Download What is Trade Facilitation?

Trade Facilitation, the WTO, and
Development: An Overview
John S. Wilson, The World Bank
Tsunehiro Otsuki, Osaka University
Key Issues for Discussion
Definition
and scope of trade facilitation
Benefits of trade facilitation
The role of the WTO
Obstacles facing developing countries in
implementing reforms
Designing strategies for reforms
Key Questions
1. What are the key WTO disciplines related to trade
facilitation agenda?
2. What are the major constraints confronting developing
countries in implementing the WTO agreements in trade
facilitation?
3. What are advantages and disadvantages of making
uniform applications of rules on trade facilitation?
4. How can the WTO agreements in trade facilitation
reflect development needs?
5. What area of trade facilitation should be given priority
in the light of feasibility and cost effectiveness?
What is Trade Facilitation?
A narrow
sense
–A reduction/streamlining of
the logistics of moving goods through ports or
the documentation requirements at a customs
post at the border
A broad
sense
–The above plus,
improvement in domestic regulatory environment and
institutions associated with trade
Background
High
trade logistics costs
Trade costs associated with transportation charges,
documentation requirements and delay in
clearance are becoming important
Globalization
Ability of countries to deliver goods and services
in time and at low costs is a key determinant of
their participation in the global economy
Background
Average Days Required for Customs Clearance by Sea
Germany
France
US
Singapore
Indonesia
Zimbabwe
Thailand
Mexico
Mozambique
South Africa
Taiwan, China
Guinea Bissau
Brazil
India
Egypt
Argentina
0
2
4
6
8
10
12
14
16
Background
Trade
facilitation as an engine of growth
Trade Facilitation
Trade
Expansion
Economic
Growth
Background
Port Efficiency and per Capita GNP
1
0.9
Port efficiency
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2
2.5
3
3.5
4
log of per capita GNP (PPP)
4.5
5
Background
Increasing
demand for multilateral rule
making and regional or plurilateral
coordination regarding trade facilitation
–At the WTO
One of the four Singapore issues
Doha development agenda
–At the WCO
Kyoto Convention
Background
Limited
progress in the WTO negotiation
–No consensus made on modalities of
negotiations at the Cancun Ministerial Meeting
–Limitation in capacity to implement trade
facilitation measures
–Uncertainty about provision of technical
assistance
–Inflexibility of agreements
Outline
Empirical
evidence
–Did trade facilitation work in reality?
Trade
facilitation agenda at the WTO
–How does the WTO manage trade facilitation?
Developing
countries’ concerns
Options to move forward on trade
facilitation modalities
Empirical Evidence
Transport
costs
–Transport cost barriers outweigh tariff barriers
for 168 of 216 countries (World Bank 2002).
–1% reduction in the fees could increase Asian
GDP by $3.3 billion (UNCTAD 2001)
Empirical Evidence
Customs
modernization
–Switching to electronic documentation save 1.5 to 15%
of landed cost of the imported items. (Australian
Department of Foreign Affairs and Trade and Chinese
Ministry of Foreign Trade and Economic Cooperation
2001)
–Standards harmonization for e-business and automating
customs procedures between Japan and Singapore increase
trade flows between the two countries and trade with the
rest of the world (Hertel, Walmsley and Itakura 2001)
Empirical Evidence
Customs
corruption
–The introduction of electronic data interchange
(EDI) system in Chilean customs led to saving of
over $1 million per month for a system cost of $5
million (WTO, 2000)
Empirical Evidence
Time
cost
–One day less in delivery times-by reducing delay
in ports and customs- reduces landed costs of
goods around the world by 0.5% (Hummels 2001)
–1 day less in the trading time will save $240
billion annually in developing countries
(Hummels 2001)
Empirical Evidence
Multi-dimensional
capacity building
–Trade facilitation defined in four dimensions
(Wilson, Mann and Otsuki 2004)
•Port
efficiency
•Customs environment
•Regulatory environment
•Service sector infrastructure
Benefit of Capacity Building in Trade
Facilitation
18
16
14
% Change
12
Ports
10
Customs
8
Regulations
6
Services
4
2
0
OECD
East Asia
ECA
LAC
South Asia Sub-Sah.
Africa
Trade Facilitation Agenda in the WTO
One
of the four Singapore issues
Reflected in three GATT Articles
–V (Freedom of transit)
–VIII (Fees and formalities related to importation
and exportation)
–X (Publication and administration of trade
regulations)
Doha
Development Agenda
General Trade Principles Reflected in
GATT Articles
Transparency
Predictability
Due
process
Non discrimination
Simplification
Avoidance of unnecessary restrictions to
trade
Doha Development Agenda
Importance
of implementation capacity of
developing and least-developed countries
Use of special and differential treatment to
achieve trade expansion goals
Developing Country Concerns
Cost
of implementation
–Improved technologies and institutions required
for customs reforms
–Institutional changes and costs related to dispute
settlement cases
Developing Country Concerns
Institutional
improvement
–Appropriateness of enforcing institutional
improvements through rulemaking
Technical
assistance
–Uncertainty about the actual delivery of
promised technical assistance to help countries
implement these arrangements
Options to Move Forward on Trade
Facilitation Modalities
The
importance of negotiations focused on the
GATT Articles
Taking into account limited implementation
capacity: A Trade Facilitation Program
Commitments for technical assistance and
capacity building for trade facilitation
Dispute Settlement Options
Multilateral vs. Plurilateral Approach
Coordination with regional integration
initiatives
Scope of Negotiations
A focused
agenda on the three GATT
articles, not an expansive agenda
A Trade Facilitation Program
Consideration
of specific circumstances,
needs, and capacities of individual countries
–Allowing flexibility in disciplines to be applied
–Making Consistency with domestic development
priorities
Technical Assistance and Capacity building
Support
for existing programs in the
WCO, the UNCTAD, the World Bank, and
regional development banks
–Kyoto Convention
–Automated System for Customs Data and
Management (ASYCUDA) , etc.
Dispute Settlement Options
Compulsory
dispute settlement for countries
above a certain level of development (in case
of not meeting the obligations)
Exemption granted to countries below that
level
Other Options
Multilateral
vs. Plurilateral Approach
Coordination with regional integration
initiatives
Conclusions
Trade
facilitation likely contributes to a longterm growth
Collective actions needed
Uniform application of multilateral agreements
complemented by capacity building and technical
assistance
Flexibility to be given according to levels of
development and development goals
A step-by-step building block approach from
core principles towards expanded ones