Joseph George - Review of Trade Patterns Market and ... · Current utilization rate of close to 95% under EBA for its textile exports • Bangladesh may retain eligibility for EU’s

Review of Trade Patterns: Market and Product Structure&

Implications for LDC Graduation

Workshop on SDGs and Sustainable LDC Graduation of Bangladesh

20 June 2019New Delhi, India

Joseph George

LDC Graduation: Trade Concerns of Bangladesh

• Bangladesh is well positioned to meet three LDC graduation criteria in 2021 for the second time – Quality for recommendation for graduation earliest by 2024

• Bangladesh is expected to be most affected by loss of trade preferences among Asia‐Pacific LDCs

• About 86% of Bangladesh’s total exports is concentrated in textiles and garment exports ‐ EU accounts for about 59% market share

• Bangladesh is one of the largest beneficiates of EU’s GSP (Generalised System of Preferences) ‐Current utilization rate of close to 95% under EBA for its textile exports

• Bangladesh may retain eligibility for EU’s standard GSP, however under higher (though preferential, less than MFN) tariffs and more stringent rules of origin (ROOs). Even this modest scenario may cause possible export losses to the tune of USD 1.6 billion in EU’s market alone, which is close to 5% of the country’s aggregate exports.

• Necessity to open negotiation channels with key trading partners to retain trade preferences

• However, long term trade adjustments are critical, irrespective of LDC graduation status

• Aggregate export from LDCs has grown from US$ 43 bn in 2000 (0.54% of WT) to US$ 216 bn (0.94% of WT) by 2017

• Post-2008 crisis effect on trade appears to have been higher for LDC exports - Concerns of higher vulnerability of LDC exports to external shocks

Export Dependency of LDCsExports of Goods and Services (% of GDP)

Trade Profile of LDCs

• Concerns of sustaining trade led growth prospects

• Growing external risks and market uncertainties – trade growth forecast to slow to 3.7% in 2019 from 3.9% (WTO)

• Vulnerabilities of LDCs‐ Reliance on tariff preferences‐ Concentration of products and

markets‐ Poor competency bases –

overreliance on low labor costs, operating in lower market segments

‐ lacks technological upgradation, product sophistication, higher value addition

Trade Concerns in Graduation Criteria

Merchandise export concentration

• Measures only concentration in merchandise exports

• Measures only product concentration not market concentration

• Relative relevance of sectors ignored

Instability of exports of goods and services• Solely based on past fluctuations• Path dependency of future export volumes weak

due to unpredictable external factors


Instability of exports of goods and services

Trade Effects Captured by EVIEVI – 2018 Triennial Review


Trade Effects Captured by EVI

Number of Products Exported (HS-6 digit)



6.0 4.72.2 3.5 3.2

12.5

27.7

50.9

24.8

0

10

20

30

40

50

60

Export Market Penetration Index

Number of Export Markets Annual Average 2010-15 (APMICs – 160-190)


Limitations of Trade Effects Captured by EVI

• Building trade competencies a continuous and dynamic process irrespective of development status

• Any partial group of indicators is not likely to accurately reflect effective and stable market access status for any country

• Trade preferences only one of the factors in building trade competencies


• Graduation criteria do not capture trade resilience

• Composite Indices suffer from limitations of partial coverage and bias of averages

• Even non-LDCs could fail to meet EVI on an average

•Preferential access in partner country market ‐ Tariff preferences, DFQF ‐ Special and Differential Treatment (S&DT provision)‐ Flexibilities, waivers‐ Aid‐for‐Trade grants

•Supply capacity ‐Diversification, sophistication, value addition ‐Entrepreneurial capital, skilling, market connect

•Trade and Transport facilitation – Trade Costs ‐Physical connectivity ‐Procedural ease‐Linkages between trade and transport facilitation

Trade Sensitivities of LDCs Effective Market Access for LDCs

• Supply capacity and trade facilitation may have overridden trade preferences in APLDC’s export performance

Export Dependency of Asia‐Pacific LDCsExport of Goods and Services (% of GDP, 2017) &CAGR of Exports of Goods and Services (2002‐17)

• Exports of goods and services of APLDCs have been growing faster than LDC average post-crisis

• Share of APLDCs in total exports of LDCs grown from 24.5 %(2002) to 37.6% (2016)

• But wide variations in relative importance of trade among APLDCs.

World Development indicators, WB


0

5

10

15

20

25

2000‐08 2009‐17

LDCs APLDCs

CAGR of Exports of Goods and Services (2002‐17)

Volume and share of merchandise exports of APLDCs (2016)


• Composition of trade, type of market access influences relative success or failure

• APLDCs with better connectivity options have fared better in exports

Bangladesh

Major Export Markets

EU – 58.4%North America – 22.8%China – 2.2%India – 1.6%

Major Products

Textile/apparel – 86% (+, 2nd largest)Leather based – 3%Agricultural/fisheries – 5%

WITS, UNCOMTRADE & ITC Trade Maps

Trade Sensitivities of LDCs

Major Export Markets

East Asia and Pacific – 81.4%China – 40.8%Thailand 19.2%

Major Products

Iron ore based – 54% (+)Mineral fuel/Inorg. chemicals– 21% (+)

Myanmar

Rajan Ratna

Select Preferential Schemes key to APLDCs

EU- Everything but Arms (EBA) enforced in 2001- 98.7% tariff lines coverage

US- 82.6% tariff lines coverage (97.6% DFQF access for LDC beneficiaries under AGOA)- Excluded products include articles of leather, cotton, articles of apparel and clothing, other textiles and textile articles, footwear (highly sensitive for APLDCs)

Japan- LDC product coverage extended from 86% to 97.9% of tariff lines in 2007 - Effective until 31 March 2021

China- DFQF since 2010- 97% coverage for 24 LDCs countries (60% for Bangladesh)

India- Duty Free Tariff Preference (DFTP) Scheme in 2008 - 94.1% tariff lines coverage- Nepal and Bhutan yet to join DFTP (beneficiaries of tariff elimination under SAFTA, bilateral

agreement with India)


Rajan Ratna

Market Share of Exports of APLDCs, 2017

• Bangladesh and Cambodia account for close to 95% of APLDCs exports to EU and US

• China (37%) and India (19%) emerges as the largest markets for APLDC exports excluding Bangladesh and Cambodia

All APLDCs Excluding Bangladesh and Cambodia


Rajan Ratna

CAGR (in %) of Exports of APLDCs to Key Markets (2001-17)

• High growth of APLDC exports to large markets within the region has contributed more to their export expansion

• Terms of access offered by large markets within the region have been supplemented by connectivity and specific local competencies.


• Sources of market access of APLDCs found to be a mix of both supply‐side competencies and terms of access at export destination markets

• Composition of trade, type of market access influences relative success or failure

• Improved connectivity, and linkages of transport and industrial infrastructure, has played an important role in expanding the export opportunities of APLDCs

• What are the implications for LDCs which rely on trade preferences? Can loss of preferential access be compensated by strengthening supply‐side competencies?


Supply-side Reforms

• LDCs have low baselines with respect to supply-side competencies, hence high margin of improvement

• Technical support and financing options for supply-side reforms not entirely tied to LDC status and will be available after graduation

•Preferential access in partner country market ‐ Tariff preferences, DFQF ‐ Special and Differential Treatment (S&DT provision)‐ Flexibilities, waivers‐ Aid‐for‐Trade grants

•Supply capacity ‐Diversification, sophistication, value addition ‐Entrepreneurial capital, skilling, market connect

•Trade and Transport facilitation – Trade Costs ‐Physical connectivity ‐Procedural ease‐Linkages between trade and transport facilitation

Supply Capacities: Industrial Composition

• A predominant share of manufacturing capacity in LDCs located in Small-scale Units –Trade off noticed (high risks-faster growth for small-scale entrants; low risks-low growth for large-scale incumbents)

• Risks high till a critical threshold of scale of operation – deterrent to new entrepreneurs

• High attrition rates noticed in industrial composition – low survival rates for new entrants implies access limitations.- Resources – finances, raw materials, power - Managerial skills- Market information, connect and network

• Challenges of keeping pace with changing global trade patterns – GVCs

• GVC participation for LDCs at a nascent stage even in sectors such as textiles and leather – East and South-east Asian value chains predominant in electronics sector

Firm level Issues

UNCTAD LDC Report 2018

• LDCs are far below the benchmarks on firm level performance - Even marginal improvements will translate into high outcomes as they start from a low base

• Addressing firm level issues by carefully designed industry policy and trade promotion measures an ongoing process

• FDI induced technology transfer key to upscale value-addition and move downstream – measures to encourage FDI led capacity building to be made integral part of trade/industrial policy

• Many reform aspects related to soft-skills, without large capital investment requirements – Administrative/governance level and firm level training/capacity-building available led by international organizations (UNCTAD/ITC/WTO) – provides grants and technical assistance.

• Measures to reduce trade cost –trade facilitation – a cross-cutting aspect for competencies of exporting firms irrespective of sectors – A tide which can lift all boats.

Supply Capacities: Industrial Composition Firm level Issues

Rajan Ratna

Time to Export (Days) for APLDCs

Average time to export:LDCs – 32.5 daysMiddle income countries – 22.8High income countries – 11.6

Average cost to export:LDCs – US$ 2099.8Middle income countries – US$ 1539.8High income countries – US$ 1007.8

Cost to Export (US$/20ft C) for APLDCs

Trade Facilitation IndicatorsSupply Capacity

• Low ranks in Logistic Performance (LPI) and Doing Business (DBI) • High margins of improvement

Trade/Transport Facilitation

Intra-regional Trade Costs

Inter-regional Trade Costs Bilateral Trade Costs

ESCAP-World Bank Trade Cost Database 2018

Example of Low baseline –High margin of improvement

Intra‐regional Trade Potential in South Asia

UNESCAP 2018, Unlocking the Potential of Regional Economic Integration in South Asia

Supply-side Reforms

• South Asia’s unexploited trade potential with Southeast Asia at 63% ($70 bn); with East Asia at 51% ($28 bn); with Central Asia 69% ($21 bn)

• Huge transport infrastructure gap noted for South Asian countries

• Poorly developed soft connectivity and facilitation as a more critical issue

• Strategic location of Southern and Central Asian subregion offers immense possibilities of inter‐regional connectivity

• Transport infrastructure development scattered across overlapping subregional projects

• Opportunities to mobilize resources for infrastructure and institutional development in a broader regional framework

Trade/Transport Facilitation

Overlapping programmes

• ECO ‐ SAARC – BIMSTEC

• CPEC, BCIM Corridors

• APTTA, BBIN MVA

• CAREC, SASEC Programmes

• IMT Highway, MGC

Differences in approach

• Institutional Capabilities

• Legal and Admin Coverage

• Project Term/Scope

• Operational authority

• Financing

Transport Corridor Design

Transport Infrastructure

Transport Facilitation Policy

Transport connectivity Landscape in Southern Asia

ESCAP’s Initiatives

Corridor Design • Layout of Asia-Pacific wide multimodal transport system built on

an integrated Asian Highway (AH)-Trans-Asian Railway(TAR)-Dry-Ports network, facilitated by respective intergovernmental agreements

• Blueprint for subregional corridor development projects

Facilitation• Intergovernmental Agreements to Strategic Frameworks for

implementation• International conventions, facilitation tools, models and best

practices• Training and Capacity-building excersices

ESCAP’s Initiatives

• Promoting Southern Asian Container Rail Corridor- joining disconnected South Asian segments of TAR- as an additional carriageway to meet rising traffic

demand - as an environmentally benign mode of transport

Rail traffic – sustainable transportation

• Estimates upto 53% cost reduction (upto 82% in certain segments) 61% time reduction

• Kolkata-Dhaka Dry Run (first ever trial of container rail connectivity – container block train service) conducted in April 2018


• Regional Strategic Framework for Facilitation of International Road Transport, 2012

‐ Building an effective legal regime‐ Wider application of new technologies‐ Development of professional training‐ Establishment and strengthening of national coordination

mechanisms‐ Promotion of joint controls at border crossings‐ Promotion of economic zones at border crossings

• Intergovernmental Agreement on International Road Transport along the Asian Highway Network, 2016

‐ Conditions of granting traffic rights ‐ Routes for which the traffic rights are granted‐ Permits and right of way‐ Terms of supervision of implementation of the Agreement‐ Application of facilitation tools

Regional Road Facilitation Framework and Facilitation Models

Transport Facilitation Policy Regional Road Facilitation Framework and Facilitation Models

Secure cross border transport model • Time‐cost‐distance (TCD) model – diagnostic tool‐ Diagnostic assessment reports for key SA corridors

published

• Efficient cross‐border transport (ECBT) model‐ Alternatives with respect to difficulty, cost, efficiency

and reliability; encourages B2B and B2G cooperation‐ Trailer/Container Swap instead of manual transloading

• Secure cross‐border transport (SCBT) model‐ Vehicle tracking system using new technologies such as

RFID,CCS, Electronic Seals, GPS tracking‐ Physical inspection at origin/destination addresses

concerns of security, diversion of goods ‐ Facilitates cooperation among border agencies both

behind and across the border

• Model on Integrated Controls at Border Crossings‐ Efficient information flow and sharing among border

agencies‐ Optimum use of modern equipment‐ Streamlining and simplifying formalities and procedures ‐ Avoid multiple inspection

• Draft Framework for Enhancing Efficiency of Railway Border Crossings (proposed) – Working Group on TAR, 2017

‐ Current and forecast of cross‐border railway freight traffic‐ Type of goods transported and nature of traffic (bulk/containerized)‐ Review of legal arrangements for railway transport ‐ Major stakeholders and their role at the railway border crossings‐ State of railway border crossing equipment, facilities and infrastructure

• Policy guidelines, tools, models and best practices:‐ Transit arrangements‐ Rolling stock Management, locomotives‐wagon exchange‐ Harmonization of signaling systems‐ Break‐of‐gauges and Intermodal interfaces‐ Security systems against pilferage and contamination‐ Human resource deployment

• International transport conventions, Model MRAs, Protocols for cross‐border rail transport

• Intergovernmental Agreement proposed for facilitation of TAR network for specific commitments

Transport Facilitation Policy Regional Rail Transport Facilitation Framework

RulesRegulatory Authorities in Country of Origin

RulesRegulatory Authorities in Destination Country

Originprocedures before cargo movement

DocumentationPayments

in Country of Origin

Border Infrastructure

In Country of Origin

Border Infrastructurein Destination

Country

DocumentationPayments

in Destination Country

Destinationprocedures after cargo

arrival

Contacting the ImporterFixing the ContractSending the contract and proforma invoiceReceiving acceptance letter and acknowledge L/C copyObtaining cargo insurancePreparing documents for exportLoading for delivery Deposit chalan fee, VAT and customs declarationCustoms inspection and clearance by C& F agentOut Pass handing over by C&F Agent to importer Receive payment

Contacting the exporterNegotiating the contract and fixing

Opening the L/C accountSending the copy of L/C and acceptance letter

Documents prepared for customs declaration (to be used by C&F agent)

Payment to C&F agent Customs inspection and clearance

Collect out pass from portTransport to destination

Reform areas requiring harmonization/coordination

ICDs/DPs ICDs/DPsRail/Road

Transport Facilitation Policy Development of Dry Ports

Transport Facilitation Policy Development of Dry Ports

• IGA on Dry Ports, 2013‐ 150 existing and 86 potential dry ports were nominated‐ India – 36, Bangladesh – 17, Bhutan – 6, Nepal‐6, Pakistan‐

12

• Regional Framework for the Development of Dry Ports of International Importance ‐ Working Group on Dry Ports 2017

‐ Service functions ‐ customs and border control functions‐ Locations ‐ seaport, road and rail Infrastructure links ‐ Technical standards‐ Physical design ‐ Coding‐ Procedural specifications – processing of trade/transport

documents‐ Arrangements for customs clearances‐ Options for financing infrastructure and operations‐ Detailed review of best practices and models of operation

• Capacity Building Workshop for Countries of South Asia –August 2018, New Delhi

Cross‐border Paperless Trade Facilitation in Southern Asia


UN Global Survey on Trade Facilitation and Paperless Trade Implementation 2017

Transport Facilitation Policy Interface between Transport and Trade Facilitation

Progressive Steps Towards Cross‐border Paperless Trade

• Electronic/digitization as basis for modernization of road, rail and dryportsnetworks

• Basis also for modernization of trade procedures

• Basis of trade-transport interface

• Customs at the core of this interface

Model agreements, templates and guidelines

Trade Facilitation Policy Framework Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific

Interim Intergovernmental Steering Group

Legal and Technical Working Groups

• Guide on how to develop or upgrade paperless trade systems in a manner consistent with the general principles

• Template for designing national policy framework

• Mutual recognition mechanism for trade-related data and documents in electronic form

Subregional workshop for South and Central Asia in 2017

• Status report being prepared • Subsequent subregional capacity-building workshops to be conducted

Border Special Development Zones (BSDZs) in Eastern South Asia: Feasibility Assessment (Phase I)

• Facilitate transformation of transport corridors todevelopment corridors

• BSDZs combine the policy goals of:

1. Achieve the policy goals of industrial development through SEZs; investment incentives, special privileges, streamlined trade procedures

2. Export oriented industrial development by tapping into trade cost advantages provided by international transport routes and gateways

3. Build direct and indirect synergies with local economy for local development

• BSDZs envisages mutually rein forcing benefits of transport infrastructure investments and enhanced trade flows

• BSDZ Defined as “BSEZ with broader socio‐economic developmental objectives at the core of its operation”

Benchmarks from ESCAP’s work in the GMS region for similarly positioned border localities in ESA

Some examples considered from GMS East‐West Economic Corridor:

•Myawaddy‐Mae Sot [Myanmar/Thailand]•Lao Bao‐Dansavanh [Vietnam/Lao PDR]•Savannakhet‐Mukdahan [Lao PDR/Thailand]

Case for BSDZ in Eastern South AsiaThe example of Meghalaya (NER) – Bangladesh Border [Dawki‐Tamabill]

• Proximity to key international gateways and potential trunk corridors hosted by Eastern South Asia

• Opportunities for cost savings from scale of operation for both intra‐regional trade and world exports of the subregion

• Opportunity to build industrial linkages across NER, benefitting small‐scale and cottage industries in particular

• Mutual advantages of trade growth, transit revenue and enhanced port operations shared by NER with Bangladesh, Bhutan, Nepal and Myanmar

• Opportunities of scaling up infrastructural investments and overcome budget constrains through international cooperation for joint investments

Broader Connectivity to External Markets

• Shillong – Dawki/Tamabil LCSs –Sylhet route part of both Asian Highways 1 and 2.

• AH1 and AH2 covers Amingaon, Nagaon and Dimapur and Sylhet, a network of major ICDs of Eastern South Asia

• Being part of N2 (Bangladesh), Sylhet is well connected to commercial centers in Bangladesh (to Dhaka through N1) and major ports such as Mongla and Chittagong.

• Sylhet is one of the main rail stations in the Southern Corridor of the Trans‐Asian Rail (TAR) network and is the closest TAR station for most of the Northern parts of NER.

• Transit through Sylhet offers the shortest and cheapest transport access to South East Asia for most of Northern NER, Parts of Nepal, Bhutan.

• Utilize access to international gateways of Dawki/Tamabil border region to minimize trade costs and secure competitive advantages for sectors with high trade potential

• Achieve industrial diversification and technological upgradation in Meghalaya, and enhance scale of operation of indigenous industries through greater market access, taking benefit of intra‐regional and inter‐regional connectivity

• Modernization of traditional agro‐industries by entering into collaborative ventures in Value‐added upstream industries and broad‐based regional sourcing of resources under a favorable industrial environment enabled by the BSDZ

• Build synergies within the BSDZ between the primary IP(s)/BSEZ(s) and the local economy, and thereby improve livelihoods of dependents of agrarian and services sectors

Policy Goals of the BSDZLocalise Vale Addition

Developments in Favour of BSDZs

• Progress on transport infrastructure of the subregion‐ Work‐in progress for completing missing links of TAR and upgradation of AH network‐ New upcoming rail links in NER‐ Development of LCSs into ICPs‐ Upgradation of existing and establishment of new ICDs in progress‐ Operationalization of the MVAs and IMT Trilateral Highway

• Key elements of policy support required for BSDZs abvailable‐ Concepts of BSDZs in the National Investment and Manufacturing Zones (NIMZs)model

provisioned under NMP, envisioned as integrated industrial townships with infrastructure and land use on the basis of zoning; clean and energy efficient technology; necessary social infrastructure; skill development facilities, etc.

- The National Foreign Trade Policy (NFTP) 2015-2020 provisions sector specific concessions, duty exemptions and a host of trade promotion schemes grouped under Exports from India Schemes (EIS). Importance given to various forms of SEZs in India as a key tool for trade promotion.

- SEZ Act (2005) and SEZ Rules (2006), special considerations being given to the NER under the broad framework of the central Industrial Promotion Policy (North East Industrial and Investment Promotion Policy (NEIIP, 2007) have additional provisions.

- Policy provisions of Meghalaya Industrial and Investment Promotion Policy (MIIPP, 2012) can be streamlined

Developments in Favour of BSDZs (Cntd.)

• Emerging opportunities for sourcing of finance‐ Multilateral organizations as development partners have increasingly year marked funds for

infrastructure in the Eastern South Asia region‐ Initiatives of the Federation of Industry and Commerce of North Eastern Region (FINER) for

infrastructural assistance through private‐public partnerships‐ North Eastern Development Finance Corporation Limited (NEDFi) acts as a key institution for

financial assistance‐ Investment cooperation arrangements among North Eastern States and stakeholders of

Bangladesh, Bhutan, Myanmar and Nepal

1. Zone specific industrial policies

2. Value chains

3. Transport and

Logistics

4. Diversification of livelihoods

5. Legal and regulatory framework

6. Socio-economic development

7. SME development

8. Linkages to other countries in the

region

Synergies for Transforming Transport Corridors to Development Corridors

Framework for a BSDZ ModelComponent Parameters

1. Zone specific policies Land acquisition for a primary BSEZ at Dawki in proximity with the upcoming ICP

Priority sectors to be decided based on current industrial profile,assessment of trade prospects and local resource (labour and raw materials) endowments

Assessment of size of the BSEZ based on sectoral priorities Assessment of geographical limits of the BSDZ based on local administrative

division of Dawki as well as possibilities of cross‐border extension to local administrative division of Tamabil

Design of incentive packages based on existing industrial promotion schemes under MIIPP

Linkages of the primary BSEZ with trade facilitation programmes of the participating governments

2. Cross‐border value chains Local resource mobilisation as a criteria and set procurement targets for agrarian and mineral resources of the state to build value chains within the state

Procurement of intermediates from NER states, Bangladesh, Bhutan and Nepal under collaborative ventures – upstream linkages

Build value chains with downstream stream industries located in nearby markets of South East Asia

Broader Zone Industrial Planning Parameters

Broader Zone Industrial Planning ParametersFramework for a BSDZ Model

Component Parameters3. Transport and logistics Upgradation of AH1/AH2 segments along Shillong‐Sylhet corridor

Upgradation of state highways linked to AH1/AH2 Cold storage and warehousing facilities at Dawki BSEZ Establishment of trade service centers in close proximity to the BSEZ,

including freight forwarding, forex outlets, banking, quality testing andinspection etc.

Establishment of telecommunication and IT hub at the BSDZ Containerisation and international multimodal transport service network

linked to rail head at Sylhet and sea ports of Chittagong and Mongla

4. Diversification of livelihoods Encourage local recruitment through a labour policy for the BSDZ Vocational training and recruitment centres for residents Fiscal incentives to promote local sourcing from cottage industries Capital subsidies for services sector enterprises owned and operated by

local entrepreneurs Institutional architecture for indirect linkages to hinterlands of the BSDZ

5. Legal and regulatory framework

Centralised zoning and land use master plan under the governance of a multi‐stakeholder BSDZ Development Authority

Introduction of zone specific investment policy, labour policy and trade promotion policy for the BSDZ

Centralised grievance redressal system and legal advisory services

Framework for a BSDZ ModelComponent Parameters

6. Socio‐economic development Employment guarantee schemes, labour welfare societies, self‐help groups and cooperatives formed as integral part of the BSDZ

Zone specific socio‐economic audit and periodic evaluation of social security schemes

Allocation of public service establishments within the BSDZ in the areas of education health and housing

7. SME and BDS development Establishment of business development and training centres in the BSDZ Establishment of SME incubators, networks and SME governing councils

8. Linkages to other countries in the region

Interstate cooperation for establishing inter‐industry linkages with neighbouring States of NER

Measures to attract investments in collaborative ventures from NER, Bangladesh, Bhutan, Myanmar and Nepal

Labour policy regime at the BSDZ to facilitate territorial access to migrant workers from participating countries

Target consolidated market access opportunities in South East Asia Eventual integration with markets beyond subregional markets in the

Asia Pacific using international rail and shipping routes

Broader Zone Industrial Planning Parameters

Coverage – Transport and procedural infrastructure, and integrated transport/trade facilitation

Strategic document as well as action plan with short and medium term targets

ESCAP tools for developing Master Plan• Regional Strategic Frameworks for Facilitation of AH, TAR and Dry Ports networks• Transport and Trade Facilitation Models, Legal Frameworks

Process of development of master plan• Preliminary draft for country consultation• Subregional workshops for consultations • Submission for adoption by countries with voluntary commitments

Partnerships – with multilateral donors and subregional organizations, industry bodies, and thinktanks with expertise in connectivity

Strong monitoring mechanism – against defined baseline scenarios

Assistance based on grants and soft‐loans – not tied to LDC status

Towards a Connectivity Master Plan

Recap and Looking Forward

• Trade challenges a mix of preferential access and supply-side issues –common across developing countries

• Graduation indicators do not fully capture trade bottlenecks

• Building trade competencies a continuous and dynamic process irrespective of development status

• Supply-side measures are inevitable irrespective of graduation as traditional competencies undergo changes – eg. failure of low cost model in the long-run

• High unexploited export/supply capacity found for South Asian LDCs

• Endogenous policy leverages available in the form of supply-side measures (firm level and trade/transport facilitation) to offset preference erosion.

• Sufficient to offset preference erosion? low baseline – high margin suggests even marginal improvements can return substantial gains.

• Support available in various forms (technical assistance/capacity building/financing) for most of the necessary supply-side reforms (firm level and trade/transport facilitation) not tied to LDC status

• Challenges of graduation can be turned into opportunities to build long-term trade competencies.

Recap and Looking Forward

48

Thank you

Available at www.unescap.org