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![Page 1: Trade Project Transit, Regional Connectivity and Integrated Border Management: The Way Forward Trade Project Regional Conference on Strengthening Transport.](https://reader034.fdocuments.us/reader034/viewer/2022051819/5518c8e5550346991f8b5936/html5/thumbnails/1.jpg)
Trade Project
Transit, Regional Connectivity and Integrated Border Management:
The Way Forward
Trade Project
Regional Conference on Strengthening Transport Connectivity and Trade Facilitation
December 10, 2013
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Trade Project
Agenda
• Background: Pakistan’s Strategic Location
• Pakistan’s Regional Framework
• Regional Connectivity and Transit Issues – Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis
• Way Forward: Improving Regional Connectivityo Grant Most Favored Nation (MFN) Status to Indiao Implement TIR Conventiono New Trade Routeso Trade Facilitationo Building Supply Chains
• Conclusion
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Trade Project
Pakistan’s Strategic Location: Benefiting from Transit Trade
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Trade Project
Pakistan’s Regional Framework
• SAFTA: South Asia Free Trade Agreement (2006)
• CAREC: Central Asia Regional Economic Cooperation Program (2010)
• APTTA: Afghanistan-Pakistan Transit Trade Agreement (2010) • QTTA: Quadrilateral Traffic in Transit Agreement among Pakistan,
China, Kyrgyzstan and Kazakhstan (2004)
• ECOTTA: Economic Cooperation Organization Trade Agreement (1998)
• CBTA: Cross-Border Transport Agreement among Kyrgyzstan, Tajikistan, and Afghanistan (Pakistan has observer status)
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Trade Project
Regional Connectivity and Transit Issues:SWOT Analysis (I)
Strengths• Strategic location provides the shortest route to seaports• Three seaports open throughout the year• Road connectivity to the seaports is in reasonable condition
Weaknesses• None of the transit agreements is fully functional• APTTA partially functional but trade substantially reduced• Pakistan has not acceded to TIR Convention• Security concerns and political uncertainty
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Trade Project
Regional Connectivity and Transit Issues:SWOT Analysis (II)
Opportunities• Pakistan borders the two fastest growing economies in the world: India
and China• Pakistan’s western neighbors are rich in energy resources• China’s Western Provinces (bordering Pakistan) need a link to the
nearest seaports• Donors investing in CAREC corridors• Current Government of Pakistan keen on increasing regional
connectivity
Threats • Transit trade not viewed favorably by general public• Vested interests prevent full utilization of Pakistan’s potential• Local industry may oppose due to perceived increase in smuggling
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Trade Project
Way Forward: Improving Regional Connectivity
• Grant MFN Status to India
• Implement TIR Convention
• Open New Trade Routeso Provide links with inland dry ports
• Trade Facilitationo Accelerate implementation of the World Trade Organization (WTO)
Agreement on Trade Facilitation/Revised Kyoto Convention (RKC)o Negotiate/fully implement bilateral transit agreementso Integrated Border Management Systems
• Build Supply Chains
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Trade Project
Implementing the TIR Convention
• Pakistan is the only ECOTTA country (of 10 total) not yet implementing the TIR system
• Its implementation was approved in 2002 but is still pending
• Implementing TIR involves the following:
o National guarantee associations and customs authorities control access
o Goods accompanied by TIR Carnet, which serves as the control document in the countries of departure, transit, and destination
o Duties and taxes covered by an internationally valid guarantee
o Goods travel in approved secure vehicles and containers
o Customs control measures taken in country of departure are accepted by the countries of transit and destination
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Trade Project
Open New Trade Routes
• At present only (A) Wagah – Attari is open for limited trade
• Other land crossings that can easily be re-opened:(B) Lahore – Patti (Burki road)(C) Kasur – Ferozpur (Ganda Singh)(D) Sahiwal – Fazilka (linking Southern Punjab)(E) Munabao – Khokhrapar rail (linking Sind)
• Open direct shipping routeso Karachi-Mumbai
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Trade Project
Trade Facilitation: RKC
Adopting the following measures would significantly increase connectivity and cut trading costs:
• Risk management• Streamlined border procedures• Harmonization and simplification of documents• Automated processes • Information availability
RKC: To achieve these objectives, full compliance is necessary
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Trade Project
Trade Facilitation vs. Tariff Reduction
Increase in Global Trade and GDP (USD $ trillion)
2.6
1.61.5
1.0
0.4
1.1
(US
D $
tri
llio
n)
4.7%
14.5% 2.6%9.4%
0.7%
10.1%
Trade GDP
Tariffs
All tariffs removed globally
Modest scenarioAmbitious scenario
Countries improve trade facilitation halfway to regional best practice
Countries improve trade facilitation halfway to global
best practice
Note: Based on export value; includes only the effect of “Border Administration” and “Telecommunication and Transport Infrastructure” Source: Ferrantino, Geiger and Tsigas, The Benefits of Trade Facilitation – A Modelling Exercise; World Economic Forum (2007 baseline)
0
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Trade Project
Trade Facilitation: Integrated Border Management
Cooperation at the National Level:• Grouping border management-related functions in a single body
• Introduce a layer of coordinated governance (e.g. joint services or groups) while relevant organizations continue to function separately
Cross-border Dimension:• Establish cross-border cooperation among Customs authorities
• Establish joint controls, align opening hours of border stations and the construction of juxtaposed Customs offices
• Advance electronic information on cargo and container shipments
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Trade Project
Integrated Border Management: Cross-border Movement of Trucks
• Joint scanning and weighing could reduce equipment needed
• Allowing cross-border movement of trucks to the nearest dry-ports could reduce the cost of building infrastructure at ports
Source: Wagah - Attari Border, tribuneindia.com Source: Wagah - Attari border, dawn.com
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Trade Project
Supply Chains: Surgical Goods
Increasing Exports through Partnerships• Sialkot produces high quality surgical
goods
• Sialkot’s exports remain low (USD $300 million in 2012)
• Cheaper raw-materials and coordination with India can increase exports substantially
• Similar examples in sporting goods from Sialkot
0%
20%
40%
60%
80%
100%Raw materials (35.0%)
Forging & shaping (1.5%)
Miling & machining (5.9%)
Rough grinding (4.6%)
Final grinding, packing & other (53.0%)
US Germany UK France Italy India Brazil China Australia Japan -
10 20 30 40 50 60 70 80
67
29 26 11 6 5 5 5 4 4
(US
D $
mill
ion
)
Pakistan’s Surgical Goods Cost Margins
Pakistan’s Top 10 Countries for Surgical Goods Exports (USD $ million)
Source: Surgical Instruments Manufacturers Association of Pakistan (2012)
US 41%
EU 44%
Asia 9%
Other 6%
Top ten destinations
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Trade Project
Supply Chains: Plastics and Chemicals
Plastics• Pakistan imports over USD $1 billion of Polyethylene (300kt) and Polypropylene (300kt)• Less than 10% are imported from India, whose petrochemical plants are located near
Lahore• Most plastic manufacturing units (over 400) are located near Lahore• India can import cheaper, high quality plastic goods such as water coolers, bottles and
parts from Pakistan
Chemicals• Pakistan has surplus capacity for soda ash and caustic soda
o India currently imports these products from more expensive sources • Huge demand in Pakistan for dyes, colouring materials and organic chemicals
PET (Resin)
Polyethylene Granules
Plastic goods (e.g. water coolers)
Dyes and coloring materials
Textiles
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Trade Project
Conclusion
• Pakistan needs to redesign its transit trade policies
• Five big steps needed: o Grant MFN Status to India o Accession to TIR Convention o Open New Trade Routes o Trade Facilitation:
– Implement recent RKC/WTO Agreement on Trade Facilitation– Integrated Border Management Systems
o Reduce Taxes on International Trade
• Improving regional connectivity may not require major resources
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Trade Project
Thank You