11:15 – 12:30

Trade facilitation: basic concepts, evolving content and most recent developments:

challenges and opportunities for developing countries

Outline Evolving concepts on Trade Facilitation

International Instruments related toTrade Facilitation

New Tools available

Trade facilitation reform

How to start

3

UNCTAD and Trade Facilitation 40 years of experience in the field Promoting trade and transport facilitation Committees Simplifying procedures and documents Spreading standards in developing countries Designing regional solutions Designing automated systems for Customs Organizing World Ministerial Columbus Ohio in 1994 Supporting Trade Facilitation in WTO in 1996 Supporting Developing countries participation in Doha Round Designing solutions to support WTO TF Negotiations

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 ConfirmationBill 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 VesselManifestCustoms (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

Available Trade Facilitation tools

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

Shipper

Freight Forwarder

Customs

Carrier

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 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

VesselsServices

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 automated

data systems

faster clearanceof cargo

Increased Customsrevenues

Simplify/harmonizedocuments & proceduresImplement

modernCustoms laws

ASYCUDA

TRADE dimension

Trade Facilitation

Best-recommendedcommercial practices

faster RoI for IMP

Competitiveexports

Simplify IMP/EXPdocuments & procedures

Create awareness on

best practicesPromote

Single Window

Transit

Agr.

TRANSPORT dimension

Transport Facilitation

Faster turn-overof means

smooth movementof goods

Create awareness onmodern transport &

logisticsEstablish norms(incl. liability

insurance)Implement

modernTransport lawsImplement logistics tools

Best-recommendedtransport practices

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

Trade facilitationin Regional Trade Agreements

Trade Facilitation in Regional Trade Agreements The number of provisions related to customs and trade

facilitation included in Regional Trade Agreements (RTAs ) has increased over time, reflecting the growing importance of trade facilitation at the regional level.

Increasing number of RTAs with customs and other trade facilitation measures (Source: UNCTAD Secretariat based on WTO RTA Database)

Trade facilitation and discrimination by RTAs Does in regional agreements lead to discrimination against

those outside the RTA? Are regional commitments aligned with WTO commitments? Could RTAs help the WTO Trade Facilitation Agreement? Consistency with future WTO rules, can benefit all trading

nations without discrimination Use of international standards

118 RTAs reviewed

To determine:1. the types of trade facilitation measures contained, 2. the relationship between these measures and the World

Trade Organization (WTO) principle of most favoured nation (MFN),

3. the differences and overlaps among selected trade facilitation measures under different RTAs, and

4. the benefits and risks brought by being part of multiple RTAs, and actions to be taken to minimise potentially adverse effects.

0 10 20 30 40 50 60 70 80 90

Fees and charges

Express shipment

Transit & temporary admission

Release of goods

Use of international standards

Use of ICT - automation & paperless trading

Risk management

Advance rulings

Publication & enquiry points

Cooperation, information exchange & TA

Customs clearance & facilitation

Source: UNCTAD Secretariat

Types of trade facilitation measures in RTAs

Policy options available to countries Cohesive approach to trade facilitation Pending the adoption of a WTO agreement, RTAs can help in

moving the trade facilitation agenda forward. Customs and other trade facilitation measures adopted in

RTAs have created trade facilitation implementation capacities in many countries and regions.

Most of the provisions existing in RTAs in fact go deeper and broader in terms of trade facilitation benefits than the current WTO provisions under the GATT Articles V, VIII and X.

Policymakers should ensure a coherent approach to the negotiation and implementation of bilateral, regional and multilateral trade facilitation commitments.

Trade facilitationin the pre-Singapore context

TF work before WTO – from early 60’s to 1994…

Work of the UNECE and UNCTAD• UNECE Recommendations (UNLK, UN/EDIFACT,

LOCODE, etc)• UNCTAD FALPRO

UN International Symposium on Trade Efficiency (UNISTE) in Columbus, Ohio (1994):• Banking & Insurance;• Customs;• Business Information for Trade;• Transport;• Telecommunications.

Related existing body of WTO Law

Current provisions pertaining to areas of trade facilitation

Agreement on Customs Valuation Agreement on Pre-shipment inspection Agreement on Import Licensing Agreement on SPSand GATT 1947 (1994)

Why multilateral rules?

1) Lack of effective implementation of the instruments

Non-binding feature of these instruments (including the relevant GATT articles)

Lack of political will for implementation Not only own reform efforts but trading partners‘ efforts

are important

2) International Standards and rules

42

From early 70’s to 1996…

Work of the UNECE and UNCTAD• UNECE Recommendations• UNCTAD FALPRO

UN International Symposium on Trade Efficiency (UNISTE) in Columbus, Ohio (1994):• Banking & Insurance;• Customs;• Business Information for Trade;• Transport;• Telecommunications.

43

Existing non-compulsory international instruments

and best practices

Internationally-accepted customs and practices, negotiated by interested Governments thru international organizations and private sector institutions;

Lack of effective implementation of the instruments;

Non-binding feature of these commitments.

44

GATT 1994· Article V Freedom of Transit· Article VIII Fees and Formalities connected with

IMP/EXPortation· Article X Publication and Administration of Trade

Procedures· Agreement on the Implementation of Article VII (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.

45

Trade facilitationin the post-Singapore context

History of TF in the WTO

1. WTO Ministerial Conference

1996

200x

Singapore Issues

« Trade And » Issues

Developed countries proposed new « topics » to be included in the WTO trade negotiations; so-called Singapore Issues were:

• Investment and related regimes• Competition Policy• Policy related to Government procurement• Trade related procedures = Trade Facilitation

48

Singapore Ministerial Declaration (1996)

Article 21: “We further agree to:

direct the Council for Trade in Goods to undertake exploratory and analytical work, drawing on the work of other relevant international organizations, on the simplification of trade procedures in order to assess the scope for WTO rules in this area.”

Mandate of WTO Work Programme

History of TF in the WTO

1. WTO Ministerial Conference

1996

2001

Singapore Issues

50

Doha Declaration (2001)

27. Recognizing the case for further expediting the movement, release and clearance of goods including goods in transit and the need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision, by explicit consensus, at that Session on modalities of negotiations. In the period until the Fifth Session, the Council for Trade in Goods shall review and as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 and identify the trade facilitation needs and priorities of Members, in particular developing and least-developed countries. We commit ourselves to ensuring adequate technical assistance and support for capacity building in this area. (WT/MIN(01)/DEC/W/1, 14 November 2001)

Timeline of TF at WTO

1. WTO Ministerial Conference

1996

2001

2003

200x

Singapore Issues

52

Work programme 2002-2003from Doha to Cancun

Meetings in the framework of regular CTG sessions;

Core agenda:

• GATT Articles V, VIII and X• Trade facilitation needs and priorities of Members• Technical assistance and capacity building

Numerous proposals, national experiences on the Articles;

Low focus on N&P, TA and CB.

Cancun is not a success but Trade Facilitation stays “on-board”.

Singapore Issues vs. Cancun

At the Ministerial Conference 2003 in Cancun a coalition of developing countries refused to open negotiations on new topics

Trade Facilitation

• Government Procurement (§26 DD)

• Investment (§20-22 DD)• Competition (§23-25 DD)

Timeline of TF at WTO

1. WTO Ministerial Conference

1996

2001

2003

2004

200x

Singapore Issues

July Package

55

The WTO July 2004 Package

56

The Negotiating Mandate

On 1 August 2004, the General Council decided to commence negotiations on TF on the basis of the modalities set out in Annex D. (WT/L/579)

Objective of negotiations (para 1):• Clarify and improve relevant aspects of GATT Articles V,

VIII and X.• Enhance technical assistance and support for capacity

building.• Provide effective cooperation between customs or other

appropriate authorities on TF and customs compliance

57

S&D treatment (para. 2):• SDT should extend beyond traditional transition periods for

implementing commitments.• Extent and timing of commitments shall be related to

implementation capacities of developing countries and LDCs.• Developing countries and LDCs are not obliged to undertake

investments in infrastructure beyond their means. Additional S&D treatment for LDCs (para. 3):

• LDcs will only be required to undertake commitments to the extent consistent with their individual development, financial and trade needs; or their institutional capabilities.

Annex D - Modalities

58

Work on areas of particular interest to developing countries and LDCs (para. 4):

• Identification of TF needs and priorities;• Address concerns of developing and LDCs related to cost

implications of proposed measures.

Annex D - Modalities

59

TA & CB during the negotiations (para. 5):• Recognized vital for developing and LDCs to fully participate

and benefit from negotiations.• Developed countries commit to adequately ensure such

support and assistance during negotiations. TA & CB after the negotiations (para. 6):

• Assistance to help implement commitments in accordance with their nature and scope;

• Support for infrastructure development in certain cases;• Linkage between provision of assistance and

implementation requirement.

Annex D - Modalities

60

Technical assistance and support for capacity building (para. 7, 8 & 9):

• Review of effectiveness of assistance provided and its ability to support implementation of results of negotiations;

• Collaborative effort among international organisations to enhance effectiveness of assistance and ensure better coherence.

Annex D - Modalities

61

Other elements of the mandate

The negotiations on TF and their outcome are part of the “Single undertaking”.

The TNC was instructed to establish a Negotiating Group on TF (NGTF) and to appoint its chair (Amb. Noor, Malaysia, now Amb. Eduardo Spirensen Guatemala).• The NGTF held 15 meetings up to mid-2006;• More than 100 proposals from Members;• Report to the Trade Negotiations Committee (TN/TF/3)

The report was endorsed as Annex E of the Declaration of the Hong Kong Ministerial Conference (Dec.05).

62

Where do we stand now ?

Consolidated Negotiating Text

ARTICLE 1: PUBLICATION AND AVAILABILITY OF INFORMATIONARTICLE 2: PRIOR PUBLICATION AND CONSULTATIONARTICLE 3: ADVANCE RULINGSARTICLE 4: APPEAL PROCEDURESARTICLE 5: OTHER MEASURES TO ENHANCE IMPARTIALITY, NON-

DISCRIMINATION AND TRANSPARENCYARTICLE 6: FEES AND CHARGES CONNECTED WITH IMPORTATION

AND EXPORTATIONARTICLE 7: RELEASE AND CLEARANCE OF GOODSARTICLE 8: CONSULARIZATIONARTICLE 9: BORDER AGENCY COOPERATIONARTICLE 9 BIS: DECLARATION OF TRANSHIPPED GOODSARTICLE 10: FORMALITIES CONNECTED WITH IMPORTATION AND

EXPORTATIONARTICLE 11: FREEDOM OF TRANSITARTICLE 12: [CUSTOMS] COOPERATION [MECHANISM FOR [TRADE

FACILITATION AND] [[CUSTOMS][TRADE]] COMPLIANCE]ARTICLE 13: INSTITUTIONAL ARRANGEMENTSARTICLE 14: NATIONAL COMMITTEE ON TRADE FACILITATIONARTICLE 15: PREAMBLE/CROSS-CUTTING MATTERSTRANSITIONAL / SPECIAL AND DIFFERENTIAL TREATMENT PROVISIONS FOR

DEVELOPING COUNTRY MEMBERS AND LEAST DEVELOPED COUNTRY MEMBERS

65

66

Thank you

José María RubiatoUNCTAD – Trade Logistics Branch

jose.rubiato@unctad.org

UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT