INTERNATIONAL MINISTERIAL CONFERENCE
OF LANDLOCKED AND TRANSIT DEVELOPING COUNTRIES
AND DONOR COUNTRIES AND INTERNATIONAL
FINANCIAL AND DEVELOPMENT INSTITUTIONS
ON TRANSIT TRANSPORT COOPERATION
UNECE Side Event
(Almaty, 28-29
August 2003)
Efficient trade and
transport facilitation within an integrated,
holistic framework
From analysis to implementation
- Introducing trade and transport facilitation
measures
in an integrated environment
Statement by Mrs. Brigita
Schmögnerová,
Executive Secretary
Landlocked developing countries face very
specific challenges ranging from geographical
distance from the markets, poor infrastructure
and maintenance problems, inadequate trade,
customs and institutional environment
to their vulnerability with regard to
their neighbours, i.e. the transit countries.
Therefore, being landlocked certainly
accounts for many economic, infrastructure
and political hardships. However many
problems landlocked countries face have
the potential to be overcome or at least
mitigated in the long run, with the right
mix of policies at country- and regional
levels. These policies should address
weaknesses in infrastructure, in capacity
(both human and physical), in institutional,
administrative and regulatory frameworks
that characterize all landlocked developing
countries. Governments of landlocked and
coastal countries as well as the international
community and donor agencies should attach
increased importance to this multifaceted
and closely linked mix of problems and
attempt to deal with them in their many
aspects. In order to provide some guidance
in this respect, UNECE has attempted to
link three concepts, which have recently
been developed by well-known economists.
They characterize very well the three
main areas of challenges faced by landlocked
developing countries, that is:
-
The physical
distance - a geographic given,
-
The political
distance - determined by
the landlocked country's relationship
with its neighbours, and
-
The economic
distance - defined by the
actual costs and the predictability
of reaching markets
There is no doubt that
the geographical distance to markets is
one of the most important growth factors
for landlocked developing countries. It
is, however, not only the physical distance,
i.e. geography, that influences their
economic success or failure. Political
instability, security problems, bad neighbourly
relations and high costs linked to inefficient
administrations or cumbersome procedures
can further aggravate the situation and
effectively prevent a landlocked country
from trading internationally. Likewise,
even if the infrastructure is in place,
trade will not take off if the relevant
trade procedures are too complicated and
trade institutions are inadequate.
The success of a landlocked
country to become part of international
markets, its competitiveness as well as
its growth prospects are therefore a function
of these three distances, the physical,
the political and the economic. Policymakers
of course need to take account of all
three aspects and carefully plan any kind
of reform around them. The UNECE Parallel
Event on Trade and Transport Facilitation
as well as the background paper prepared
for this purpose, however, will focus
on just one of these distances: the economic
distance and its reduction through trade
and transport facilitation.
For disadvantaged landlocked
countries, integrated trade and transport
facilitation measures can be a particularly
effective tool in offsetting the barriers
they face in regional and global trade.
Improvements in transport and transit
facilities, lower transaction costs and
higher customs revenue as well as increased
traffic volume will eventually benefit
all and have an impact on economic growth
and income distribution. Trade facilitation
is often identified with highly technical
and expensive procedures, but there are
some very simple, basic measures which
are neither very costly nor complicated
to implement, and which can make a huge
impact on the way trade and transport
function. Such simple measures include
adequate opening hours at border stations,
joint customs posts with neighbouring
countries, or the publishing of applicable
rules, laws, procedures or security measures.
Traders and investors look for predictability,
accountability and reliability. If such
basic enabling conditions are not given,
trade flows are simply diverted.
Trade facilitation measures
require realistic timeframes that have
to include long-term implications, acquire
the support of all stakeholders, public
and private, and take into consideration
the financial viability of projects.
As in developing countries
the dominant actors are small firms whose
trade transaction costs are disproportionately
high, they would consequently benefit
most from the introduction of trade facilitation
measures. The removal of the barriers
and the related costs can therefore entail
quite significant advantages. In a study
published in 2002, the UNECE estimated
that potential benefits resulting from
trade facilitation measures can range
from between 2 to 3 percent of the total
trade value. They can be arguably more
important than tariff reductions as trade
development instruments. Likewise, a study
published by UNECE in 2003 found that
long-term effects on growth can only be
achieved when an open and liberal trade
policy is combined with trade and transport
facilitation measures. This means that
there is a compelling need for an open
liberal trading environment with functioning
institutions and good trading conditions,
which trade facilitation measures can
help to create.
However, trade facilitation
on its own, is not enough to tackle the
complex situation faced by landlocked
developing countries. An integrated, holistic
approach to their problems is therefore
recommended to achieve any kind of tangible
result. An integrated strategy should
therefore encompass reforms in the areas
of:
-
trade facilitation
with a realistic, comprehensive and
targeted agenda;
-
transport and
transit facilitation including the
physical infrastructure, economic
implications and capacity building;
-
the enabling environment
with institutional reforms and institution
building, legal and regulatory reforms
as well as their implementation and
enforcement, as the quality of institutions
and the lack of a conducive growth-promoting
and investment climate have a decisive
impact on the economic situation of
a country. Fraud, corruption and informal
trade are direct symptoms of institutional
malfunctioning and as such are to
be blamed for many costs incurred
throughout the documentation and transit
chain.
-
and finally the
regional approach with a coherent
regional cooperation framework to
negotiate solutions and linkages between
all related issues. In addition, given
the close dependency between landlocked
and coastal countries, particular
attention should also be given to
the positive impact of regional cooperation
on good neighbourly relations.
In the area of trade
facilitation, international and regional
organizations (including UNECE) have elaborated
many tools, instruments and recommendations
on which any integrated development plan
should draw. Further, such an integrated
framework needs to take into consideration
regional aspects. The regional commissions
are well positioned to assist in the regional
development work and should be called
upon to provide a forum for discussion
and advice. Many of the tools that UNECE
has developed over the years tackle many
of the practical problems faced by landlocked
developing countries especially in the
area of trade and transport facilitation.
They range from the harmonization of documents
as set out in UNECE Recommendation 18,
the use of the same location codes as
e.g. define by the UN/LOCODE or the establishment
of trade facilitation bodies to foster
the dialogue with the private sector described
in Recommendation 4. Technically more
advanced initiatives such as the use of
electronic codes and documents, include
UN/EDIFACT and more recently UNeDocs.
A further extremely important contribution
of UNECE to the reduction of the economic
distance of landlocked countries is the
TIR Convention in the area of transport
facilitation which up to now is the only
universal Customs transit system in existence.
Other organizations as
well have developed a whole range of instruments
including UNCTAD's Automated System for
Customs Data (ASYCUDA) or the Advanced
Cargo Information System (ACIS) as well
the revised Kyoto Convention on the Harmonization
and Simplification of Customs Procedures
elaborated by the World Customs Organization.
An integrated trade facilitation
framework that includes all these different
aspects and adapts them to each country's
or region's particular situation can have
the potential to reduce the economic distance
that separates landlocked developing countries
from their markets. However, it requires
to be backed by strong political will
and has to be integrated into a wider
policy and development framework of governments
and international organisations.
Thank you for your cooperation.
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