Transcript Trade Facilitation and Capacity Building Priorities

Trade Facilitation for
Development
Gianni Zanini
Lead Economist (Trade)
The World Bank Institute
Moscow, March 20, 2006
Moscow, Russia, March 20, 2006
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Outline
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Trade Facilitation – Indicators
Trade Facilitation Reform – Benefits
Customs Modernization
Rules of Origins
Trade Facilitation – The Doha Negotiations
The World Bank and Trade Facilitation
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Trade Facilitation: What is it?
• Simplification, harmonization, and transparency
of transit and customs procedures and
associated information flows to reduce costs of
moving goods between seller and buyer across
international borders
• More broadly, it may also encompass the
physical improvement of infrastructure
investment (roads, ports, airports)
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Trade Facilitation Information
• International Exhibition Logistics
Association (www.iela.org)
• Doing Business Database, Trade Indicators,
World Bank (www.doingbusiness.org)
• Global Facilitation Partnership for Trade
and Transportation (www.gfp.org)
• Trade Facilitation Negotiations Support
Project (www.worldbank.org)
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Trade Facilitation: Why Reform I
• Transit costs > import tariff incidence
• Transit costs in developing countries 2-4 times > in OECD
• Significant impact on costs of goods
– Administrative and customs costs at Brazilizan ports add 20 %
(World Bank study of Brazilian ports, 1997
– Logistics account for 33 % of shipment costs (Subramanian-Arnold,
2001)
– Higher inventory raises costs of production by 20% (Gausch and
Kogan, 2001)
– ½% to 1% of goods value per day in customs (Hummels 2001)
• Impact on growth, inequality, exports
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Trade Facilitation: Why Reform II
Global income changes from a one-percentage-point ad valorem increase in trade costs (losses as a
percent share of GDP)
Latin America
North America
South Asia
North Asia
Oceania
Sub-saharan Africa
N. Africa & Middle East
Eastern Europe
Western Europe
Rest of the World
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Source: Walkenhorst and Dihel (2002)
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Trade Facilitation: Why Reform III
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Easiest and Most Difficult Traders
Note: Russia Rank (Trading Across Borders Indicators): 67
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Small Role of Physical Infrastructure
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Days to Import
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Major Reforms
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Major Hurdles
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Less Bureacracy in OECD and Asia
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Russia - Trading Across Borders
Russia Rank: 67
Source: Doing Business Database 2005
http://www.doingbusiness.org/ExploreEconomies/Default.aspx?economyid=159
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IELA; Customs Clearance Days
Figure 5 Developing countries take longer to move goods
through customs
Customs clearance for partial container load of sea cargo (in days)
Germany
Singapore
US
Indonesia
Thailand
Mexico
South Africa
Cape Verde
Guinea Bissau
India
Brazil
Taiwan, China
Egypt
Russian Federation
Argentina
0
2
4
6
8
10
12
14
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Source: International Exhibition Logistics Associates (http://www.iela.org).
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Other Benefits from Reform
• 1-2% reduction in import prices yields 3.3 percent increase in
exports (APEC 1999)
• 1% cost reduction in maritime and air transport services yields
$3.3 billion in Asian GDP (UNCTAD 2001)
• 10 % increase in web-hosts increases trade by 1% (Freund and
Weinhold (2000)
• 10 % fall in telecom costs increase trade 8% (Fink, Mattoo,
Neagu 2002)
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Gains from Raising Trade Facilitation Capacity
• Wilson, Mann, Otsuki (World Bank 2003)
built a dataset for 75 countries with trade
facilitation defined broadly as:
– Port efficiency, Customs environment, Regulatory
environment and Services infrastructure
• Clarify capacity building priorities and gains
from collective action vs domestic reform
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Significant Trade Gains from Raising
Capacity Half-way to Global Average
$377 billion increase in 75 countries
Sources of Trade Expansion
Port
Efficiency
28%
Services
41%
Regulatory
Harmnization
10%
Customs
Environment
9%
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Trade Gain from Reform by Region
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16
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% Change
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Ports
10
Customs
Regulations
8
Services
6
4
2
0
OECD
East Asia
ECA
LAC
South
Asia
Sub-Sah.
Africa
Source: Wilson, Mann and Otsuki (2003)
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Significant Export Trade Gains
Source: Calculations based on table 4 in Wilson, Mann,
and Otsuki, “Trade Facilitation and Capacity Building: Global Perspective,” 2003, mimeo.
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Unilateral vs Collective Actions
• Majority of the trade gains in all four areas
are associated with unilateral actions
• Collective actions through international
agreements will also increase trade
• Majority of export gains to developing
countries occurred by increased access to
OECD market.
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Terrorism and Trade:
Economic Costs…..but
• Doubling of terrorist incidents 1968-1979 led to a
6% decrease in bilateral trade between targeted
economies (Nitsch and Schumacher, 2002).
• World welfare declines by $75 billion – 1%
increase in trade costs (Walkenhorst and Dihel
2002).
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….Security and Automation Can Also
Promote Investment and Growth
• Private investment rose 0.5-1 % of GDP in countries that
adopted security measures in ‘best practice’ regions. GDP
growth rose by 0.5-1.25 % per year (Poirson 1998)
• More automated customs can improve efficiency and
accuracy of inspections.
• Introduction of automated customs lowers direct costs of
customs clearance by the equivalent of 0.2% . Indirect
benefits with reduced delays lower costs by 1% (Hertel,
Walmsley and Ikatura, 2001).
• Prospect of fewer threats and reduction in risk premiums
• Delays in clearance of goods through customs that
currently impedes competitiveness of developing country
trade can also be reduced – contributing to port efficiency
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World Bank Strategy
• Strengthened capacity for AAA
– New research and data; more experts
– More indicators
• Expand lending in FY04-06
• Strengthen partnerships (GFP, WTO, WCO,
bilateral donors...)
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THANK YOU
[email protected]
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KEY REFERENCES
• Wilson John, Catherine Mann, and Tsnushiro Otsuki, (2004),
“Assessing the Potential Benefits of Trade Facilitation: A Global
Perspective”, World bank Working Paper 3224.
• Walkenhorst, Peter and Tadashi Yasui (2003). “ Quantitative
Assessment of the Benefits of Trade Facilitation.”
TD/TC/WP2003(31)/Final.(13 November). Paris:OECD.
• De Wulf Luc and J. Solok , editors , (2004) Customs Modernization
Initiatives: Case Studies, Trade and Development Series, World bank,
Washington D.C..
• De Wulf Luc and Jose Sokol, editors (2005), Customs Modernization
Handbook, Trade and Development Series, World Bank, Washington
D.C..
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Thank You
– www.worldbank.org/trade
– www.worldbank.org/transport
– www.worldbank.org/prospects/gep04
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