Trade facilitation policy at national and regional levels: core elements

Strengthening Trade Competitiveness in times of global economic crisis –

Challenges faced by LLDCs

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

Third Meeting of Trade Ministers of Landlocked Developing Countries

Ezulwini, Swaziland, 21-22 October 2009

José María Rubiato

UNCTAD – Trade Logistics Branch

jose.rubiato@unctad.org

Outline

Evolving concepts on Trade Facilitation

International Instruments related toTrade Facilitation

New Tools available

Trade facilitation reform

How to start

Evolving concepts

Traditional definition

Simplification and harmonization of international trade procedures and documentation

Core elements:• Documents as support of information• Procedures as information processing

Main outcomes:• Standard documents• Standard data and codes• Standard protocols

Transport corridors and trade channels

Supply chain management model

Core elements:• Goods movements rather than paperwork• Operational issues not only controls

Main outcomes:• Integrated approach on processes• Single international transaction

Recent evolution

TF is just a matter of bureaucracy

TF is inexpensive & easy to implement

Potentially Misleading Beliefs

Arrival Notice

Letter of InstructionInvoice, PO

Importer’s Bank

Ocean Carrier

Customs House Broker

Line of CreditProforma Invoice

Shipping & funding detail

Cargo Status

Vessel Booking Request

CargoStatus

Shipping & Funding Detail

Exporter’s Bank

Importer Exporter

Vessel Booking Confirmation

Bill of Lading

Rated Bill of Lading

Dock Receipt

Freight Forwarder / NVOCC

Purchase Order

LCConfirmation

AES

Dock receipt

Pick-up & Delivery Order

Vessel Manifest

Dock receipt

Release/Approval

Demurrage guarantee & payment

Inland Carrier

Manifest

Pick-up & Delivery Order

Importer Notice

Converted VesselManifest

Customs (Export)Port

Customs ( Import )

Original B/L, Invoice, PO, Packing List

Inland Carrier

Marine Insurance Company

Fund Transfer

Confirmed Line of Credit

Release/HoldNotice

Purchasing Export Import

ImportTerminalOperator

Proforma Invoice

Export Declaration

Export Declaration

Bill of lading, Documentation

Import Docs

Export Terminal Operator

• Up to 20 Involved Parties

• 200+ data elements

• Manual data exchange processes

• Multiple data platforms

• 30+ documents or messages

• 60-70% repetitions

• 6-15% of the final value of the goods

• 40% of the transaction time

Data Flow for International Trade

International Instruments related toTrade Facilitation

ICC International Customs Guidelines; ICS rec. on B/L and ship’s manifest; IMO FAL Convention; IMO: other conventions with TF relevance (7); Relevant ISO Standards; UN/ECE (& UN/CEFACT) Recommendations; UN/ECE TIR Convention; UN/ECE CMR Convention; WCO: Revised Kyoto Convention; WCO: Istanbul Conv. (Temporary Admission); WCO: Nairobi Conv. on Prevention, Investigation &

Repression of Customs offences; WCO: Various other WCO Customs Conv. (9); WCO: Various non-binding WCO rec. (5); Free trade agreements and/or Customs unions.

Instruments outside WTO

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

Existing WTO rules on trade facilitation

New Tools available

Trade Facilitation Platforms

National and Regional Trade and Transport Facilitation Committees: as structures for dialogue with private stakeholders, inter-agency coordination and high level policy coherence at national level in the design of administrative reforms.

WTO Trade Facilitation Support Groups: as coordinating mechanisms to support national negotiators in Geneva through the provision of technical expertise and feedback on the tabled proposals.

Transit corridor facilitation clusters: as operational multi stakeholders multi national cooperative platforms to assess obstacles, design and implement solutions to improve transport corridor operations and management.

Repository of Trade Facilitation Working Groups

A joint initiative by UNCTAD and UNECE the repository of national working group on trade facilitation, provides a collection of country's experiences in setting up and maintaining national inter-agency public private consultative trade facilitation mechanisms

The country experiences currently include Benin, Burkina Faso, Ecuador, Mali, and St. Lucia. It is planned to expand the number of countries’ participating during this and the following year.

See:http://r0.unctad.org/ttl/repository/TFWGintro.htm.

Clusters along Transport Corridors

ShipperShipper

Freight ForwarderFreight Forwarder

CustomsCustoms

CarrierCarrier

Cluster

Ulaanbaatar

Tianjin Port

Time/Cost – Distance Methodology

Zamyn Uud1000 km

Average speed22.4 km/h

Tianjin, 0 km

75 hrs 31 min.

500 km 1000 km 2000 km1500 km

Day 4

Distance

Tim

e

1,691 km33.7 km/h

27.5 km/h

04.18 a.m.

Day 3

Day 2

Day 129 hrs 12 min.

Erenhot, 983 km

02.30 a.m.

05.59 a.m.20 hrs 31 min.

Ulaanbaatar1700 km

Shunting + train formation:

3 hrs. 35 min.

Transshipment:(3.5 min. per box)3 hrs. 20 min.

4 hrs. 50 min.Mongolia,

China, 3 hrs. 00 min.Customs:

Example: Tianjin-Ulaanbaatar Railway link

Cost per TEUCost per TEU

$131$100

$293

$155 $124 $200

$650

$0

$100

$200

$300

$400

$500

$600

$700

Lao PDR-Thai

Lao PDR-Viet Nam

Mongolia-

China

Mongolia-Russian Fed.

Nepal-India

Kazakhstan-Russian Fed.

*Uzbekistan-Turkmenistan

* Estimated from cost of standard European 12 meter semi trailer.

Border Crossings: Cost or Time

UNCTAD Liner Shipping Connectivity in 2009

Maximum vessel size

TEU

Vessels

Services

Companies

70

80

90

100

110

120

130

140

150

160

2004 2005 2006 2007 2008 2009

Source:http://www.unctad.org/transportnews

Country 2004 2005 2006 2007 2008 2009 Rank 2009

Change 2009/2008

Change 2009/2004

China 100.00 108.29 113.10 127.85 137.38 132.47 1 -4.91 32.47 India 34.14 36.88 42.90 40.47 42.18 40.97 22 -1.21 6.83 Thailand 31.01 31.92 33.89 35.31 36.48 36.78 25 0.30 5.77 Brazil 25.83 31.49 31.61 31.64 30.87 31.08 33 0.21 5.25 South Africa 23.13 25.83 26.21 27.52 28.49 32.07 29 3.58 8.94 Lebanon 10.57 12.53 25.57 30.01 28.92 29.55 34 0.63 18.98 Iran, Islamic Rep. of 13.69 14.23 17.37 23.59 22.91 28.90 35 5.99 15.21 Pakistan 20.18 21.49 21.82 24.77 24.61 26.58 38 1.98 6.41 Vietnam 12.86 14.30 15.14 17.59 18.73 26.39 39 7.65 13.53 Argentina 20.09 24.95 25.58 25.63 25.70 25.99 40 0.29 5.90 Uruguay 16.44 16.58 16.81 21.28 22.88 22.28 46 -0.60 5.84 Côte d'Ivoire 14.39 14.52 12.98 14.98 16.93 19.39 53 2.46 5.00 Ghana 12.48 12.64 13.80 14.99 18.13 19.33 54 1.21 6.86 Chile 15.48 15.53 16.10 17.49 17.42 18.84 56 1.42 3.36 Djibouti 6.76 7.59 7.36 10.45 10.43 17.98 58 7.56 11.22 Peru 14.79 14.95 16.33 16.90 17.38 16.96 60 -0.42 2.17 Senegal 10.15 10.09 11.24 17.08 17.64 14.96 63 -2.67 4.81 Togo 10.19 10.62 11.09 10.63 12.56 14.42 68 1.86 4.23 Namibia 6.28 6.61 8.52 8.37 11.12 13.61 69 2.49 7.33 Benin 10.13 10.23 10.99 11.16 12.02 13.52 70 1.50 3.39 Kenya 8.59 8.98 9.30 10.85 10.95 12.83 72 1.88 4.24 Cameroon 10.46 10.62 11.41 11.65 11.05 11.60 73 0.55 1.14 Congo, Republic of 8.29 9.10 9.12 9.61 11.80 11.37 74 -0.43 3.08 Tanzania, UR of 8.10 8.59 8.71 10.58 10.46 9.54 83 -0.92 1.44

Transit Countries LSCI 2004-2009

WB - Logistics Performance Index

   1 <= LPI  <= 2.29    2.29 <= LPI  <= 2.53

   2.53 <= LPI  <= 3.14    3.14 <= LPI  <= 5

   No data 1 is the lowest score and 5 is the maximum score.

Source:www.worldbank.org/lpi

LPI 2009 – LLDCs and transit

Trade facilitation reform

Reform Policy Objectives

External commitments:

• Bilateral and regional agreements

• WTO

Internal objectives:

• Administrative effectiveness

• Better trade management

• Better use of public resources

• Trade competitiveness

• Support national trade sector

• Lower transaction costs

Common Reform Phases

Definition of goals to achieve the objectives

Analysis of the capacity of the current processes to achieve the goal

Analysis of required actions to fill the gaps

Assessment of needs/resources for identified actions

Design of individual processes

Development of comprehensive plan

Implementation of the solution

Operation and maintenance of the new system

Elements in each phase

Staffing: manpower / technical skills

Technology: equipment and training

Institutional: functions, interactions and management

Regulatory: authority and mandates

Budgeting costs / revenues

All the above for three different levels:

• Planning and monitoring unit : goals – analysis – solution - sequencing

• Design and development units: analysis and process development

• Implementation units: operation and maintenance of the system

Sequences to introduce reform

Function sequence depends on:

• Steps to take before

• Impact on consecutive processes

Priority sequence depends on:

• External commitments

• Other defined objectives

Time sequence depends on:

• Priorities

• Resource deployment

Three dimensions

TradeFacilitation

TRADE TRANSPORT

CUSTOMS

CUSTOMS dimension

Customs Facilitation

Customs Reformand Modernization

Support automateddata systems

faster clearanceof cargo

Increased Customsrevenues

Simplify/harmonizedocuments & procedures

Implement modernCustoms laws

ASYCUDA

TRADE dimension

Trade Facilitation

Best-recommendedcommercial practices

faster RoI

for IMP

Competitive

exports

Simplify IMP/EXPdocuments & procedures

Create awareness onbest practices

PromoteSingle Window

Transit Agr.

TRANSPORT dimension

Transport Facilitation

Faster turn-over

of means

smooth movementof goods

Create awareness onmodern transport & logistics

Establish norms(incl. liability insurance)

Implement modernTransport laws

Implement logistics tools

Best-recommendedtransport practices

How to start

Action planning workshop 3 days of analysis and 2 days for planning of activities with 20-25

participants:

• Ministry of Trade

• Ministry of Finance/ Customs

• Other Government Agencies related to trade

• Exporters, importers and shippers

• Service providers: Customs brokers, freight forwarders, carriers

• Commercial banks, Central Bank

• Export promotion agency / Investment promotion agency

Objective

To introduce fundamentals of trade facilitation (basic concepts,

global trends, what can be done, costs and benefits, how to

implement, etc);

To exchange experiences: learning about trade facilitation (TF),

identify bottlenecks, needs and priorities on TF.

To develop an initial high level scoping with participants and

outline a strategy for implementation (identification of bottlenecks,

priorities, key stakeholders, etc).

To prepare a draft national or regional action plan.

Day 1: General presentation

1) Introduction to trade facilitation

2) Cost and benefits of trade facilitation.

3) Main stakeholders of trade facilitation reforms.

4) Trade facilitation implementation strategies.

5) Presentation of trade facilitation successful reforms.

Day 2: Needs assessment - round table

To learn from participants about the state of the play as regards

trade facilitation and identify bottlenecks. The presence of

representatives of the private sector is essential.

Main obstacles and bottlenecks faced by trade operations

Current initiatives to address procedural obstacles and bottlenecks

Existing legal and institutional frameworks governing trade

Transit /transport policy and transit / transport arrangements.

Day 3: Barriers and Stakeholders

Risk analysis: minimum conditions that must exist for a successful

implementation of the project; external factors that can have an

impact on the project

Stakeholder analysis: identify key persons, institutions as

counterparts and establish a TF consultative group; identify a

possible trade facilitation task force that could support the

implementation of adopted measures.

Day 4: Plan of action

Determine a TF focal point to be the main counterpart for the future

project implementation.

Define the pre-conditions for projects implementation.

Determine project objectives/outcomes and related activities.

Prepare an initial draft of a project proposal.

Agree on an initial scheduling of the activities.

Discuss staffing and resource requirements

Design practical operational modalities.

Day 5: Meeting with donors and partners

Meet with relevant financing and technical assistance agencies

foreseen to be involved in project implementation

Current activities and ensure synergies and complementarities

Discuss local practical conditions for project personnel deployment

and scheduling of deliveries.

Announcements

8-9-10 December 2009: Experts meeting on Public and Private Partnerships for the Development of Infrastructure to Facilitate Trade and Transport.

11December 2009: Ad Hoc Experts Meeting on Transit Ports servicing Landlocked Developing Countries

Thank you

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT

José María Rubiato

UNCTAD – Trade Logistics Branch

jose.rubiato@unctad.org

Third Meeting of Trade Ministers of Landlocked Developing Countries

Ezulwini, Swaziland, 21-22 October 2009