Trade Facilitation: Benefits to Business

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

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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Trade Facilitation: Benefits to BusinessTrade Facilitation: Benefits to Business

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)


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


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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Thank you.Thank you.

[email protected]

www.unece.org/trade

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