UNCTAD Expert Meeting Trade Facilitation as an Engine for Development

1. UNCTAD Expert Meeting Trade Facilitation as an Engine for Development Trade and Transport Facilitation and Development Angela Strachan, Adviser (Trade) Special Advisory Services Division, Commonwealth Secretariat

2. Agenda • Introduction • Commonwealth’s work in trade development and trade facilitation • Case Studies • Kenya • Mozambique • St. Kitts and Nevis • Good Practices • Lessons learnt • Summary

3. What we do • Rationale for involvement in trade facilitation • Trade facilitation is a fundamental element of the Commonwealth Secretariat’s mandate to help countries improve their export competitiveness, (even without a WTO Agreement) as most member countries still need to simplify business procedures, customs documentation requirements and automate customs procedures, in an effort to reduce transaction costs and bring goods to markets much faster. • Mandate from Commonwealth Secretariat’s Strategic Plan 2004-8 to introduce programmes to help to reduce poverty

4. What we do • Also mandate to assist countries to improve their export competitiveness through, inter alia • Support to effectively implement international standards in trade facilitation and customs valuation • Assistance includes expertise to carry out needs assessment for TF and cost benefit analyses, benchmarking studies in TF and customs valuation, strategic reviews • Important feature is collaboration with other agencies – WCO, World Bank, DFID • Small donor, but important catalyst for more significant donor support from larger donors - Kenya, Sierra Leone et al

5. What we do • Finally, while not directly involved in preparing clients for negotiations, support to client takes account of the context of the WTO DDA negotiations on Trade Facilitation • Simplification and modernisation of transit (GATT Article V) • Simplification and standardising fees, rules and border procedures (GATT Article VIII) • Transparency and appeal (GATT Article X)

6. Main clients • Ministries of Trade • Customs Agencies/Departments • Revenue Authorities

7. Case study: Kenya • Aim of assistance • To help Kenya improve its trade competitiveness • Main deliverable: A trade facilitation strategy • Other outputs • A study on the administrative barriers to trade in Kenya and the cost of addressing constraints • A framework for a one-stop shop • A handbook on importing and exporting to Kenya + FAQs • A framework for an information network of trade related institutions. • Capacity building in trade facilitation for brokers, freight forwarders, shipping agents

8. Case study: Kenya • Progress to date • Administrative barriers study completed. It highlights Kenya’s trade facilitation needs, priorities and related costs • Has been useful as a resource for Kenya’s trade negotiations • Project has acted as a catalyst for other donor interest in trade and transport infrastructure support e.g. World Bank for development of a community based system at Mombassa Port and the WCO for a diagnostic review and integrity development programme for the KRA drawing on WCO tools • Analysis has provided good synergies with Kenya’s participation in regional transit initiatives eg. the Northern Corridor Transit Project

9. Case study: Kenya Observations • Project implementation an excellent example of Public-Private Sector Partnership – project outcomes enhanced by process of continuous engagement • Active client involvement through the project steering committee (Core Team) • Strong support from other donors • Proposals for recommendations to reduce clearance times for cargo are actively being addressed by members of the Core Team and by consultants through reengineering of business processes

10. Case study: Mozambique • Aim of assistance: • To provide independent advice to the Directorate of Customs on competitiveness of its trade facilitation information technology (IT) efforts viz risk management, transit management and customs valuation • Main deliverable: • A strategic proposal for the Directorate of Customs with an action plan and an implementation schedule for improvements to address any gaps identified in the strategic review

11. Case study: Mozambique • Expected outcomes • Reduction in the number of complaints from local and regional traders as regards time taken for the clearance of goods at Mozambique’s main ports and borders • Reduction in transaction costs of doing business in Mozambique • Availability of more reliable Mozambique trade statistics • Increased capability within the Directorate to accommodate electronic payments for customs duties • Increased capability within the Directorate to receive customs declarations electronically from local and regional traders

12. Case study: Mozambique • Progress to Date • Diagnostic and gap analysis -work in progress • Regional benchmarking workshop in best practices in trade facilitation IT systems in Aug ‘05 • Workshop reviewed trade facilitation IT implementation good practice case studies from South Africa, Mauritius, Senegal, Ghana, Kenya, Cape Verde, Zambia, Uganda, DRC, Singapore • Process of ongoing consultation with local business community, government departments, regional trading partners

13. Case Study - Mozambique • Observations • Mozambique currently undergoing a reform of the public sector including planned introduction of a Revenue Authority • Significant progress on policy initiatives to create more transparent trade facilitation environment • Role in SADC + tade gateway for landlocked neighbours • All of above are critical considerations in efforts to boost competitiveness by benchmarking against best practices

14. Case study: St. Kitts and Nevis • Services-based economy-tourism, financial services • Typical characteristic of a small island developing state –limited market size, extreme openness, vulnerability to natural disasters , etc • Concerns about competitiveness hence request: • To identify its trade facilitation needs and priorities • To identify bottlenecks and constraints in the trade facilitation transaction value chain • To benchmark against regional best practices • To highlight implications of project results viz trade policy direction • Presently undergoing a customs reform and modernisation programme

15. Case study: St. Kitts and Nevis • Main deliverables • A study on the impediments to trade and investments and proposals on changes required to enhance Kitts and Nevis’ international competitiveness • A cost benefit analysis of the benefits of adopting an Agreement on Trade Facilitation based on current proposals for Articles V, VIII and X

16. Case study: St. Kitts and Nevis • Cost Benefit analysis completed • Training on trade facilitation conducted with public and private sector stakeholders • Five areas proposed as offering significant prospects for measurable trade facilitation gains • Legal and regulatory framework; Trade Procedures; Transport formalities; Customs; and Information Communications Technology Infrastructure and E-payment facilities • N.B Significant cost savings in trade facilitation IT systems and other costs, by marrying implementation of report recommendations with current reform of customs

17. Case study: St. Kitts and Nevis Observations • Areas of concern highlighted by analysis: • Inadequate port facilities • Outdated regulatory framework • Customs procedures impeded by lack of an adequate ICT infrastructure • However, potential opportunities in port and logistics services • This case study highlights the need for further analysis on Trade Facilitation and the liberalisation of Trade in Services in order to demonstrate benefits to services-based economies

18. Good Practices • Commonwealth membership is diverse- landlocked countries, developed countries, LDCs, small island states, and transit states with varying trade facilitation concerns • Also has a wide range of expertise and varying good practices in customs and trade facilitation

19. Lessons Learnt • Problem definition is key – sometimes necessary to work with client to articulate technical assistance needs • Appropriate project design and methodology also critical success factors • Allow for layers of consultation-necessary in some countries • If there is strong in-country interest, provide back up and adequate resources to empower local implementing teams • Question of managing expectations • Limited in-house resources impacts ability to support recommendations through to implementation • Identify potential partners for implementation for infrastructure projects eg port improvements • Projects are most successful when the Minister is the champion and when there is strong operational support

20. BENEFITS OF AN EFFICIENT TRADE FACILITATION SYSTEM Source: St. Kitts and Nevis Trade Facilitation Study by Ace Technologies for Commonwealth Secretariat

21. Summary • WTO DDA trade facilitation negotiations will further define support required by developing countries to implement commitments • Challenge will be to work with available resources and deepen collaboration with partners like the WCO and others to continue to play a strategic role

22. Thanks for your attention www.thecommonwealth.org/sasd