TRADE FACILITATION IN THE MENA REGION
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Transcript of TRADE FACILITATION IN THE MENA REGION
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TRADE FACILITATION IN THE MENA REGION
Mona HaddadSector Manager
International Trade DepartmentWorld Bank
UN-ESCWAExpert Group Meeting on
Transport and Trade Facilitation in the ESCWA
RegionDubai, April 10, 2013
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Outline
New Logistics to Support New Global Trends: Where Does MENA Fit?
Effect of Logistics on Trade
Improving Trade Facilitation
Trade Facilitation in MENA
Trade Facilitation and Logistics Agenda Looking Forward
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New Logistics to Support New Global Trends: Where Does MENA Fit?
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Regional integration is the new model
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Number of PTAs
Date of entry into force
The number of RTAs increased exponentially: 278 RTAs in 2010 Bilateral agreements are increasing, often between different regions South-South RTAs account for two-thirds of the total
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Share of developing countries in global trade rising
1996 1998 2000 2002 2004 2006 20080%
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Low & middle income countriesBRICsHigh income countries
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Source: Hanson (chapter 8).
Share of World Imports by Country Group
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Global value chains dominate production trends
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MENA is among the least integrated regionsMENA
Oil Exporters
Oil Importers
Arab League
ASEAN
EU27
MERCOSUR
NAFTA
0 10 20 30 40 50 60 70 80
2008-20101998-2000
Share of exports within regions (%)
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Exports are concentrated
Export concentration index
LebanonMorocco
Egypt, Arab Rep.JordanTunisia
Syrian Arab RepublicUnited Arab Emirates
BahrainOman
Iran, Islamic Rep.Qatar
Saudi ArabiaYemenKuwaitAlgeria
Iraq
0 0.2 0.4 0.6 0.8 1 1.2
2010200520001995
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Regional supply chains are under-developedIntra-industry trade by region
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Effect of Logistics on Trade
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0%
5%
10%
15%
20%cargaarancel
TRADE COSTS: FREIGHT VS. TARIFFS(% OF LAC EXPORT VALUE TO THE US, 2006) Freight
Tariffs
Logistics matter more for trade than tariffs
Source: Moreira et. al. (2009); IDB INTrade Database; World Bank Trade Indicators; WTO
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Better logistics performance increases trade
Result when a low income country reaches LPI of middle income averageIndicator/policy area Increase in trade
(%)Logistics Performance Index 15.2
All trade barriers reduced to 10% 8.4
Doing Business, cost of trading 7.4
Tariffs reduced to 5% 5.7
Note: LPI = Logistics Performance Index; Tariffs = TTRI = Trade Restrictiveness Index; All barriers = OTRI = Overall Trade Restrictiveness Index.
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Sanitary and phytosanitary measures Technical barriers to trade
ANNUAL NUMBER OF NON-TARIFF BARRIER NOTIFICATIONS TO THE WTO, 1995-2010
NTMs are another source of trade costs
Source: Moreira et. al. (2009); IDB INTrade Database; World Bank Trade Indicators; WTO
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Improving Trade Facilitation and Reducing Trade Costs
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Goals of trade facilitation and logistics agenda
•Address links between investments in hard infrastructure and policy actions needed to facilitate trade flows
•Make more efficient the supply chains linking domestic producers and buyers to international partners
•Ease the movement of goods regionally and internationally to increase competitiveness
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Three pillars of logistics performance
•Availability and quality of trade-related infrastructure: ports, airports, roads, railroads
•Friendliness and transparency of trade procedures implemented by customs and other border control agencies
•Development and quality of logistics services such as trucking, warehousing, freight forwarders, shipping, and customs agents
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Efficiency of the clearance processQuality of trade and transport infrastructureEase of arranging competitively priced shipmentsLogistics competence and quality of logistics servicesAbility to track and trace consignmentsTimeliness of shipment delivery
The LPI measures six dimensions of country performance:
19
Measuring logistics efficiency
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International shipments
Customs Timeliness
Tracking and Tracing
Infrastructure
Services Quality
Supply Chain Service Delivery
Service Deliveryperformance outcomesAreas for
policy regulations (inputs) Time, cost, reliability
The LPI: Time, Cost, Reliability
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A changing trade facilitation agenda
Cross-cutting issues • Making transit
work • Collaborative
border management
Quality and efficiency of service providers• Freight forwarders• Customs brokers• Truckers
Trade related infrastructure• Roads• Ports• Railways
Customs reform and modernization• Fiscal focus• IT orientation
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Priority areas for policy interventions
•Regional integration and development of trade corridors, border crossings, and transit regimes
•Customs reform and trade facilitation•Border management beyond customs•Port reform•Regulations and development of logistics services
(trucking, TPLs, freight forwarders, warehousing)•Development of performance metrics•Building public-private coalitions for reforms
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Trade Facilitation in MENA
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MENA: High trade costs and low logistics performance
•Major East-West shipping thru Mediterranean•Ports active in transshipments, including Egypt
•But…•Small volumes of trade regionally compared to trade
between MENA and EU•Not justified by small size of economies•Supply-side constraints and high bilateral trade costs
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Bilateral trade costs•Trade costs= price equivalent of the reduction of
international trade as compared with the potential implied by domestic production and consumption in the origin and destination markets.
•Trade costs captures the effect of:▫Distance▫Connectivity, logistics, facilitation ▫Trade policies ▫NTMs
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Bilateral trade costs high within MENA•Cost of trade between neighbors is typically twice as
high among MENA countries compared with those of Western Europe
•Maghreb countries have lower trade costs with Europe than between themselves
•Trade costs are higher for agricultural products, due to higher transportation costs (per unit value), time sensitivity for perishables, border controls, and NTMs
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Higher trade costs within MENA than between MENA and EU
Maghreb Egypt Mashreq
France, Italy, Spain
GCC
Maghreb 95% 126% 152% 75% 167%Egypt 126% 112% 119% 111%Mashreq 152% 112% 77% 149% 96%France, Italy, Spain
75% 119% 149% 50% 132%
GCC 167% 111% 96% 132% 69%
Þ Except GCC higher costs within MNA countries including neighbors compared to with EUÞ Relatively high costs given distanceSource World Bank 2012
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Higher trade costs within Maghreb than between Maghreb and EU, for manufactured products and more so for agricultural products
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LPI ranking among MENA countries
France
Italy
Turkey
Morocco
Tunisia
Lebanon
Saudi Arabia
0 20 40 60 80 100 120 140
LPI Rank 2012
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Logistics Performance Index 2012 (LPI score 1-5)
MENA has relatively poor trade logistics performance compared to countries of same income level
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Consistent, partial, and unfriendly performers
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3.6
Aver
age
2012
LPI
Sco
re
Consistent perform-
ers
Partialperform-
ersLogistics
unfriendly
Low income
Lower middle income
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MENA: LPI performance stalled since 2010
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How far from the top performer?
Algeria
Bahrain
Djibouti
Egypt
Iran
Iraq
JordanKuwait
Lebanon
Libya
MoroccoOman
Qatar
Saudi A
rabiaSyr
ia
Tunisia UAE
Yemen0%
10%
20%
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percent of highest performer
201220102007
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Key areas lagging behind on logistics performance: Logistics competence, infrastructure, customs
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MNA better in connectivity than LPI
LSCI 2010
LSCI Rank 2010
LPI 2012 LPI Rank 2012
(0-100) (out of 183) (1-5) out of
155France 75 11 3.9 12Spain 74 12 3.7 20Italy 60 16 3.7 24Turkey 36 29 3.5 27Morocco 49 18 3 50Algeria 31 35 2.4 125Tunisia 6 105 3.2 41Egypt 48 20 3 57Lebanon 30 39 2.6 96UAE 63 15 3.8 17Saudi Arabia 50 17 3.2 37
LSCI = liner shipping connectivity index (UNCTAD) based on volume and diversity of connections with container shippingÞ Several hub ports in the
regions: Tangier, Port Said, Jeddah, Salala (Oman), Dubai
Þ MNA on the main maritime highway
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MENA: MFN tariffs remain high but significant progress in reducing them regionally
(Tariff only) Trade Restrictiveness Index
0
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10
15
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25
East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North Africa
South Asia Sub-Saharan Africa
Total trade Agriculture Manufacturing
Percent
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NTMs are highest in MENA
Overall (Tariff and Non-Tariff) Trade Restrictiveness Index
0
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25
30
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East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North Africa
South Asia Sub- Saharan Africa
Total trade Agriculture Manufacturing
Percent
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The spaghetti bowl: MENA is no exception
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Rules of origin complicate use of preferences
• PAFTA preference utilization rates are low < 10% of intra-PAFTA trade makes use of the PAFTA preferences
• Reasons for the low utilization rates of PAFTA: 1) Difficulty in satisfying and proving the required value-added
requirement2) High administrative costs of compliance3) Low preference margins
• When the costs of complying with the rules of origin exceed the margin of preference, trade will just take
place under the MFN regime
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Trade Facilitation and Logistics Agenda Looking Forward
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Strong logistics needed to develop regional production sharing networks
• Countries in the region can be partners not competitors• Each country can better use its comparative advantage
thru production sharing networks• The region can achieve greater economies of scale• Aim for the bigger markets as final destination of the
final product—e.g. EU• Involve the private sector•Hypothetical example: cotton from Egypt, textile from
Syria, designers and financial services from Lebanon, financing from Dubai, high quality assembly in Morocco.
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Strengthen trade facilitation
• Trade costs constitute 20-40% of the price for MENA’s non-oil exports • Trade costs between MENA neighbors are twice as high for MENA
countries as in Western Europe • Maghreb countries’ trade costs are lower when trading with Europe
than when trading among themselves• Trade costs are especially high for agricultural products (high
transportation costs, border controls, NTMs)
Liberalize markets for logistics services; Simplify and harmonize customs procedures;
Put in place a transit regime to facilitate movement across countries
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Simplify and harmonize non-tariff measures• The rule of origin of 40% VA requirement is prohibitive• NTMs are inconsistent with splintering of supply chains and
specialization in niches/segments of chains
Reduce VA requirement to 25-30%;Introduce cumulation provisions that allow regional content to be counted as originating;Introduce a regional NTM notification register and a regional review of NTMs
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Priorities by sub-region in MENA
Four sub-regions from the perspective of supply chain and logistics:•Maghreb countries•GCC• Egypt•Mashreq (Syria, Lebanon, Jordan, WBG)ÞPhysical cross border connections, similar logistics patterns,
similar facilitation framework.ÞImplementation should focus on geographically consistent
groupsÞLittle scope for MNA wide activities
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Priorities1. GCC
▫ Comparatively quite advanced in customs reforms▫ Move towards implementation of a customs union▫ Concentration of ownership in infrastructure services
2. Mashreq▫A series of existing corridors linking Turkey to the GCC and the countries
to Europe ▫Corridor facilitation = opportunities for intra-regional and extra-regional
export development in Syria and Jordan▫Serious bottlenecks in border crossings▫ Jordan more advanced in border management reforms▫Major problem in Iraq an Syria where trade facilitation and logistics
agencies need to be rebuilt
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Priorities
3. Maghreb▫ Association with EU has been a driver for reforms and
investment▫ Very little regional trade despite the UMA (Maghreb
Union); known cross-border issues▫ Less attention given to the specific needs of regional
transportation and trade ▫ Morocco more advanced in investment and reforms, and
attracts logistics investments▫ Libya trade facilitation and logistics need to be UMA
compatible
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Logistics Performance Index (LPI) Trade and Transport Facilitation Assessment (TTFA)
49
From global benchmarks to country-level assessments
• MEASURES the trade logistics efficiency of a country
• Fundamental premise: Efficient logistics drives economic performance and competitiveness
• Diagnostic tool for countries to perform an in-depth assessment and inform policy
• Plans of action to IMPROVE logistics performance
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Some recent knowledge contributions50
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Contact Us
www.worldbank.org/tradewww.worldbank.org/tradefacilitationwww.worldbank.org/tradelogisticswww.worldbank.org/lpiwww.worldbank.org/tradestrategy
Washington Office1818 H Street NW
Washington DC 20433
Contact: [email protected]
The World Bank GroupInternational Trade Department
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THANK YOU
For more information:www.worldbank.org/trade