Trade Facilitation: Benefits to Business

1. Trade Facilitation: Benefits to Business Dr. Carol Cosgrove-Sacks Director, Trade United Nations Economic Commission for Europe (UNECE) CTIED, 26 May 2005

2. Trade Facilitation: Benefits to Business Contents • Business relevance of trade facilitation • What business needs from public service • Costs and benefits of trade facilitation • Business contribution to trade facilitation • Further negotiations 2

3. Trade Facilitation: Benefits to Business 1. Business relevance of trade facilitation 3

4. Trade Facilitation: Benefits to Business • Trade liberalization and lower tariffs make non-tariff barriers more costly • Unpredictable and cumbersome procedures and administrative delays cost money 4

5. Trade Facilitation: Benefits to Business • International supply chains depend on moving goods and components fast and predictably • Increased reliance on just in time production and delivery makes just in time customs clearance a major issue for business • SMEs suffer most from poor trade facilitation 5

6. Trade Facilitation: Benefits to Business 6

7. Trade Facilitation: Benefits to Business • Direct costs: compliance trade-related services • Indirect costs: procedural delays lack of predictability lost business opportunities 7

8. Trade Facilitation: Benefits to Business 2. What business needs from public service 8

9. Trade Facilitation: Benefits to Business • Lower trade transaction costs • Faster information flow & more secure trading environment • Efficient and predictable customs procedures • Modernization of customs facilities and automation to support cross-border trade and security • Transparent and robust framework for financial transactions 9

10. Trade Facilitation: Benefits to Business The average ad valorem equivalent of a 1-day delay in the transportation of manufactured goods is around 0.8% (Hummels 2001) 10

11. Trade Facilitation: Benefits to Business 3. Costs and benefits of trade facilitation 11

12. Trade Facilitation: Benefits to Business • Cutting costs and reducing delays • Faster Customs clearance and release • Simple commercial framework for both domestic and international trade • Enhanced competitiveness 12

13. Trade Facilitation: Benefits to Business The world income gains from 1% reduction in trade transaction costs amounts to USD 40 billion, with no losers (OECD 2005) 13

14. Trade Facilitation: Benefits to Business APEC: 5% of reduction in trade-related transaction costs by 2006 could raise GDP by 0.9% and lift real consumption significantly above what it would otherwise be. (Foreign Affairs and Trade, Australia, 2002) 14

15. Trade Facilitation: Benefits to Business Freight and insurance costs as % of total exports (WTO submissions 2005): • 12.9% for landlocked LDCs • 8.1% for developing countries • 5.8% for developed countries • over 50% for some African LDCs • Over 25% for landlocked CIS (UNECE) 15

16. Trade Facilitation: Benefits to Business • Fraud, illegal payments and poor security at customs in Nigeria are estimated to increase the cost of imports by 45% (World Bank 2004) • Increased efficiency of customs procedures could increase trade flows by 30% in the Russian Federation and 22% in Indonesia (Wilson et al. 2003) 16

17. Trade Facilitation: Benefits to Business Automation / e-Business saved 1.5% of the value of imported goods in APEC countries (Foreign Affairs and Trade, Australia, 2002) 17

18. Trade Facilitation: Benefits to Business 4. Business contribution to Trade Facilitation 18

19. Trade Facilitation: Benefits to Business • A key partner in trade facilitation for governments • Public Private Partnerships for trade • Source of expertise on trade practices and technology • Useful first-hand experience of problems and solutions 19

20. Trade Facilitation: Benefits to Business 5. Further negotiations 20

21. Trade Facilitation: Benefits to Business Trade Facilitation in WTO Negotiations • Art. V: Creating a predictable regime to expedite the movement of goods in transit; special interest to landlocked and transit countries • Art. VIII: Reducing fees and formalities connected with imports and exports procedures and documents • Art. X: Increasing transparency in publication and application of trade laws, regulations and procedures 21

22. Trade Facilitation: Benefits to Business Issues • Capacity building and technical assistance – needs assessment • Customs cooperation – agreed guidelines • Special and differential treatment for developing countries and Least Developed Countries • Timing 22

23. Trade Facilitation: Benefits to Business UNECE/CEFACT • Developing and maintaining trade facilitation standards, recommendations and other tools • Vision: “Simple, Transparent and Effective Processes for Global Commerce” • Open to participation from all UN member states and organizations recognized by ECOSOC • Series of Working Groups with over 400 participants from governments and businesses 23

24. Trade Facilitation: Benefits to Business UNECE/CEFACT standards • Over 30 Trade Facilitation Recommendations, several of which are ISO standards • Recommendation 1: UNLAYOUT KEY Recommendation 4: Trade Facilitation organizations • UN/EDIFACT and related standards and recommendations • Single window (single entry point) 24

25. Trade Facilitation: Benefits to Business How UNECE/CEFACT could help • eDocuments: paperless trade • Capacity building for trade facilitation • Tools • Document alignment • Repositories • Publications • Codes databases • Websites 25

26. Thank you.Carol.Cosgrove-Sacks@unece.orgwww.unece.org/trade 26