South Asia South Asia –– Regional Cooperation Regional Cooperation
on Trade Facilitation: Overview of on Trade Facilitation: Overview of
Existing InitiativesExisting Initiatives
PrabirPrabir DeDe
RISRIS
Asia Asia –– Pacific Trade Facilitation Forum 2011Pacific Trade Facilitation Forum 2011
4 4 –– 5 October 20115 October 2011
SeoulSeoul
South Asia Has High Trade South Asia Has High Trade
Potential, But Largely UnrealizedPotential, But Largely Unrealized�� Regional trade in South Asia is moving below potentialRegional trade in South Asia is moving below potential
�� IntraIntra--regional trade in 2010: US$ 15 billion (approx.)regional trade in 2010: US$ 15 billion (approx.)
�� IntraIntra--regional trade potential: US$ 40 billion* regional trade potential: US$ 40 billion*
�� About 65% of intraAbout 65% of intra--regional trade potential is remained regional trade potential is remained unrealizedunrealized
�� Causes of high underutilization of intraCauses of high underutilization of intra--regional trade are regional trade are mostly economic in nature mostly economic in nature �� High trade barriers High trade barriers –– both visible and invisibleboth visible and invisible
�� Poor transportation links and lack of transitPoor transportation links and lack of transit
�� Inadequate trade facilitation measures Inadequate trade facilitation measures
�� Lack of supply capabilities of Lack of supply capabilities of LDCsLDCs, among others., among others.
�� Region suffers from high trade costsRegion suffers from high trade costs (e.g. transport (e.g. transport costs outweigh tariffs)costs outweigh tariffs)
*RIS estimation based on a gravity model
Intraregional Comprehensive Trade Intraregional Comprehensive Trade
Costs (2007, tariff equivalent)Costs (2007, tariff equivalent)
Source: Duval and Utoktham (2010)
Two Appealing Reasons Two Appealing Reasons
for the Need of Improved for the Need of Improved
Trade Facilitation in Trade Facilitation in
South AsiaSouth Asia
1.1. Improved Trade Facilitation Improved Trade Facilitation
Enhances Trade FlowsEnhances Trade Flows
Source: Brooks (2008)
(Trade
Facilitation)
2. Improved Logistics and Trade 2. Improved Logistics and Trade
Facilitation Strengthen Facilitation Strengthen
Production NetworksProduction Networks
Trade Facilitation Intervention
Source: Adapted from Kimura et al (2009)
Low Intraregional Trade, Low Intraregional Trade,
with Changing Trade with Changing Trade
Pattern in South AsiaPattern in South Asia
Intraregional Trade in South AsiaIntraregional Trade in South Asia
0
5
10
15
20
25
30
35
40
45
1985 1990 1995 2000 2005 2010 2015
Intr
a-r
eg
ion
al
tra
de
(%
)
ASEAN ASEAN+3 SAARC
�� Low intraregional trade Low intraregional trade
(goods) share in South Asia, (goods) share in South Asia,
�� average 4.43% in last two average 4.43% in last two
decadesdecades
�� grown @ 2% per annumgrown @ 2% per annum
�� Intraregional trade increased Intraregional trade increased
from from US$ 2.89 billion in US$ 2.89 billion in
2000 to US$ 14.67 billion 2000 to US$ 14.67 billion
in 2010in 2010
�� High informal tradeHigh informal trade
�� Sensitive list Sensitive list
2.91%
4.31%
18.84%
26.37%29.41%
39.56%
Source: DOTS, IMF
Intra-regional Trade Average1990-2010 1990s 2000s
ASEAN 24.28 22.32 26.03
ASEAN+3 36.30 34.16 38.11
SAARC 4.43 3.69 5.18
(%)
1990-2010 1990s 2000s
ASEAN 1.70 2.61 0.74
ASEAN+3 1.49 2.07 0.33
SAARC 1.99 3.07 -0.21
(%)
Intra-regional Trade Growth (CAGR)
Wide Variations in Intraregional TradeWide Variations in Intraregional Trade
568.2064.470.5864.56417.1321.470.00Sri Lanka
2688.54270.580.904.53294.75393.691724.09Pakistan
532.041.470.970.01496.9232.680.00Nepal
22.8917.830.010.003.941.110.00Maldives
10160.082560.011878.171828.7696.563234.21562.38India
419.6312.0368.639.810.00321.797.36Bangladesh
274.660.00137.800.000.00135.940.92Afghanistan
SAARCSri LankaPakistanNepalMaldivesIndiaBangladeshAfghanistan
Source: DOTS, IMF
(US$ million)Intraregional Trade Matrix, 2010
Higher Market Access for Small EconomiesHigher Market Access for Small Economies
3.48
4.55
42.90
18.13
4.47
1.66
42.61
(%)
Regional export Regional export
share* 2000share* 2000
6.70
12.56
66.10
21.66
4.57
2.86
51.61
(%)
Regional export Regional export
share* 2010share* 2010
(%)(US$ million)(US$ million)
17.642890.0914666.04SAARC
11.58189.88568.20Sri Lanka
20.86404.262688.54Pakistan
5.58309.20532.04Nepal
5.1813.8122.89Maldives
18.761819.9510160.08India
16.3092.69419.63Bangladesh
16.3760.30274.66Afghanistan
CAGR CAGR
(2000(2000--2010)2010)
Export value
2000
Export value
2010
CountryCountry
Source: DOTS, IMF
*Share in global exports
High Regional High Regional
Infrastructure Deficit, Infrastructure Deficit,
Poor Connectivity, and Poor Connectivity, and
Congested Borders Congested Borders
Poor Regional Infrastructure LinksPoor Regional Infrastructure LinksSector Countries Particular
Road transportation
(passenger bus
services)
India and Pakistan
Delhi – Lahore
Amritsar-Nankana Sahib
Amritsar – Lahore
Poonch - Rawalakot
Srinagar - Muzaffarabad
India and Bangladesh Kolkata – Dhaka
Agartala – Dhaka
India and Bhutan Kolkata – Phuentsholing
Siliguri – Phuentsholing
Rail transportation
(passenger train
services)
India and Pakistan Delhi – Lahore
Jodhpur - Karachi
India and Bangladesh Kolkata - Dhaka
Energy (power trading)
India and BhutanPower transmission lines
India and Nepal
India and Sri Lanka**Proposed
Lack in TransitLack in Transit
Nepal – member,
Bhutan – observer
NoYesBilateralBhutan-Nepal
Bangladesh – member,
Bhutan – observer
YesYesBilateralBangladesh-Bhutan
YesYesYesBilateralBangladesh-Nepal
Pakistan – member
Afghanistan – observer
YesYesBilateralPakistan-Afghanistan
YesNoNoBilateralIndia-Pakistan
India – member;
Bhutan – observer
YesYesBilateralIndia-Bhutan
YesYesYesBilateralIndia-Nepal
YesNoYesBilateralIndia-Bangladesh
GATT SignatoriesMFN
Transit
MFN
Trade
TypeAgreement
Congested Borders and Lack of Congested Borders and Lack of
Transparency in Customs OperationTransparency in Customs Operation
67-118Copies of documents required at border (No)
17-29Types of documents required at border (No)
3.923.632.5Border crossing delays (days)**
16.8010.38-Transaction costs (% of shipment value)*
Survey year: 2005
Survey year: 2002
Survey year: 1998
De and Ghosh
(2006)
Das and Pohit(2006)
Subramanian and Arnold
(2001)
Particulars
Transaction Time and Cost for India’s Overland Exports to Bangladesh
Source: De and Ghosh (2008)
Outcomes of Current Outcomes of Current
State of Affairs of Trade State of Affairs of Trade
Facilitation Facilitation
Export Takes Longer TimeExport Takes Longer Time
21214121173825742011
21224121173825742010
21224121173828742009
21224321183828672008
25224321273835672007
25314321273835662006
Sri LankaPakistanNepalMaldivesIndiaBhutanBangladeshAfghanistanYearYear
Source: Doing Business Database, The World Bank
(Number of Days)
Rising Costs of ExportRising Costs of Export
7156111,9601,5501,0551,3529853,8652011
7156111,7641,3489451,2109703,3502010
7156111,7641,3489451,2109703,0002009
6605151,6001,2008201,1508442,5002008
6475151,6001,2008641,1509022,5002007
6479961,6001,2008641,1509022,5002006
Sri LankaPakistanNepalMaldivesIndiaBhutanBangladeshAfghanistanYear
(US$ per container)
Source: Doing Business Database, The World Bank
How is South AsiaHow is South Asia’’s s
Performance, when Performance, when
Compared with China? Compared with China?
South Asia much behind of China in South Asia much behind of China in
Logistics PerformanceLogistics Performance
3.043.91
Timeliness of shipments in reaching destination within the scheduled or expected delivery time.
Timeliness
2.533.55
Ability to track and trace consignments;Tracking & tracing
2.333.49
Competence and quality of logistics services (e.g.transport operators, customs brokers);
Logistics competence
2.613.31
Ease of arranging competitively priced shipmentsInternational shipments
2.133.54
Quality of trade and transport related infrastructure (e.g. ports, railroads, roads, information technology)
Infrastructure
2.223.16
Efficiency of the clearance process (i.e. speed, simplicity
and predictability of formalities) by border control agencies, including Customs
Customs
2.493.49LPI
South
AsiaChina
DefinitionIndicators
Source: World Bank
LPI (International): 2010LPI (International): 2010
South Asia Showing Wide Variations South Asia Showing Wide Variations
in LPI, Potential for Improvementin LPI, Potential for Improvement
3.042.532.332.612.132.222.49South Asia
2.742.262.072.211.802.072.20Nepal
2.612.372.092.241.872.222.24Afghanistan
2.982.232.092.481.881.962.29Sri Lanka
2.992.542.242.441.832.142.38Bhutan
2.832.422.292.422.162.252.40Maldives
3.082.642.282.912.082.052.53Pakistan
3.462.642.442.992.492.332.74Bangladesh
3.613.143.163.132.912.703.12India
Timeli-ness
Tracking & tracing
Logt.
Competence
Int.
shipmentsInfras-tructure
CustomsLPICountry
Source: World Bank
LPI (International): 2010LPI (International): 2010
Trade Facilitation Trade Facilitation
Gaining Higher Gaining Higher
Importance (WTO+) in Importance (WTO+) in
Regional Cooperation Regional Cooperation
AgreementAgreement
Trade Facilitation Measures in Trade Facilitation Measures in
Forefront of Regional AgreementsForefront of Regional Agreements
NoNoNoYesNoBIMSTEC
YesYesNoYesYesSAARC
NoNoNoYesNoINDIA-THAI
YesYesYesYesYesEU
YesYesYesYesYesNAFTA
YesYesNoYesYesASEAN
NoNoNoNoNoINDIA-LANKA
NoNoNoNoNo
INDIA-
AFGHAN
NoYesNoYesNoCHINA-PAK
NoNoNoYesNoASEAN-INDIA
NoNoNoNoNoAPTA
Cooperation in
Trade
Facilitation
E-Commerce
/Paperless
Trade
Trade
Regulations
Publication
Customs
Valuation
Customs
ProceduresAgreement
Source: APTIAD, UNESCAP
Regional Trade and Regional Trade and
Transport Facilitation: Transport Facilitation:
Progress so FarProgress so Far
Some Encouraging Developments in Some Encouraging Developments in
Physical ConnectivityPhysical Connectivity� Negotiation of Regional Transport and Transit Agreement, and a Regional Motor Vehicle’s
Agreement (ongoing).� SAARC Expert Group finalized the text of the Regional Agreement on Railways in August 2011.
� Launch of feasibility studies of pilot projects:� Birganj and Kathmandu (160 km) completed in October 2008 – negotiation ongoing
� Kathmandu-Birgunj-Kolkata/Haldia – rail corridor� Birgunj-Katihar-Singhabad-Rohanpur-Chittagong with links to Jogbani, Biratnagar and Agartala –
rail corridor
� Agartala-Akhaura-Chittagong – rail corridor
� Construction between Agartala and Akhaura (14 km) is about to commence.
� Phuntsholing and Hashimara – road corridor
� Ferry link - between Colombo and Tuticorin (started already) and Colombo and Cochin
� Air link - Malé-New Delhi and Islamabad-New Delhi;
� Establishment of modern border crossing facility at Phuntsholing.
� On-going projects: � Feasibility study for India - Bhutan rail link
� Construction of railway line from Jiribam-Tupui (near to Imphal, India) has commenced
� Construction of Kaladan Multimodal Transport project has started in December 2010
� Railway infrastructure improvement projects in Sri Lanka� Intermodal connectivity – Air Services Agreement (single ticket to fly between South Asian
nations)
� Demonstration run of container train involving Bangladesh, India and Nepal
Progress in Modernizing and Progress in Modernizing and
Opening of Land Customs Stations Opening of Land Customs Stations
� India’s Integrated Check Post (ICPs)
project
� Opening of Banglabandha – Fulbari land
port for trade
� Opening of border haat in Baliamari
(Bangladesh) – Kalaichar (India)
� Few more border haats (e.g. between India
and Bangladesh) coming up
Progress in Customs CooperationProgress in Customs Cooperation� SAARC Agreement on Mutual Administrative Assistance in
Customs Matter, signed in 2005� The Seventh Meeting of the Sub-Group on Customs Cooperation
(11-12 February 2010) made following recommendations with a view to facilitating trade in goods in SAARC. � Building infrastructure including roads and railways networks near the LCSs.� Customs clearance procedures at LCSs need to be smoothened;� Customs Administrations may consider a system of customs facilitation in
which export documentation of one Member State could be considered by the Customs Administration in the importing country for the purposes of assessing and clearing the consignment.
� Need for developing an Electronic Data Exchange System within the region, including at LCSs, with a view to ensure better facilitation of trade in goods among the SAARC countries including improved compliance.
� SAARC Secretariat to develop a regional/sub-regional project to set up automated customs clearing mechanism at the designated LCSs.
� Harmonisation of 8-digit tariff lines is needed, and in order to make this task easier, all Member States would further provide upto only 100 8-digit tariff lines with a trade potential of 75% (in value terms) in the region.
Regional Transit Regional Transit –– Benefits to Smaller Benefits to Smaller
CountriesCountries� Bangladesh can earn hefty
revenue (over US$ 1 billion per annum) as transit fees from Indian vehicles plying to and from India’s North Eastern Region (NER) to rest of India using Bangladeshi soil.
� Similarly, transit arrangement between India, Pakistan and Afghanistan will fetch a hefty royalty to Pakistan for movement of vehicles between India and Afghanistan using Pakistani soil.
� There are also huge gains associated with energy conservation due to transit and efficient use of resources.
US$ 110 - 180
MILLION
AGATALA (INDIA)/ AKHAURA
(BANGLADESH),
BENAPOLE /
PETRAPOLE
INDIA &
BANGLADESH
AGARTALA –AKHAURA –
DHAKA –
KOLKATA (478
KMS)
US$ 660 - 1060
MILLION
DAWKI (INDIA)
/TAMABIL
(BANGLADESH),
BENAPOLE
(BANGLADESH) /
PETRAPOLE (INDIA)
INDIA &
BANGLADESH
SHILLONG –
SYLHET –
DHAKA –
KOLKATA (721
KMS)
REVENUE OF
BANGLADESH FROM
TRANSIT (US$)*
BORDER CROSSINGSCOUNTRIESCORRIDOR
Note:* Average during the period 2007 to 2010. Several assumptions applied.
Source: Author
Estimated Transit Revenue of Bangladesh for
India – Bangladesh Trade
Encouraging Progress in TransitEncouraging Progress in Transit
� All SAARC countries have in-principally agreed to regional regional transittransit.
� Motor Vehicle Agreement is being negotiated.
� SAARC Expert Group finalized the text of the Regional Agreement on Railways in August 2011.
� Sub-regional transit has been agreed between India, Nepal, Bhutan and Bangladesh.
� Bilateral document between India and Bangladesh signed during the state visit of Indian PM to Bangladesh in September 2011 to facilitate overland transit traffic between Bangladesh and India
� Demonstration run of container train between Bangladesh, India and Nepal is getting ready.
� Huge trade opportunities if Afghanistan – Pakistan Transit Agreement covers Western South Asia subregion.
Three Important Developments on Three Important Developments on
Regional Connectivity Regional Connectivity
(Strong Impact on Trade Flow)(Strong Impact on Trade Flow)
1. Transit for traffic between India, Bangladesh,
Nepal, and Bhutan.
2. Integrated check post (ICP) in Moreh in
Manipur and Petrapole in West Bengal (India)
3. India – ASEAN connectivity projects
Deepening South Deepening South
Asian Integration Asian Integration
The Renewed VisionThe Renewed Vision
1. With SAFTA, South Asia has entered into the second era of regional integration
2. Vision is to achieve Common (Single) Marketthrough Customs Union and then Economic Union
Milestones to CrossMilestones to Cross
Harmonized &
integrated road
and railway
network
Maritime &
waterways
network
Aviation
policy
One
‘Customs’
Transit Competition
Policy
EU (10)✓ ✓ ✓ ✓ ✓ ✓
ASEAN � ✓ ✓ ✓ ✓ �
NAFTA �*✓ ✓ ✓
✓*✓
SAARC � � � � � �
SAARC Integration Next Stages:
Customs Union (2015) => Economic Union (2020)
* Except US and Mexico
The ChallengesThe Challenges
Source: World Bank
Making Trade Friendly Land BordersMaking Trade Friendly Land Borders
Unplanned and informal market
Long queue of trucks
3.6
0
hrs
5.0
0
hrs
78
.40
h
rs10
.00
h
rs
Loading at
Kolkata
Kolkata to
Petrapole
Time at
Petrapole
Unloading at Benapole
5.1
0
hrsCrossing border
returning from
Benapole
International
border
Total Time = 102.10 hrs.
(≈≈≈≈ 4 days)
Kolkata
Ban
gla
desh
Ind
ia
Case of India (Petrapole) and Bangladesh (Benapole)
3.6
0
hrs
5.0
0
hrs
78
.40
h
rs10
.00
h
rs
Loading at
Kolkata
Kolkata to
Petrapole
Time at
Petrapole
Unloading at Benapole
5.1
0
hrsCrossing border
returning from
Benapole
International
border
Total Time = 102.10 hrs.
(≈≈≈≈ 4 days)
Kolkata
Ban
gla
desh
Ind
ia3.6
0
hrs
5.0
0
hrs
78
.40
h
rs10
.00
h
rs
Loading at
Kolkata
Kolkata to
Petrapole
Time at
Petrapole
Unloading at Benapole
5.1
0
hrsCrossing border
returning from
Benapole
International
border
Total Time = 102.10 hrs.
(≈≈≈≈ 4 days)
Kolkata
Ban
gla
desh
Ind
ia3.6
0
hrs
5.0
0
hrs
78
.40
h
rs10
.00
h
rs
Loading at
Kolkata
Kolkata to
Petrapole
Time at
Petrapole
Unloading at Benapole
5.1
0
hrsCrossing border
returning from
Benapole
International
border
Total Time = 102.10 hrs.
(≈≈≈≈ 4 days)
Kolkata
Ban
gla
desh
Ind
ia3.6
0
hrs
5.0
0
hrs
78
.40
h
rs10
.00
h
rs
Loading at
Kolkata
Kolkata to
Petrapole
Time at
Petrapole
Unloading at Benapole
5.1
0
hrsCrossing border
returning from
Benapole
International
border
Total Time = 102.10 hrs.
(≈ 4 days)
Kolkata
Ban
gla
desh
Ind
ia3.60
hrs
5.00
hrs
78.40
hrs
10.00
hrs
Loading at
Kolkata
Kolkata to
Petrapole
Time at
Petrapole
Unloading at
Benapole
5.10 hrsCrossing border
returning from
Benapole
International
border
Total Time = 102.10 hrs. (Total Time = 102.10 hrs. (≈≈≈≈≈≈≈≈
4 days)4 days)
Kolkata
Ban
gladesh
India
Simplifying Trade Procedures Simplifying Trade Procedures
Source: De (2011)
(i) BPA Charts of Cotton Yarn Export from India to Bangladesh(i) BPA Charts of Cotton Yarn Export from India to Bangladesh
Simplifying Trade Procedures Simplifying Trade Procedures
Source: Hossain and Rahman (2011)
(ii) BPA Charts of RMG Export from Bangladesh to India(ii) BPA Charts of RMG Export from Bangladesh to India
Signing International Conventions Signing International Conventions
on Trade & Transport Facilitationon Trade & Transport Facilitation
NoNoNoNoNoNoNoNoConvention on the
Harmonization of Frontier
Controls of Goods (1982)
NoNoNoNoNoNoNoNoConvention on the Contract for the International
Carriage of Goods by Road
(1956)
NoNoNoNoNoNoNoYesConvention on International
Transport of Goods under
Cover of TIR Carnets (1975)
NoNoNoNoNoNoNoNoCustoms Convention on
Containers (1972)
NoNoNoNoNoNoNoYesCustoms Convention on Temporary Importation of
Commercial Road Vehicles
(1956)
NoYesNoNoYesNoNoNoConvention on Road Signs and Signals (1968)
YesYesNoNoYesNoYesNoConvention onRoad Traffic (1968)
Sri LankaPakistanNepalMaldivesIndiaBhutanBangladeshAfghanistanConvention
Some Specific RecommendationsSome Specific Recommendations1.1. Accept Accept subregionalsubregional and subsequently regional and subsequently regional transittransit
2. Fast track lane and priority of goods in transit to cross the border
3. Set-up SAARC Single Window (Customs) (pilot run of authorized economic operator, AEO; and mutual recognition agreement)
4. Simplification and harmonization of trade procedures, more particularly at border.
5.5. Strengthen Strengthen crosscross--border infrastructureborder infrastructure (move from road corridors to (move from road corridors to economic corridors)economic corridors)
6.6. Introduce Introduce modern corridor management techniquesmodern corridor management techniques in selected in selected corridorscorridors
7.7. Promote Promote multimodal transportationmultimodal transportation (with rail transit, regular (with rail transit, regular container train in the region)container train in the region)
8.8. Improve the Improve the efficiency of border corridorsefficiency of border corridors (both side of border (both side of border improvement in ICP project in parallel)improvement in ICP project in parallel)
9.9. Effective Effective project coordinationproject coordination among government stakeholdersamong government stakeholders
10. Stronger institution (publicinstitution (public--private interface)private interface) for trade facilitation is for trade facilitation is urgently needed. urgently needed.
Thank youThank you