trade facilitation: benefits to business dr. carol cosgrove-sacks director, trade united nations...
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Trade Facilitation: Trade Facilitation: Benefits to BusinessBenefits to Business
Dr. Carol Cosgrove-SacksDirector, Trade
United Nations Economic Commission for Europe (UNECE)
CTIED, 26 May 2005
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Contents
1. Business relevance of trade facilitation
2. What business needs from public service
3. Costs and benefits of trade facilitation
4. Business contribution to trade facilitation
5. Further negotiations
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1. Business relevance of trade 1. Business relevance of trade facilitationfacilitation
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• Trade liberalization and lower tariffs make non-tariff barriers more costly
• Unpredictable and cumbersome procedures and administrative delays cost money
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• International supply chains depend on moving goods and components fast and predictably
• Increased reliance on just in time production and delivery makes just in time customs clearance a major issue for business
• SMEs suffer most from poor trade facilitation
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• Direct costs: compliance
trade-related services
• Indirect costs: procedural delays
lack of predictability
lost business opportunities
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2. What business needs from 2. What business needs from public servicepublic service
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• Lower trade transaction costs• Faster information flow & more secure
trading environment• Efficient and predictable customs
procedures• Modernization of customs facilities and
automation to support cross-border trade and security
• Transparent and robust framework for financial transactions
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The average ad valorem equivalent of a 1-day delay in the transportation of manufactured goods is around 0.8% (Hummels 2001)
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3. Costs and benefits of trade 3. Costs and benefits of trade facilitationfacilitation
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• Cutting costs and reducing delays
• Faster Customs clearance and release
• Simple commercial framework for both domestic and international trade
• Enhanced competitiveness
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The world income gains from 1% reduction in trade transaction costs amounts to USD 40 billion, with no losers (OECD 2005)
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APEC: 5% of reduction in trade-related transaction costs by 2006
could raise GDP by 0.9% and lift real consumption significantly above what it would otherwise be. (Foreign Affairs and Trade,
Australia, 2002)
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Freight and insurance costs as % of total exports (WTO submissions 2005):
– 12.9% for landlocked LDCs
– 8.1% for developing countries
– 5.8% for developed countries
– over 50% for some African LDCs
– Over 25% for landlocked CIS (UNECE)
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• Fraud, illegal payments and poor security at customs in Nigeria are estimated to increase the cost of imports by 45% (World Bank 2004)
• Increased efficiency of customs procedures could increase trade flows by 30% in the Russian Federation and 22% in Indonesia (Wilson et al. 2003)
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Automation / e-Business saved 1.5% of the value of imported goods in APEC countries (Foreign Affairs and Trade, Australia, 2002)
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4. Business contribution to 4. Business contribution to Trade FacilitationTrade Facilitation
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• A key partner in trade facilitation for governments
• Public Private Partnerships for trade
• Source of expertise on trade practices and technology
• Useful first-hand experience of problems and solutions
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5. Further negotiations5. Further negotiations
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Trade Facilitation in WTO Negotiations
• Art. V: Creating a predictable regime to expedite the movement of goods in transit; special interest to landlocked and transit countries
• Art. VIII: Reducing fees and formalities connected with imports and exports procedures and documents
• Art. X: Increasing transparency in publication and application of trade laws, regulations and procedures
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• Capacity building and technical assistance – needs assessment
• Customs cooperation – agreed guidelines
• Special and differential treatment for developing countries and Least Developed Countries
• Timing
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Issues
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UNECE/CEFACT• Developing and maintaining trade facilitation
standards, recommendations and other tools• Vision: “Simple, Transparent and Effective
Processes for Global Commerce”• Open to participation from all UN member
states and organizations recognized by ECOSOC
• Series of Working Groups with over 400 participants from governments and businesses
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UNECE/CEFACT standards
• Over 30 Trade Facilitation Recommendations, several of which are ISO standards– Recommendation 1: UNLAYOUT KEY
Recommendation 4: Trade Facilitation organizations
– UN/EDIFACT and related standards and recommendations
– Single window (single entry point)
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How UNECE/CEFACT could help
• eDocuments: paperless trade• Capacity building for trade facilitation• Tools
– Document alignment– Repositories– Publications– Codes databases– Websites
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