaboration of concrete proposals
Thematic workshops
Laws & regulations
Administrative & operational measures
Strengthening of associations
Preparation for ASYCUDA & ACIS
Training programme


Implementation Plan


PHASE III


Ad-hoc implementation of the proposals


TF project life cycle


National Facilitation Body


08/08/2002 62


Main T.A. Project output


• Modern laws, and terms & conditions;
• Simplified trade documentation & procedures;
• Simplified Customs docs & procedures;
• Implementation of Customs automation: ASYCUDA
• Minimum professional standards;
• Implementation of logistics tools: ACIS
• Awareness of international instruments;
• Creation of Trade Point(s);
• Trained instructors & teaching material;
• Etc.


08/08/2002 63


Leading to ….


• Alignment with international practices;
• Reduced transaction costs;
• Faster Customs clearance;
• Better trade-supporting services;
• Strengthened trade & transport associations;
• Increased transit operations (e.g. TIR);
• Greater trade & transport market opportunities;
• Greater professionalism & productivity;
• Etc.


08/08/2002 64


On-going T.A. Projects


• Integrated country projects:
– Nepal
– Pakistan
– ECO


• IT-based management projects:
– ACIS (19 countries)
– ASYCUDA (80 countries)




17


08/08/2002 65


WTO Rules on
Trade Facilitation


08/08/2002 66


Singapore Ministerial Declaration (1996)


Article 21: “We further agree to:
direct the Council for Trade in Goods to undertake
exploratory and analytical work, drawing on the work of
other relevant international organizations, on the
simplification of trade procedures in order to assess the
scope for WTO rules in this area.”


Mandate of WTO Work Programme


08/08/2002 67


Developments from 1997 - 2001
• 1997: Fact finding stage;


• 1998: WTO Symposium on TF & informal meetings;


• 1999: Preparation for Seattle Ministerial Conference;


• 2000: Informal meetings continue;


• 2001: Workshop on Capacity Building and Technical
Assistance in Trade Facilitation


08/08/2002 68


Existing WTO rules on
trade facilitation


GATT 1994:


• Article V Freedom of Transit


• Article VIII Fees and Formalities connected with
Importation and Exportation


• Article X Publication and Administration of
Trade Procedures




18


08/08/2002 69


Existing WTO rules on
trade facilitation


• Agreement on the Implementation of Article VII
GATT 1994 (Customs Valuation)


• Agreement on Preshipment Inspection
• Agreement on Import Licensing Procedures
• Agreement on Rules of Origin
• Agreement on Technical Barriers to Trade
• Agreement on Sanitary and Phytosanitary Measures


08/08/2002 70


Common features of existing
WTO rules


• Publication of laws and regulations prior to
application (all agreements)


• Fair and equitable administration of procedures
(Import Licensing, Rules of Origin, PSI)


• Right to appeal administrative decisions
(Customs Valuation, Import Licensing, PSI)


Doha and after….


08/08/2002 72


A vision of trade facilitation


Trade Facilitation is a process
towards better management of trade.


As such, it may become
a powerful engine for development.




19


08/08/2002 73


Misleading statements


• TF is just a matter of formalities


• TF is cheap & easy to implement


• Binding rules lead to TF


08/08/2002 74


Just a matter of formalities


• Collection, processing, storage & exchange of data
• Facilitate to better control;


better control to better manage
• Need to remove obstacles & better capture/


understand trade (transactions)
• Need to create an environment for cost reductions,


faster movement… not simply reductions of
controls.


08/08/2002 75


Cheap and easy


• TF requires a proper context
– The case of the EU


• Cost implications:
– EU (Customs 2000); USAID, WB programmes


• TF requires important resources,
a concern for developing countries


• Recognized benefits (Chile, Others)
• But problems remain to be solved


– E.g. US-Mexico border crossing costs and barriers


08/08/2002 76


Towards a global ruling


• TF rules already exist in the context of:
– International instruments
– Regional agreements


• Global ruling (One size fits all):
– Difficult to cover the wide scope of TF
– But possible if limited to few rules


• Para.27 of the Doha Declaration




20


08/08/2002 77


Doha Declaration


27. Recognizing the case for further expediting the movement,
release and clearance of goods including goods in transit and the need
for enhanced technical assistance and capacity building in this area, we
agree that negotiations will take place after the Fifth Session of the
Ministerial Conference on the basis of a decision, by explicit consensus, at
that Session on modalities of negotiations. In the period until the Fifth
Session, the Council for Trade in Goods shall review and as appropriate,
clarify and improve relevant aspects of Articles V, VIII and X of the
GATT 1994 and identify the trade facilitation needs and priorities of
Members, in particular developing and least-developed countries. We
commit ourselves to ensuring adequate technical assistance and support
for capacity building in this area.
(WT/MIN(01)/DEC/W/1, 14 November 2001)


08/08/2002 78


What would developing
countries need?


• In the post-Doha context, technical assistance &
capacity building would be required, for example:


• Art.X (Publication):
to establish information platforms
(but information manag. & IT-related problems);


• Art.V (Transit):
to track transit cargo; to implement TIR system
(but standards, insurance, institutional and IT-
related problems)


08/08/2002 79


Conclusions from Doha Declaration


• From the perspective of the Doha
Development Agenda, TF is a first step.


• Will it be sufficient to reduce transaction
costs, particularly for developing countries?


• Maybe other avenues should be considered.


08/08/2002 80


WTO Rules on TF
• Present situation:


– There are WTO Rules & other int’l instruments related
to TF;


– Implementation requires commitment and investments;
– Development dimension affects implementation.


• Post-Doha direction:
– The binding character of WTO Rules might be an


element to insure implementation of TF measures, but
they are not enough.


– Need for Technical Assistance not only to negotiate the
Rules, but also to implement them.




21


08/08/2002 81


UNCTAD’s project proposal
Activity #1:


Analysis of existing TF measures


• Analysis of key issues in trade facilitation,
through the preparation of studies to
explore the needs to be considered, identify
priorities and appreciate the development
dimension; translation of the studies into all
official United Nations languages.


• Preparation of awareness and training
material, in coordination with WTO and the
UNCTAD TrainForTrade programme;
translation of the training material into all
official United Nations languages.


Activity #2:
Capacity building


and institutional development


• Organization of two-day regional symposia
for decision-makers on issues related to
closer multilateral cooperation in TF.


• Organization of preparatory assistance
missions towards national and regional
technical assistance programmes on trade and
transport facilitation, including development,
organization and implementation of national
task forces or national trade and transport
facilitation bodies at inter-ministerial level.


• Organization of one-day Geneva-based
seminars for trade officials and negotiators to
build consensus on modalities of negotiations
related to trade facilitation.


08/08/2002 82


Joint WTO-UNCTAD Workshop
on Trade Facilitation


Objectives:
• Create understanding of the key


issues in trade facilitation
(movement, release and clearance of
goods);


• Explore the range of issues for
consideration in WTO Rule
negotiations;


• Identify priorities, taking into
account their countries’ interests and
development dimension;


• Assess capacity to adequately study
the tabled proposals & potential
effects; and


• Gather preliminary elements to
establish a position in the coming
WTO meetings.


Contents:
1. What is Trade Facilitation?
2. Existing instruments related to trade


facilitation
3. Trade facilitation needs and priorities
4. Capacity building in trade


facilitation: the role of technical
cooperation


5. Some questions raised by para.27 of
the Doha Declaration


6. Conclusions: The Road Ahead: From
Doha to Mexico


END


Trade Facilitation Section
Services Development Division


08/08/2002 84


TF Contacts at UNCTAD


• Mr. Peter Faust (peter.faust@unctad.org)
Trade Logistics Branch (+41-22 907.20.45)


• Mr. Maxence Orthlieb (maxence.orthlieb@unctad.org)
Trade Facilitation Section (+41-22 907.20.01)


• Mr. Coll Hunter (coll.hunter@unctad.org)
ACIS Programme (+41-22 907.44.80)


• Mr. Fabrice Millet (fabrice.millet@unctad.org)
ASYCUDA Programme (+41-22 907.44.65)




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