Trade Facilitation in South Asia: a reflection of selected...

7Th South Asia Economic Summit

New Delhi

5-7 November 2014

Trade Facilitation in South Asia:

a reflection of selected areas

Tengfei Wang

Economic Affairs Officer

Trade Facilitation Unit

Trade and Investment Division

United Nations Economic and Social Commission for Asia and the Pacific

[email protected]

7Th South Asia Economic Summit, New Delhi, 5-7 November 2014

Outline

Stocktaking

Trade Costs

Trade Process and Procedures

Implementation of trade facilitation and paperless measures

Transit issue

Way Forward

Sustainable national trade and transport facilitation monitoring

mechanism (TTFMM)

Take the advantage of available trade facilitation tools


ESCAP-World Bank International Trade Cost Database

ESCAP started developing a bilateral trade cost database in

2010 in an effort to increase understanding of the cost of

trading between countries in Asia and the Pacific and beyond.

In late 2011, United Nations ESCAP and the World Bank (WB)

joined hands to develop a common standard methodology for

calculating comprehensive international trade costs.

The current version of database includes data from 1995 to

2013 for over 180 countries


Key findings from the ESCAP-World Bank Trade

Costs database

1. All-inclusive trade costs are often much higher than tariff

rates

2. Trade costs in developing countries much higher than in developed countries

3. Trade costs in agriculture much higher than trade costs in manufacturing in all income groups

4. Very different levels of trade costs in different developing regions

5. Often cheaper for developing countries to trade with far-away developed countries than to trade with neighbors


Intra- and Inter-regional trade costs

of Asia and the Pacific subregions*

Period ASEAN-4 East Asia-3 North and

Central Asia Pacific Islands

Developing

Economies

SAARC-4 AUS-NZL EU-3 USA

ASEAN-4 2007-2012 76.46% 75.03% 389.38% 227.76% 125.31% 99.32% 109.04% 83.86%

% change 7.39% 5.66% 5.19% 3.78% 0.04% 3.02% 5.13% 11.36%

East Asia-3 2007-2012 75.03% 51.10% 217.62% 238.15% 124.35% 90.58% 84.35% 62.17%

% change 5.66% -7.08% -9.60% -3.28% -0.50% -2.17% -5.27% -1.79%

North and Central Asia 2007-2012 389.38% 217.62% 141.77% 303.96% 271.61% 325.92% 164.01% 189.23%

% change 5.19% -9.60% 1.91% 23.53% -10.84% -6.37% -4.19% 3.07%

Pacific Islands Developing

Economies 2007-2012 227.76% 238.15% 303.96% 243.84% 314.92% 118.56% 319.96% 207.28%

% change 3.78% -3.28% 23.53% 119.89% 4.99% 7.33% 31.57% -9.09%

SAARC-4 2007-2012 125.31% 124.35% 271.61% 314.92% 106.07% 146.58% 114.30% 107.15%

% change 0.04% -0.50% -10.84% 4.99% 1.09% 2.43% 3.83% 4.36%

AUS-NZL 2007-2012 99.32% 90.58% 325.92% 118.56% 146.58% 54.52% 109.32% 99.28%

% change 3.02% -2.17% -6.37% 7.33% 2.43% 3.44% 0.63% 5.05%

EU-3 2007-2012 109.04% 84.35% 164.01% 319.96% 114.30% 109.32% 43.55% 65.85%

% change 5.13% -5.27% -4.19% 31.57% 3.83% 0.63% -3.59% -0.67%

USA 2007-2012 83.86% 62.17% 189.23% 207.28% 107.15% 99.28% 65.85%

% change 11.36% -1.79% 3.07% -9.09% 4.36% 5.05% -0.67%

*Based on ESCAP-World Bank trade cost database, excluding tariff costs.

Percentage changes in trade cost between 2001-2004 and 2007-2010 are in parentheses.

SAARC-4: Bangladesh, India, Pakistan and Sri Lanka


Bilateral Trade Costs:

Selected Economies with China and USA (2006-2012)

0 20 40 60 80 100 120 140 160

Sri Lanka

Bangladesh

Indonesia

South Africa

India

Philippines

Brazil

United Kingdom

Russian Federation

France

Thailand

Germany

United States

Malaysia

Japan

Korea, Rep.

China

United States

China


Outline

Stocktaking

Trade Costs



Transit issue

Way Forward


mechanism (TTFMM)



Bali, 7 December 2013


e-Single Window and paperless trading

National Data Harmonization

BPA: the first step to be taken before introducing other trade facilitation measures

Document Simplification & Standardization

Cross Border Data Exchange

Business Process Analysis for Trade Facilitation 1

6

5

3

2

4

Process Simplification and Harmonization


2) Ship

1) Buy

3) Pay

2.4) Apply for

cargo insurance

2.2) Arrange

transport

2.3) Prepare export

permit

2.5) Prepare and

submit customs

declaration

2.1) Have

product sampled

and examined

2.7) Clear goods

through customs

2.8) Handle

Container and stow

it on vessel

2.9) Prepare

documents required

by importers

2.6) Stuff container

and transfer to port of

departure

Exporter or

Representative

Importer

Exporter’s

Bank

Importer’s

Bank Customs

Department of

Foreign Trade

The Central Islamic

Committee Office Thailand

Port

Authority

Department of

Consular Affairs

Insurance

Company

Carrier

(Shipping Line)

Inland

Haulage

Department

of Fisheries

Authorized Private

Inspector

Customs’

Bank

An Example of Use Case Diagram

1) Buy

3) Pay

2.4) Apply for

cargo insurance

2.2) Arrange

transport

2.3) Prepare export

permit

2.5) Prepare and

submit customs

declaration

2.1) Have

product sampled

and examined

2.7) Clear goods

through customs

2.8) Handle

Container and stow

it on vessel

Exporter or

Representative

Importer

Exporter’s

Bank

Importer’s

Bank Customs

Department of

Foreign Trade

The Central Islamic

Committee Office Thailand

Port

Authority

Department of

Consular Affairs

Insurance

Company

Carrier

(Shipping Line)

Inland

Haulage

Department

of Fisheries (D0F)

Authorized Private

Inspector

2) Ship

2.9) Prepare

documents required

by importers

2.6) Stuff container

and transfer to port of

departure

Customs’

Bank


Activity Diagram


A Time-Procedure Chart of Trade Process

1 2 3 4 5 6 7 8 9 10 11

Day

Process

30

20

10

0

5

25

15

35

14 days

3 days

2 days

1 day

3 days

4 days

1 day

1

2

4

3

5 6 7 8

9

10

11

1 day

1 day

1. Buy - Conclude sales contract and trade terms

2. Have product sampled and technically examined

3. Arrange transport

4. Prepare export permit

5. Apply for cargo insurance

6. Prepare and submit customs declaration

7. Stuff container and transfer it to port of departure

8. Clear goods through customs

9. Handle container at terminal and stow it on vessel

10. Prepare documents required by importer as listed in L/C

11. Pay - Claim payment of goods


Trade Facilitation Analysis Database

(TPAD)

A database of business process

analyses of country and product-

specific import and export

procedures conducted in Asia-

Pacific developing countries.

Over 50 import and export

process cases are included, based

on studies conducted since 2009

by international organizations

such as ESCAP, ECE, ADB and

their member states.


Key functions of TPAD

Data analysis:

enables the users

to compare trade

process and

procedures across

countries

TPAD is also a tool

to assist

researchers to

standardize the BPA

studies in the future


Corridors covered in South Asia

Corridor Countries

Linked

Distance,

Total

Distance,

Transit

Products

Traded

Corridor 1 (Nepal corridor)

Kakarvitta-Panitanki-Fulbari-

Banglabandha

Nepal –

India -

Bangladesh

1152 km# 54 km Lentil

LAA*

Corridor 2 (Bhutan corridor)

Phuentsholing-Jaigaon-Hasimara-

Changrabandha-Burimari

Bhutan –

India -

Bangladesh

630 km^ 115 km Orange

Fruit

juice

Corridor 3 (Nepal corridor)

Kathmandu-Birgunj-Raxaul - Kolkata

Nepal - India 1287 km$ 1047 km Carpet

CSO**

*Lead acid accumulator **Crude soya bean oil #Kathmandu to Dhaka.

^Thimpu to Dhaka $Kathmandu to Kolkata


General findings and recommendations (e.g., )

Trade facilitation varies across procedures, countries, products

and corridors

No one-fits-all solution for the entire subregion.

Simplification of procedures and processes is crucial for facilitation

of trade.

More specific findings and recommendations (e.g.,)

Key findings and recommendations through trade process analysis

18 Lack of border

infrastructure

at

Phuentsholling

Development of a mini dry port at Phuentsholing

Ppening of a second international gate at Phuentsholing

Construction of a bypass road from Phuentsholing to

Pasakha

Provision of equipment for RRCO & opening of a new road

from Bolan Chaupatti (India) to Pasakha along with a land

customs station

Trade creation and trade capacity

Political differences

Lack of cooperation from one of the

major parties involved

Problems of coordination among

stakeholders

More information is available at the joint ADB-ESCAP Publication

Business Process Analysis (BPA) report 2013

on selected products and transport corridors of

South Asia subregional economic cooperation (SASEC)


Outline

Stocktaking

Trade Costs



Transit issue

Way Forward


mechanism (TTFMM)



Survey on trade facilitation and paperless trade

implementation

Overarching aim of the survey: to provide countries

with useful policy reference and cursor on

implementation of trade facilitation measures, and

ultimately, to support evidence-based policy making.

UNESCAP has been conducting the survey since 2012

The Survey approach has been expanded from ESCAP

region to global coverage: in 2014, all four other United

Nations Regional Commissions including ECA, ECE,

ECLAC and ESCWA, in collaboration with OECD and

Oceania Customs Organisation (OCO), are conducting

the same Survey under the overall coordination of

ESCAP.


Key outcomes of the Survey

A annual report

highlighting the key

issues on trade

facilitation in the region.

A database including

key indicators on

implementation of trade

facilitation measures

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Trade facilitation measures for authorized operators

Establishment and publication of average release times

National single window

Pre-arrival processing

Expedited shipments

Advance ruling (on tariff classification)

Independent appeal mechanism

Post-clearance audit

Risk management

Separation of release from final determination of customs duties, taxes, fees and charges

Advance publication/ notification of new regulation before their implementation

Stakeholder consultation on new draft regulations (prior to their finalization)

Publication of existing import-export regulations on the Internet

Fully implemented Partially implemented Not implemented


Implementation of trade facilitation measures

0

10

20

30

40

50

60

70

80

90

100

TFA related measures Paperless Trade and Single Window Cross border paperless Score


Subregional performance in implementing trade


Note: indicates the average score of each subregion. Numbers in parentheses represent relative standard deviation.

Source: Wang and Duval, 2014


Trade costs vs. implementing trade facilitation

measures

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0 10 20 30 40 50 60 70 80 90 100

Co

sts

Implemenetaton of Trade Facilitation Measures Score

Source: Wang and Duval, 2014


-2500 -2000 -1500 -1000 -500 0

Bhutan

Maldives

Nepal

Sri Lanka

Afghanistan

Bangladesh

Pakistan

India

Full Implementation Partial Implementation

Effect of trade facilitation implementation on direct trade costs

for moving containerised cargoes per annum (US$ m)


Outline

Stocktaking

Trade Costs



Transit issue

Way Forward


mechanism (TTFMM)



Transit Issue

Snow et al. (2003), in their case studies of 30 LLDCs,

conclude that Bhutan, thanks to its special relationship

with India, enjoys the “best transit procedures”.

Nepal has a generally positive relationship with India.

Transit to and from Nepal is subject not only to the

Indian central government regulations and formalities but

also those that are enforced by local governments

(Chakra Infrastructure Consultants (CIC). 2001).

The Afghanistan-Pakistan transit agreement has the

highest legal potential among other bilateral agreements

reviewed, implementation has been very challenging.

(Cousin and Yann, 2014))


Outline

Stocktaking

Trade Costs



Transit issue

Way Forward


mechanism (TTFMM)



Why is sustainable trade facilitation monitoring

mechanism important and essential?

Available international cross-country trade

and transport indicators are useful but

not sufficiently detailed or reliable

Many trade facilitation studies often done in developing

countries, but

One-off / Ad hoc assessment studies; Overlapping and not

coordinated; No uniform method & approach

Lack of ownership of results, with no follow-up

Need for an integrated and sustainable mechanism:

(1) To provide adequate data & information to support

decision making and to monitor implementation and impact of

these decisions on trade facilitation measures

(2) To reduce unnecessary duplication of efforts & ensure

recommendations are implemented


Institutional Arrangement National Human Capacity

Integrated and Sustainable Trade & Transport

Facilitation Monitoring Mechanism (TTFMM)

Measure, monitor and assess

progress in trade facilitation

Trade facilitation reform

Implementation

Integrated Methodology: BPA+

Baseline trade and transport facilitation assessment study

Formulate, update and prioritize

recommendations for advancing trade facilitation


Institutional arrangement

(including national human resources) S

upport

fro

m d

evelo

pm

ent

part

ners

National Trade and Transport Facilitation Committee (NTTFC)

TTFMM implementation team leader

(A senior member of NTTFC or a person appointed by NTTFC)

TTFMM implementation coordinator (Secretariat of NTTFC)

BPA data collection & TTFMM analysis,

database and report

(a national research institute)

TRS data collection

(Customs officers)

TCD data collection

(freight forwarders and drivers)


TTFMM – Key Outputs

30

TTFMM Database, including:

Description, activity diagram and related rules/regulations for

each trade & transport procedure for selected products along

selected corridors

Time, Cost, No. of documents for each process/procedure

Set of Indicators (dashboard)

Include Time, Cost, No. of documents for each

process/procedure

Average speed along the corridor

Average border crossing time

An annual report

Presenting relevant summary information from the database

to the public, as decided by the NTTFC, as well as an analysis and recommendations


Launch of TTFMM

The publication of TTFMM was launched by UNESCAP and ADB at the

Asia-Pacific Trade Facilitation Forum held on 24-25 September 2014.

31


TTFMM implementation in Bangladesh, Bhutan and Nepal (with support of ADB, ESCAP and WCO)


Outline

Stocktaking

Trade Costs



Transit issue

Way Forward


mechanism (TTFMM)



Take advantage of available trade facilitation tools


Summary and Recommendations

Summary

Trade costs are still relatively high in South Asia

Countries in South Asia are at different stages of implementing trade


Recommendations

Monitoring of trade facilitation in a sustainable manner is essential

and possible for all countries - it does not need to be expensive

Monitoring tools are available - countries should take advantage of it.

Efforts by international organizations and development partners

needed to be coordinated to assist countries to establish trade

facilitation monitoring mechanism - countries will be in the driving

seat in the long term.


Further reading

Chakra Infrastructure Consultants (CIC). 2001. Review of Progress in the

Development of Transit Transport Systems in the India, Nepal and Bhutan

Subregion.

Kharel, P. 2009, Case for South Asian Transit Arrangement, South Asia Watch

on Trade, Economics & Environment (SAWTEE) Briefing paper, No. 11.

ESCAP and ADB, 2013, Towards a National Integrated and Sustainable Trade

and Transport Facilitation Monitoring Mechanism: BPA+ .

Wang, T and Y. Duval (2013), Trade Facilitation and Paperless Trade in Asia:

Results from an Expert Survey, ESCAP Trade and Investment Division, TID

Working Paper No. 01/13, Bangkok.

Cousin, L. and Y. Duval, 2014, Trade facilitation potential of Asian transit

agreements in the context of the WTO negotiations, ESCAP Trade and

Investment Division, TID Working Paper NO. 01/14, 27 January 2014.

Bangkok.

Wang, T and Y. Duval (2014), Trade Facilitation and Paperless Trade

Implementation: 2013/14 Asia-Pacific Update, ESCAP Trade and Investment

Division, TID Working Paper No. 02/14, 27 June 2014. Bangkok.

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