Transcript costs and benfits of trade faciltation

UNECE – SECOND INTERNATIONAL FORUM
ON TRADE FACILITATION
GENEVA, 14-15 MAY 2003
COSTS AND BENEFITS OF
TRADE FACILITATION
Anthony Kleitz
Trade Directorate, OECD
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I. OBJECTIVE OF THIS PRESENTATION

Understand better the nature and importance of
trade facilitation.

Focus on a quantitative rather qualitative
assessment.
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II. DEFINITIONS
Trade facilitation (TF) – an imprecise term
 WTO: simplification and harmonisation of trade
procedures;
 Often considered to include other procedural NTBs.
Costs and benefits – not the flip side of each other
 Trade transaction costs (TTC): what TF aims to reduce;
 Implementation costs of TF;
 Benefits of TF: come from the reduction of TTC;
 Public and private sectors see different costs and benefits.
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III. QUANTITATIVE ANALYSIS OF COSTS
AND BENEFITS OF TF
a) Challenges:




Inconsistent data on TTC and implementation costs;
No standard methodology for analysis;
Results vary according to parameters and assumptions.
Public and private sectors face different costs and benefits.
b) Implementation costs for governments - an example of
data for automated customs systems:



Chile – $ 5 m.;
Chinese Taipei – $ 5 m. (air-cargo system),
$ 6.5 m. (sea-cargo system);
US – overall $ 1 b. (ACE estimate).
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c) Modelling trade and welfare effects:
1. Overall TTC and benefits of TF: some results
– TTC valued by UNCTAD at 7-10% of world trade;
– Typically TF estimated to reduce TTC by 1-3% of world
trade value, increasing GDP:
Estimated Benefits of TF*
Additional GDP Growth
(Billion US$)
Share of TF benefits in overall
liberalisation benefits (%)
Dutch study (2003)
72
34%
OECD study (2003)
76
65%
APEC study (2002)
154
56%
* Liberalisation assumptions of these studies differ
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2. Quantitative cost indications for particular
sectors:
Some goods more susceptible to border controls
-- e.g. border delays for agricultural products:
•
•
Korea – typically 10-18 days for new products (cf. less
than 3-4 days for most other agricultural products);
Japan – 1 day more for sea-cargoes subject to other
government procedures (e.g. animal and plant quarantine,
food sanitary).
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3. Quantitative assessments for particular countries:
Customs Service Quality in Relation to GDP Per Capita
10
8
6
4
2
0
0
5000
10000
15000
20000
25000
30000
35000
40000
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CUSTOMS QUALITY BY REGION
10
8
6
4
2
0
Western
Europe
Eastern
East &
Europe & South Asia
Central Asia
North
America
Latin
Middle East Sub-Saharan Oceania
America & & North
Africa
Caribbean
Africa
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OBSERVATIONS ON PERCEIVED QUALITY OF THE
CUSTOMS ENVIRONMENT


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
“Customs service quality” is an average of three survey
indicators;
SMEs and developing country firms frequently seen as
disadvantaged in meeting TTC and implementation costs;
Positive correlation between income and customs quality;
Yet many examples of low-income countries with good
customs services;
Examples of countries with good customs found in all
major regions;
Suggests that benefits can be within grasp.
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4. Calculations for particular kinds of costs and
benefits:
•
Administrative costs: Japan MITI estimates feasible
reductions of import prices:
– 0.5-1.2% for transport machinery;
– 1.5-2.4% for other machinery and equipment.
•
Savings from paperless trading:
– estimated 1.5-15% of landed value by Australian DFAT;
– 3% average  $60b. savings across APEC.
•
Time required for customs release.
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Average Customs Clearance Time for
Imports through trade facilitation
(Hours)
Economy
Before
After
240
0.2
48 - 96
0.25
Greece
5-6
0.5
Korea
2.8
0.75
Costa Rica
144
0.2 - 1.9
360 - 720
2 - 24
New Zealand
Singapore
Peru
Source: WTO, OECD, and others
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IV. CONCLUDING REMARKS
No single answer; work continues.
Important to identify key areas where TF may
produce greatest benefits.
• One size does not fit all;
• Importance of a coherent approach to streamlining
procedures and improving infrastructure.
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