Measuring Trade Facilitation Performance: Rationale, ESCAP ...

Measuring Trade Facilitation Performance:Rationale, ESCAP Tools & Way Forward

Central Asia Breakout Session, APTFF 2011

Yann Duval, Trade Facilitation Section

Trade and Investment Division,

United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

Asia-Pacific Trade Facilitation Forum 2011 & Side Events: 3 - 8 October, Seoul

Overview

• Introduction

• ESCAP Trade Facilitation Framework

• ESCAP’s Regional Trade Cost Database– Some findings from data analysis

• ESCAP’s Business Process Analysis Initiatives– Selected findings

• Conclusions & Recommendations


Introduction

• Measuring progress is crucial– Identifying trade facilitation measures that work – and those that don’t

– Ensuring that the changing needs of stakeholders are understood

– Securing needed financial and/or political support to make further improvements

and implement additional/new measures

• Various tools already exist

– TF (need) assessment frameworks• List of TF measures & information about their implementation status: APEC TFAP;

WCO or WTO TF assessment check list; ESCAP TF Framework

– TF performance monitoring databases or methods• Macro level (global/general): Doing Business, WB LPI, UNCTAD LSCI, others

• Macro level (bilateral/intra/interregional): ESCAP Trade Cost Database

• Micro level (national/bilateral & product/corridor specific): CAREC CPPM; ESCAP/ECE BPA; ESCAP time/cost distance model; WCO TRS; others


ESCAP Trade Facilitation Framework (1)

• What is it?– Series of suggested

Trade Facilitation

implementation

steps and sub-steps

– With associated

(yes/no) indicators

(to assess state of

implementation)

– Also include

suggested key

performance

indicators

– http://www.unescap.org/tid/publication/t&ipub2327.asp

• Developed by a regional team of TF experts in 2003/4


ESCAP Trade Facilitation Framework (2)

• (known) Applications so far:– Applied in several Central Asian countries on a pilot basis in 2004-5

• Unclear whether the framework was used for monitoring of TF implementation by

individual countries after project ended

– Used as the basis for development of the ASEAN Trade Facilitation

Framework (mandated as part of the ASEAN Trade in Goods Agreement

implementation)

• ASEAN has not made its framework public;

• Simplified and updated version introduced in the ADB-ESCAP

Reference Book on “Designing and Implementing Trade

Facilitation in Asia and the Pacific”, 2009• http://www.unescap.org/tid/projects/tfforum_adbescapbook.pdf


ESCAP Bilateral Trade Cost Database

• Macro-level indicator of Trade Facilitation Performance– Measure of all direct and indirect international trade costs between two

countries

• Only database providing bilateral trade cost information– Directly relevant for intra-regional trade performance monitoring

– 50+ countries (http://www.unescap.org/tid/artnet/trade-costs.asp )

• Version 2.0 under dev.– 107 countries

– Enhanced trade cost indicators

– Disaggregated into:• Industry trade costs

• & Agricultural trade costs

– To be available by: Dec. 2011

Trade costs

of selected

countries

with Japan


ASEAN-4

East and

North-

East Asia

North and

Central

Asia

SAARC-4 Aus-NZ EU-5 NAFTA

ASEAN-449%

(-1%)

East and North-

East Asia132%

(na)

105%

(na)

North and

Central Asia

259%

(10%)

193%

(-5%)

148%

(12%)

SAARC-4117%

(-4%)

201%

(na)

258%

(-6%)

113%

(-5%)

EU-5105%

(2%)

127%

(na)

161%

(-3%)

124%

(-2%)

122%

(0%)

59%

(-3%)

NAFTA 101%

(3%)

109%

(na)

244%

(10%)

137%

(-7%)

122%(6

%)

104%

(1%)

50%

(15%)

Intra & Inter subregional Trade Costs in Asia(excluding tariff; 2007 in tariff equivalent; changes since 2003 in parenthesis)

�� Intra-Asia trade cost HIGHER than trade cost of Asia

with non-Asian partners


ESCAP’s Business Process Analysis Initiatives for Trade Facilitation

• Part of ESCAP’s support to paperless trade – United Nations Network of Experts for Paperless Trade in Asia and the Pacific

(UNNExT)

• www.unescap.org/unnext/

• UNNExT Business Process Analysis Guide for the

Simplification of Trade Procedures (2010).

BPA? Analysis, including mapping,

timing and costing of a process(e.g., moving goods from factory to

deck of ship)

Why? Necessary first step to improving a process


Output of a UNNExT Business Process Analysis (1)

8

Use Case Diagram

Activ

ity D

iagra

ms

Define scope of analysis,stakeholders involved,Activities to be studied


Output of a UNNExT Business Process Analysis (2)

The time-procedure chart*

*Frozen shrimp exports; Data collected by Institute for IT Innovation, Kasetsart University (2007)


Export Time and Cost Estimates from BPA Studies*(Doing Business Report 2011 values shown for reference)

Export from THAILAND CHINA CAMBODIA INDIA

Source: DB11 K.07 ARTNeT DB11 ARTNeT DB11 ESCAP DB11 ARTNeT

Product: ? RiceAuto

PartsSugar ? Garment

Electric

Eq.? Rice Cashew ? Fruits & Veg.

Export to ? IN BL ? JP TH ? EU IN ? UAE

Export Time (days)

Time for Document

Preparation X

8 7.2 2 14 14 4 9 14 10 8 8 11

Time for Inland

Carriage and Handling

X

2 1.6 1.5 2 2 3.9 5.1 3 4 4 4 4

Time for Customs

clearance X

1 0.2 1 1 2 2.3 0.2 3 0.5 0.5 2 2

Time for Terminal

Handling X

3 1 3.25 2 3 1.3 1.2 2 2.5 2.5 3 2

TOTAL TIME for

EXPORTS (WB Def.)

14 9 8 19 21 12 16 22 17 15 17 19

EXPORT Cost (USD)

TOTAL COSTS -

Exports

625 n.a. 509 430 500 366 366 732 1029 839 1,055 550

*Preliminary and adjusted to allow for comparisons. See individual studies at www.artnetontrade.org for details.


Selected findings from BPA for TF studies

• Document preparation takes most time, followed by transport/handling issues

• Some procedures/regulations driven by industry associations to prevent entry by new/small players

• Procedures between private parties are a big part of the overalltrade process

• Importance of port logistics confirmed

• Large variations in time and cost across products (or product usage), transport routes, destination, firm size,…– Data collected needs to be carefully validated (e.g., through multi-stakeholder

meetings)


Conclusions and Recommendations (1)

• ESCAP trade cost database provide unique BILATERAL cost information

• �Countries to learn how to measure bilateral trade costs based on their national data

• �Countries to learn how to interpret available (cross-country) indicators and their limitations

• � Regular standardized BPA studies of trade procedures should be considered at the national/regional level– Complementary to WCO Time Release Study method

– Complementary to time/cost-distance model & ADB Corridor performance measurement initiative

– Best approach would be Joint cross-border Trade/Transit Process Analyses


Conclusions and Recommendations (2)

• Adoption of common TF (need/implementation) Assessment Framework can be useful to foster collaboration and understanding

• � Agree on a common Trade Facilitation Assessment Framework

• Adopt a simple existing framework to limit development and implementation costs

• Build on / Integrate existing data collection and performance monitoring initiatives by ADB under CAREC

• � If Single Window of special interest, agree on a

common implementation assessment framework– ESCAP/ECE and UNNExT are developing such framework

– ASEAN also working on this

13


Thank You

14

More information on the:

ESCAP Trade Cost Database - [email protected]

United Nations Network of Experts for Paperless

Trade (UNNEXT) – www.unescap.org/unnext

Asia-Pacific Research and Training Network on

Trade (ARTNeT) – www.artnetontrade.org


Annex


ESCAP’s Intraregional Trade Cost Database- Background

• Much progress has been made in developing trade

facilitation/costs indicators

• However, there are limitations, including:– (1) partial coverage of international trade costs (e.g., only international

shipping costs)

– (2) little or no information on bilateral/regional/south-south trade costs

– (3) very large variations in trade efficiency across products and trade routes

not captured

• ESCAP is therefore:– Developing a database of bilateral and intraregional trade costs

– Building capacity in Trade Process Analysis


What explains changes in the trade costs across countries?*

50+ %

25%

10%

10%

1%

10-30%

60-90%

Natural trade costs(geographic and cultural distance between countries)

0-10%Tariff costs

Policy-relatedNon-Tariff

trade costs

Business environment

Availability/use of ICT services

Liner Shipping Connectivity (port and maritime services efficiency)

Direct cost of trade procedures

Other factors, including:-Indirect cost of trade procedures

-Currency / exchange rate-Non-tariff Measures (SPS, TBT)

*simplified representation based on Duval (2011)

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