Trade facilitation in Central Asia: A regional perspective Seminar on Trade Facilitation at the...

Trade facilitation in Central

Asia: A regional perspective

Seminar on Trade Facilitation at the Border in Central Asia

11-13 May 2009, Dushanbe, Tajikistan

Mr. Peng BinEconomic Affairs OfficerTrade Facilitation SectionTrade and Investment DivisionESCAP

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Trade in Central Asia: An overview

The growth of international merchandise trade is above the world’s average in recent years

International merchandise trade volume is still small

The rank in world merchandise export among 180 economies: Afghanistan 160, Kyrgyzstan 141, Tajikistan 131, Uzbekistan 86, Turkmenistan 81, Azerbaijan 78, Kazakhstan 51 (WTO, 2007)

High percentage of fuels and mining products in export and manufactures in import

High trade dependence

Trade to GDP ratio 65 – 105%

Low level of intra-regional trade

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Trade to GDP ratio, 2005-2007

Central Asia East and Southeast Asia South Asia Developed economies

Country Ratio Country Ratio Country Ratio Country Ratio

Azerbaijan 105 China 71.3 Bangladesh 45 EU (27) 26.4

Kazakhstan 93.3 Mongolia 127.1 Bhutan 97.3 US 27.2

Kyrgyzstan 126 Korea (Rep. of) 85.7 India 44.7

Tajikistan 139 Brunei 96.9 Maldives 184.2

Uzbekistan 65.1 Cambodia 139.2 Nepal 46.9

Indonesia 60.4 Pakistan 41.6

Lao 73.5 Sri Lanka 70.7

Malaysia 209.6

Philippines 92.3

Singapore 443.7

Thailand 143.9

Vietnam 156

Sources: WTO, 2008

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Intra-regional trade in Central Asia

Matrix of import shares, 2007 (change from 1995 in brackets)

ENA SEA SA NCA Pacific ESCAP EU

ENA 22.3 11.4 2.8 1.9 0 54.8 10.3

{-1.0} {2.9} {1.4} {0.4} {-0.1} {-2} {-2.9}

SEA 19.8 24.5 2.5 0.5 0.1 61.7 10.7

{9.8} {6.4} {1.1} {0.2} {0} {5.6} {-3.9}

SA 14.8 7.9 5.5 7.1 0 39.9 23.9

{8.2} {1.5} {0.7} {3.1} {0} {9.4} {-10.2}

NCA 18 1 3.8 9.8 0 36.9 44.5

{14.5} {0.1} {-0.2} {-7.2} {0} {9.5} {2.0}

Pacific 7.8 25.4 1.5 0.1 3.5 88.6 3.2

{2.6} {10.4} {0.7} {0} {2.3} {2.8} {-1.5}

ESCAP 20.8 13.4 3.1 2.8 0.1 52.1 15.3

{5.4} {1.5} {1.2} {0.9} {-0.1} {3.4} {-2.0}

EU 7.1 2 2.4 4.1 0 18 63.5

{3.9} {-0.4} {0.6} {2.1} {0} {4.3} {-0.7}

World 13.7 6.2 2.8 3.1 0 32.4 36.3

{5.7} {0.2} {1.0} {1.3} {-0.1} {4.1} {-2.2}

Source: ESCAP Commission paper based on IMF (2008)

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Constraints of doing business

SPECA countries are among the most remote countries, the distance to the closest seaport

More than 2000 km for Afghanistan

3750 km for Kazakhstan

3600 km for Kyrgyzstan

3100 km for Tajikistan

2950 km for Uzbekistan

High trade costs in doing business Transport costs

• Cost of transporting a container from an LLDC to a developed country port was about US$4,500, about 20% more than from a coastal country (World Bank)

• Transport costs in the CIS-7 are at least three times higher than in the developed countries (Corporate Technologies Center)

Trade procedures compliance costs, including transit procedures

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Timeliness: Perceived likelihood of on-schedule delivery(Subregional averages; 5: nearly always on schedule)

2.11-2.762.30-3.141.38-3.472.08-3.952.25-4.18

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

East and Northeast Asia** Southeast Asia*** South and Southwest Asia Pacific Island North and Central Asia

Developed ESCAP (4.16)

Developing ESCAP (2.93)

Source: Based on data from the World Bank Logistic Performance Index (2007)

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Complicated trade procedurescomparison with China, India and Thailand

Countries

Export procedures Import procedures

Duration of documents preparation (days)

Duration of inland transportation and handling (days)

Cost of inland transportation and handling (USD)

Duration of documents preparation (days)

Duration of inland transportation and handling (days)

Cost of inland trasportation and handling (USD)

Afghanistan 44 18 1650 49 16 1650

Azerbaijan 28 8 2300 28 14 2600

Kazakhstan 29 26 2225 33 23 2225

Kyrgyzstan 24 34 2500 26 33 2500

Tajikistan 20 58 2000 20 57 3500

Uzbekistan 32 36 2500 50 32 4000

China 14 3 95 15 3 135

India 8 4 300 8 3 250

Thailand 8 3 85 8 1 220

Source: Compiled based on Trading Across Border, World Bank (2009)

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Logistics to be improved

Countries Customs Infrastructure Internationalshipment

Tracking & tracing

Domestic logistics costs

Timeliness LPI

Afghanistan 150 150 150 150 40 150 150

Azerbaijan 96 116 90 96 87 124 111

Kazakhstan 139 138 129 117 96 120 133

Kyrgyz 102 112 106 93 99 109 103

Tajikistan 140 125 136 146 138 146 146

Uzbekistan 137 124 133 123 82 112 129

Logistics performance index rank in Central Asia

Source: Logistics Performance Index, World Bank (2007)

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Transit procedures and costs

Sea transport Port of transit country

Inland transport in transit country

Border Inland transport Destination

Unloading at port Uploading Customs and border inspection

Unloading at destination

Customs inspection and clearance

Convoy

Control en route

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Border checks: Cross border road freight transport Transported cargo Vehicles Drivers

1. Check on trade documentation: 1. Fuel tax assessment: Check quantity of fuel in 1. Passport and visa· Waybill/Bill of Lading tank vs. quantity which is allowed free into the · Invoices country· Packing lists · Certificates of Origin · Letters of Credit · Import licenses · Export permits 2. Physical inspection of cargo 2. Vehicle tax, road charge, or transit fee 2. Customs inspection3. Quarantine (agriculture and 3. Compulsory vehicle insurance 3. Quarantine (agriculture and veterinary)/health inspection veterinary)/health inspection4. Collection of statistical data 4. Transport authorization (bilateral, transit, third 4. Driver license country, multilateral)

5. Payments for special transport permits 5. Inspection re driving time and 6. Weights and dimensions rest period requirements7. Vehicle certificate8. Vehicle roadworthiness9. Customs security of vehicles (including Customs seals affixed to vehicles or containers)10. Quarantine (agriculture and veterinary)/health inspection11. Collection of statistical data

Source: ESCAP, 2007

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Trade facilitation in Central Asia

With the elimination tariff barriers, importance of removing non

tariff barriers increased

Movement of trade facilitation from technical issue to policy issue,

particularly the adoption of trade facilitation into WTO negotiations

Inherent linkage between trade liberalization and facilitation, such

as Customs clearance of tariff preferential goods under FTAs and

RTAs

Technical development, particularly use of IT in trade

administration

Market requirements – reduction of costs and timely delivery

becomes a prerequisite to participate into global and regional

supply chain

Trade facilitation: Why it becomes important?

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Facilitate trade: What can we do?

Simplified trade procedures and documents

Simplified trade procedures and documents

Improved institutional quality and governance

Improved institutional quality and governance

Aligned and transparent trade policies and regulations

Aligned and transparent trade policies and regulations

Improved trade infrastructures

Improved trade infrastructures

Trade documents and procedures

Quality of trade documents

Process of flow of information

Means of conveying trade documents and data including the use of IT facilities

Trade documents and procedures

Quality of trade documents

Process of flow of information

Means of conveying trade documents and data including the use of IT facilities

Institution Institutional

structure Bureaucracy Corruption and

illegal payment

Institution Institutional

structure Bureaucracy Corruption and

illegal payment

Trade policy and regulations

Align trade policies and regulations with international agreements (remove TBT and other NTBs)

Transparency of trade policies and regulations

Trade policy and regulations

Align trade policies and regulations with international agreements (remove TBT and other NTBs)

Transparency of trade policies and regulations

Trade infrastructure Transport and

logistics infrastructure

Inspection facilities Laboratory and test

equipment IT infrastructure Financial

infrastructure

Trade infrastructure Transport and

logistics infrastructure

Inspection facilities Laboratory and test

equipment IT infrastructure Financial

infrastructure

Reduced trade costs and timeReduced trade costs and time

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Mongolia

CAREC

SPECA

Turkmenistan Afghanistan

Azerbaijan

Kazakhstan

Kyrgyzstan

Tajikistan

Uzbekistan APEC

China Canada, Chile, Hong Kong, China, Japan,

Korea, Mexico, Peru, Russia, Chinese Taipei,

United States

Australia

New Zealand

Papua New Guinea

GMS

Cambodia Thailand Brunei Darussalam

LaoPDR Vietnam Indonesia

Myanmar Malaysia

Philippines

Singapore

ASEAN (AFTA)

Cook Islands

Micronesia, Fiji

Kiribati PIF (PICTA)Marshall Islands

Nauru, Niue, Palau

Samoa

Solomon Islands

Tonga, Tuvalu

Vanuatu

Bangladesh, Bhutan, India

Maldives, Nepal, Pakistan, Sri Lanka

SAARC (SAFTA)

Regional trade

facilitation

cooperation: Central

Asia and other

subregions

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Accession of Central Asian countries to international conventions

State WTO TIR WCO Kyoto

Convention

Harmonization

Convention

Customs Convention

on Containers

CMR

Afghanistan

X

Azerbaijan X X X X

Kazakhstan X X X X

Kyrgyzstan X X X X X

Tajikistan X X

Turkmenistan

X

Uzbekistan X X X X

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National Coordination mechanism in SPECA

Country National Trade/Transport Facilitation Body

AfghanistanNational Trade and Transport Facilitation Committee of Afghanistan (AFPRO)

AzerbaijanNational Trade and Transport Facilitation Committee of Azerbaijan (AZERPRO)

KazakhstanInter-ministry commission for transport with a focus on cross-border transport

KyrgyzstanSeparate mechanisms for coordinating trade and transport facilitation

TajikistanInter-ministry commission for transport with a focus on cross-border transport

Uzbekistan UZINCOMCENTER

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Benefit of coordination and cooperation of border agencies

Lower compliance costs for tradersLower compliance costs for traders

Good governance and anti-corruption

Good governance and anti-corruption

Faster border crossing

Faster border crossing

Improve institutional and human capacity

Improve institutional and human capacity

Reduce pressure on the infrastructureReduce pressure on the infrastructure

Costs savings for regulatory agencies

Costs savings for regulatory agencies

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Tools and instruments for border management

UNECE instrumentsUnited Nations Layout Key for Trade Documents (UNLK, ISO 6422)United Nations Trade Data Elements Directory (UNTDED, ISO

7372)United Nations Electronic Data Interchange for Administration,

Commerce and Transport (UN/EDIFACT)UN/CEFACT Single Window The International Convention on the Harmonisation of Frontier

Controls of Goods

WCO instrumentsWCO SAFE Framework

UNCTADThe Automated System for Customs Data (ASYCUDA)

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Thank you

Seminar on Trade Facilitation at the Border in Central Asia

11-13 May 2009, Dushanbe, Tajikistan

[email protected]

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