Post on 15-Oct-2020
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
R2 = 0.1354
0
50
100
150
200
0 5 10 15 20 25 30 35
Days through customs, imports
Ratio of total trade to GDP, 90 countries
%
Source: WBES and Global Trends as cited in Subramanian, et al 2003
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, UNCTAD, DANIDA, DFID, EU, FINNIDA, SIDA & IMF)
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
Global trade agenda
Regionalism
Asia
Standards
Speed 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
0
10
20
30
40
50
60
70
80
90
100
Possible gains in real income in 2015 as percent of full multilateral liberalization for
LMICs (excluding services and trade facilitation)
Full
Tiered cuts w/ SDT
w/ 2% exclusions
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
“Success” in Doha Round will still leave much to be done at global level
Low & Middle Income
Regional Trade Agreements are
proliferating…
0
5
10
15
20
25
30
1958 1969 1976 1984 1989 1994 1999 2004
Annual number
Annual number
Regional Trade Agreements are
proliferating…
0
5
10
15
20
25
30
1958 1969 1976 1984 1989 1994 1999 2004
0
50
100
150
200
250
300
New agreements annually
Annual number Total in force
Cumulative in force
0
5
10
15
20
25
30
35
1990 1996 2002
0
50
100
150
200
250
1990 1996 2002
South-South RTAs predominate in
number, but not in trade covered
South-South
European Union
US
South-South
European Union
Percent of World Trade CoveredNumber of RTAs
US
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
Canada
USA
Mexico
Chile
Uruguay
Paraguay Brazil Argentina
Mercosur
Bolivia
Colombia
Venezuela
Peru
Ecuador
Costa Rica
Nicaragua
El Salvador
Honduras Guatemala
CACM
Trinidad & Tobago
Antigua & Barbuda
Barbados
Belize
Dominica Grenada
Guyana Jamaica
Suriname
St. Lucia
St. Vincent & Grenadines
St. Kitts & Nevis
CARICOM
Panama
Dominican Republic
“ American and Asian Spaghetti
Bowl -
Andean Community
Bahamas
Haiti
Brunei
Cambodia
Thailand
Laos
Malaysia Philippines
Myanmar
Singapore
Indonesia Vietnam
Japan
New Zealand
Australia
ASEAN
Korea
PR China Hong Kong
Taiwan
Russia
Papua New Guinea APEC
Intra - Asia - Pacific in force Intra - Asia - Pacific signed
FTAA
Intra - Americas in force
Trans - Pacific signed
APEC
FTAA
Source: Devlin and Estevadeordal (2004)
Proliferation of PTAs is leading to a
complex global trading system
Algeria
Libya
Morocco Mauritania
Tunisia
AMU
Ghana
Nigeria Cape Verde
Gambia
ECOWAS
Benin Niger
Togo Burkina Faso
Cote d’Ivoire
Conseil de
L’Entente
Guinea-Bissau Mali
Senegal
WAEMU
Liberia
Sierra Leaone Guinea
Mano River
UnionCLISS
Cameroon
Central African Rep.
Gabon
Equat. Guinea
Rep.Congo
Chad
Sao Tomé & Principe
ECCAS
CEMAC
Angola
Burundi*
Rwanda*
Egypt
DR Congo
Djibouti
Ethiopia
Eritrea
Sudan
Kenya*
Uganda*
Somalia
Tanzania*
EAC
South Africa
Botswana
Lesotho
Namibia*
Swaziland*
Mozambique
SACU
Malawi*
Zambia*
Zimbabwe*
Mauritius*
Syechelles*
Comoros*
Madagascar*
Reunion
IOC
*CBI
SADC
COMESANile River Basin
IGAD
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
Overlapping African agreements…
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
costsa) 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 ROOEU 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…….Figure 3 : Changing Structure of Developing Country Agro-food
Exports
M ajo r tradit io nal
co mmo dit ies M ajo r tradit io nal
co mmo dit iesM ajo r tradit io nal
co mmo dit ies
High value
commodities High value
commodities High value
commodities
C ereal,o il seeds,
feedC ereal,o il seeds,
feed
Other OtherOther
C ereal,o il seeds,
feed
0%
20%
40%
60%
80%
100%
80/81 90/91 03/04
Sh
are
in
To
tal A
gro
-fo
od
Exp
ort
s
…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
0 2 4 6 8 10 12 14
Bangladesh
India
South Asia
Africa
Latin America and Caribbean
East Asia and Pacific
Developed
Average number of days to clear customs for sea cargo
Source: International Exhibition Logistics Associates, based on a sample of countries in each
region as cited in World Bank Global Economic Prospects 2004; country data from World Bank
country surveys
Conclusions Increasing emphasis on customs as a border
management institution to facilitate timely and secure trade
Bank a key source of research and operational experience on trade issues
Trade facilitation essential element of Bank’s agenda on trade and poverty reduction