Customs Modernization Driving Forces

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Transcript Customs Modernization Driving Forces

Trends in International Trade: Key Issues for the World Bank and Customs

Paul Brenton International Trade Department World Bank

OUTLINE

 What is the World Bank ?

 What do we do on trade? Research, advocacy, advice, lending.

 Why are we interested in Customs and trade facilitation ?

 Key trends in trade that will shape our work and the work of Customs

What is the World Bank?

 Global co-operative owned by its 184 shareholders or member countries – Run by a Board of Governors  The Bank is a UN Specialized Agency  Development agency that provides policy advice, TA, knowledge sharing and development finance  11254 staff in 111 countries  In FY 04 - IDA - $9 b – 158 projects - 62 countries  In FY 04 - IBRD - $11 b – 87 projects – 33 countries

Trade can be a powerful engine of growth and poverty reduction

Levers for Intervention  Before the border (Improving overseas market access, reforming domestic trade policy)  At the border (Trade Facilitation – Regulatory and procedural harmonization, simplification and institutional reform)  Behind the border (Improving the investment climate, improving trade and transport infrastructure, dealing with supply side constraints)

WHAT IS THE BANK DOING ON TRADE?

 Research, analysis and advocacy  Elevating Trade to a prominent role in Country Policy Dialogue  Established Trade Department including Trade Logistics Group – Bringing together Trade Policy, Infrastructure and Customs/Border Management teams  Stepping up trade–related operations  Aid for trade?

Why is the World Bank interested in Customs?

 Customs plays a critical role in trade facilitation. The costs of crossing borders now seen as a more significant barrier than tariff rates.

 Customs performs other important functions such as revenue collection, community protection and, increasingly, national security  Customs can act as an effective integrator to ensure all trade and border related agencies work together to simplify and harmonize systems and procedures  The Bank believes productive investment in Customs modernization delivers sound development results

More efficient customs are associated with more trade

200 Ratio of total trade to GDP, 90 countries % 150 100 50 R 2 = 0.1354

0 0 5 10 15 20 25 Days through customs, imports

Source

: WBES and Global Trends as cited in Subramanian, et al 2003

30 35

What is the Bank doing on Customs?



Stressing importance of Customs in policy dialogue



Established the Trade Logistics Group



Building a broader constituency for reform

•

Global Facilitation Partnership for T & T, Diagnostic Trade Integration Studies, Trade and Transport Facilitation Audits, Trade Facilitation Seminars



Coordination of donors & international organizations



Customs Modernization Handbook



Stepping up operations

Bank Operations - Some current examples:

  Russian Customs Modernization Project ($ 140 m) Vietnam Customs Modernization Project ($ 75 m)  Tanzania Tax Administration Project ($ 70 m - WB IMF)

UNCTAD, DANIDA, DFID, EU, FINNIDA, SIDA &  Cambodia Trade Facilitation and Competitiveness project ($ 10 m - WB, EU & AUSAID)  EAC Trade Facilitation Project ($30 m)

Despite improvements in trade policies, many Countries Have Been Left Behind

 The experience of individual countries varies greatly  43 countries had no expansion of exports between 1980 and 2000  Increase in market share mainly associated with today’s Middle Income Countries  Much growth in South – South trade

Key issues in Bank research and analysis on trade

 G lobal trade agenda  R egionalism  A sia  S tandards  S peed with security

Global integration

 Technological change and splitting up of production chains will continue to drive greater trade and capital flows. Labour?

 Global companies seeking out lowest cost locations  More countries are seeking to integrate into global markets  The global market enacts a high price on those not using competitively supplied inputs

“Success” in Doha Round will still leave much to be done at global level Possible gains in real income in 2015 as percent of full multilateral liberalization for LMICs (excluding services and trade facilitation) 100 90 80 70 60 50 40 30 20

Full Tiered cuts w/ SDT w/ 2% exclusions

10 0 Low & Middle Income

Tiered SDT ~ 70% in HICs and 40 in LMICs in ag, plus NAMA cuts of 50% in HICs, 33 in LMICs; and 0 in LDCs

Regional Trade Agreements are proliferating

… Annual number 30 25 20 15 10 5 0 1958 Annual number 1969 1976 1984 1989 1994 1999 2004

Regional Trade Agreements are proliferating…

Annual number 30 25 20 15 10 5 0 1958 New agreements annually 1969 1976 Cumulative in force 1984 1989 1994 Total in force 300 250 1999 200 150 100 50 2004 0

South-South RTAs predominate in number, but not in trade covered

Percent of World Trade Covered

150 100 50 0 250

Number of RTAs

200 1990

South South US

1996

European Union

2002 35 30 25 20 15 10 5 0

South South US

1990

European Union

1996 2002

RTAs can help address trade facilitation issues

 RTAs can offer a mechanism to deal with cross-border issues: – Customs simplification, cooperation, harmonisation…….

– Transport cooperation, harmonisation of regulations, insurance….

 But, many RTAs have yet to deliver better trade facilitation

Proliferation of PTAs is leading to a complex global trading system

American and Asian Spaghetti Bowl -

Hong Kong PR China Taiwan Brunei Cambodia Thailand Korea Malaysia Philippines Myanmar

ASEAN

Japan Singapore Laos Indonesia Australia Vietnam FTAA APEC Intra Americas in force Intra Asia Pacific in force Intra Asia Pacific signed Trans Pacific signed Papua New Guinea Source: Devlin and Estevadeordal (2004) New Zealand Russia

APEC

USA Canada Mexico Costa Rica

CACM

El Salvador Guatemala Honduras

FTAA

Nicaragua Panama

Mercosur

Paraguay Argentina Uruguay Brazil Bolivia Colombia Chile Peru Venezuela Ecuador

Andean Community

Suriname Jamaica Guyana St. Kitts & Nevis Haiti Dominica St. Lucia

CARICOM

Grenada Trinidad & Tobago Barbados St. Vincent & Grenadines Antigua & Barbuda Belize Bahamas Dominican Republic

AMU ECOWAS Conseil de L’Entente

Overlapping African agreements…

Nile River Basin COMESA ECCAS CEMAC

Somalia Sao Tomé & Principe Algeria Libya Morocco Mauritania Tunisia Cameroon Central African Rep.

Gabon Equat. Guinea Rep.Congo

Egypt Ghana Nigeria Cape Verde Gambia Chad Burundi* Rwanda* Djibouti Ethiopia Eritrea Sudan DR Congo Kenya* Uganda* Benin Niger Togo Burkina Faso Cote d’Ivoire Angola Guinea-Bissau Mali Senegal

EAC

Liberia Sierra Leaone Guinea

WAEMU Mano River Union CLISS

AMU: Arab Maghreb Union CBI: Cross Border Initiative CEMAC: Economic & Monetary Community of Central Africa CILSS: Permanent Interstate Committee on Drought Control in the Sahel COMESA: Common Market for Eastern and Southern Africa EAC: East African Cooperation ECOWAS: Economic Community of Western African Studies IGAD: Inter-Governmental Authority for Government IOC: Indian Ocean Commission SACU: Southern African Customs Union SADC: Southern African Development Community WAEMU: West African Economic & Monetary Union

SACU

Tanzania*

SADC

South Africa Botswana Lesotho

IGAD

Malawi* Zambia* Zimbabwe* Namibia* Swaziland* Mauritius* Syechelles* Comoros* Madagascar* Reunion Mozambique

*CBI IOC

Different agreements with different rules of origin add complexity Proliferating trade agreements with differing ROO further complicate customs procedures •clearance of preferential imports requires more manpower •overlapping rules of origin cause particular difficulties for customs Need

Clear and consistent ROO

with minimal costs a) to firms in adhering to them and b) to customs in implementing them How about satisfying either a 10% value added requirement OR change of tariff classification (6 digit HS)

Examples of Complex and Restrictive ROO EU imports of Fish To receive preferences under the GSP •The vessel must be registered in the beneficiary country or in the EU •The vessel must sail under the flag of the beneficiary or of a member state of the EU •The vessel must be at least 50 per cent owned by nationals of the beneficiary country or the EU •The master and the officers must be nationals of the beneficiary country or an EU member •At least 75 per cent of the crew must be nationals of the beneficiary country or the EU.

The Rise of Asia

 East Asia’s share of worlds (non-oil) imports has risen from 2.7% in 1980 to 10.6% in 2004  East Asia was the key source of export growth for Africa in 1990s  Opportunities and challenges – Tremendous mass of fast growing demand (emerging tri-polar world): key to improved market access is global negotiation – Increasing competition in export and domestic markets: Need to distinguish unfair from effective competition. (Perceived) Lack of border control can undermine efforts towards trade liberalisation.

The Rising Importance of Non Traditional Exports

……

.

100%

Figure 3 : Changing Structure of Developing Country Agro-food Exports O ther O ther O ther

80%

C ereal,o il seeds, feed C ereal,o il seeds, feed C ereal,o il seeds, feed High value

60%

com m odities High value com m odities High value

40%

com m odities

20%

M ajo r traditio nal co m m o dities M ajo r traditio nal co m m o dities M ajo r traditio nal co m m o dities

0% 80/81 90/91 03/04

…

brings greater demands in terms of standards

…

.

 Competitiveness depends on capacity to satisfy both mandatory (SPS/TBT) and private standards in export markets  Standards in developed countries are shaping expectations of consumers in developing countries

…

and increased need for timeliness to be competitive.

 Increasing importance of air transport (30% of US imports now come by air)  For many products, globalisation means that to be competitive exporters require access to imported inputs at world prices  Increasing impetus to hold lower inventories  Security – secure trade is now as important as free trade, and the two need not be mutually exclusive  Particular problems for land-locked countries

Still much to be done to improve trade facilitation in developing countries

Average number of days to clear customs for sea cargo

Developed East Asia and Pacific Latin America and Caribbean Africa South Asia India Bangladesh 0 2 4 6 8 10 12