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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 ? - PowerPoint PPT Presentation
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Trends in International Trade: Trends in International Trade: Key Issues for the World Bank Key Issues for the World Bank
and Customsand Customs
Paul BrentonInternational Trade Department
World Bank
OUTLINEOUTLINEWhat 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?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 Trade can be a powerful engine of growth and poverty reductiongrowth 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 WHAT IS THE BANK DOING ON TRADE?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 Why is the World Bank interested in Customs?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 More efficient customs are associated with more tradeassociated with more trade
R2 = 0.1354
0
50
100
150
200
0 5 10 15 20 25 30 35Days 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 What is the Bank doing on Customs?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 Bank Operations - Some current examples: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, Despite improvements in trade policies, many Countries Have Been Left Behindmany 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 Key issues in Bank research and analysis on tradeand analysis on trade
Global trade agendaRegionalismAsiaStandards Speed with security
Global integrationGlobal integrationTechnological 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
0102030
405060708090
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/ Tiered cuts w/ SDTSDT
w/ 2% w/ 2% exclusionsexclusions
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 Success” in Doha Round will still leave much to be done at global levelmuch to be done at global level
Low & Middle Income
Regional Trade Agreements are Regional Trade Agreements are proliferatingproliferating… …
0
5
10
15
20
25
30
1958 1969 1976 1984 1989 1994 1999 2004
Annual numberAnnual number
Annual numberAnnual number
Regional Trade Agreements are Regional Trade Agreements are proliferating…proliferating…
0
5
10
15
20
25
30
1958 1969 1976 1984 1989 1994 1999 20040
50
100
150
200
250
300
New agreements annuallyNew agreements annually
Annual numberAnnual number Total in force Total in force
Cumulative in forceCumulative 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 South-South RTAs predominate in number, but not in trade coverednumber, but not in trade covered
South-South-SouthSouth
European European UnionUnion
USUS
South-South
European European UnionUnion
Percent of World Trade CoveredPercent of World Trade CoveredNumber of RTAsNumber of RTAs
USUS
RTAs can help address trade RTAs can help address trade facilitation issuesfacilitation 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 Proliferation of PTAs is leading to a complex global trading system complex global trading system
AlgeriaLibyaMorocco MauritaniaTunisia
AMU
GhanaNigeria Cape Verde
Gambia
ECOWAS
Benin NigerTogo Burkina FasoCote d’Ivoire
Conseil de L’Entente
Guinea-Bissau Mali Senegal
WAEMU
Liberia Sierra Leaone Guinea
Mano River Union CLISS
CameroonCentral African Rep.GabonEquat. GuineaRep.Congo
Chad
Sao Tomé & Principe
ECCAS
CEMAC
Angola
Burundi*Rwanda*
Egypt
DR Congo
DjiboutiEthiopiaEritreaSudan
Kenya*Uganda*
Somalia
Tanzania*
EAC
South AfricaBotswanaLesotho
Namibia*Swaziland*
Mozambique
SACU
Malawi*Zambia*Zimbabwe*
Mauritius*Syechelles*
Comoros*Madagascar*
Reunion
IOC
*CBI
SADC
COMESA Nile River Basin IGAD
AMU: Arab Maghreb UnionCBI: Cross Border InitiativeCEMAC: Economic & Monetary Community of Central AfricaCILSS: Permanent Interstate Committee on Drought Control in the SahelCOMESA: Common Market for Eastern and Southern AfricaEAC: East African CooperationECOWAS: Economic Community of Western African StudiesIGAD: Inter-Governmental Authority for GovernmentIOC: Indian Ocean CommissionSACU: Southern African Customs UnionSADC: Southern African Development CommunityWAEMU: West African Economic & Monetary Union
Overlapping African agreements…Overlapping African agreements…
Different agreements with different rules of Different agreements with different rules of origin add complexityorigin 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 ROOExamples 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 AsiaThe Rise of AsiaEast Asia’s share of worlds (non-oil) imports has
risen from 2.7% in 1980 to 10.6% in 2004East Asia was the key source of export growth for
Africa in 1990sOpportunities 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-The Rising Importance of Non-Traditional Exports…….Traditional Exports…….
Figure 3 : Changing Structure of Developing Country Agro-food Exports
Major traditional commodities Major traditional
commodities Major traditional commodities
High value commodities High value
commodities High value commodities
Cereal,oil seeds, feed
Cereal,oil seeds, feed
Other Other Other
Cereal,oil seeds, feed
0%
20%
40%
60%
80%
100%
80/81 90/91 03/04
Shar
e in
Tot
al A
gro-
food
Ex
port
s
……brings greater demands in brings greater demands in terms of standards….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 and increased need for timeliness to be competitive.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 Still much to be done to improve trade facilitation in developing countriesfacilitation 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 cargoAverage 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
ConclusionsConclusionsIncreasing 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