ADMINISTRATIVE TRADE BARRIERS AND TRADE FACILITATION Predrag Bjelić, Ph.D Ivana Popović Petrović, M.Sc.
ADMINISTRATIVE BARRIERS AS OBSTACLES TO INTERNATIONAL TRADE Golden age – period after 1945 GATT –eight rounds of multilateral trade negotiations – trade regime liberalisation Non-tariff barriers: -traditional -technical -administrative
Graph1: Evolution of Non-tariff Barriers by Broad Category, in % Graph1: Evolution of Non-tariff Barriers by Broad Category, in % Source: UNCTAD ”Globalisation and Development: Fact and Figures” Geneva, 2009, p.53
Administrative barriers to trade are a special category of non-tariff barriers • Source: administrative regulations and procedures with • a restrictive effect on international trade • AB are obstacles to international trade • derived from differences in national legal and administrative regulations • and administrative procedures that exporter had to carry out • in order to put its products on a foreign market
All administrative barriers, by their origin, can be divided into two main groups: Legal barriers to trade; Procedural barriers to trade. We have to distinguish “naturally” occurring non-tariff barriers, which are caused from differences in national standards and inefficient customs authorities clearance of goods, from politically introduced measures that are intended to obstruct import in country which introduce these measures.
The group of administrative barriers to trade is consisted of many different measures and procedures, some of them being: Customs valuation; Application of Sanitary and Phytosanitary measures; Rules of origin; Special customs formalities; Preshipment inspection; Procedures of Export licences.
Main indicators – The World Bank Trading across borders Number of documents needed to obtain to execute export or import in the economy; Number of days need for a procedure of export or import in the economy; Costs of exporting and importing measured in USD per container.
Table 1: Indicators of Foreign Trade Administrative Procedures in Southeast Europe, 2008. Source: World Bank, Doing Business 2009 Report, Trading Across Borders Indicators, April 2009.
Table 2: Trading across borders indicators for Serbia (*) Data for 2005 are for Serbia and Montenegro Source: World Bank data from Doing Business Report for 2006, 2007, 2008 and 2009.
Removing administrative barriers Individual national economies vs. multilateral and regional initiatives
TRADE FACILITATION – INITIATIVES FOR THE REMOVAL OF ADMINISTRATIVE TRADE BARRIERS
The World Trade Organization as a Pillar of Multilateral Regulation of Trade Facilitation
The Trade Facilitation process is based on the three articles in GATT from 1994. Article 5 which deals with freedom of transit for goods, Article 8 concerned with fees and formalities connected to importation and exportation Article 10 which requires all trade regulations to be clearly published and fairly administered. The Trade Facilitation–to strengthen GATT articles
TFtopic of discussion in 1996 at the Singapore Ministerial Conference. Doha Ministerial Declaration adopted on 14th November 2001, the Council for Trade in Goods should review, clarify and improve relevant aspects of Articles 5, 8 and 10 of the GATT 1994 and identify the Trade Facilitation needs and priorities of all members
in July 2004 - ”July Package“ TF was put on the negotiation agenda of the Doha round On 12th October 2004 the Trade Negotiations Committee established the Negotiating Group on Trade Facilitation
The Agenda of the Negotiating Group consists of: -Clarification and improvement of relevant aspects of Articles 5, 8 and 10 of the GATT 1994; -Special and differential treatment for developing and LDC; -Identification of Trade Facilitation needs and priorities; -Concerns related to cost implications of proposed measures; -Technical assistance and support for capacity-building and -Working with and the work of other relevant international organizations
The initiative of the WCO - More than 50 years of work – important technical progress in customs clearance and in developing the process of administering and co-operation of custom services of its member countries. International Convention on the Simplification and Harmonization of Customs Procedures also called Kyoto Convention, adopted in 1973, revised in 1999.
Trade Capacity Building The trade capacity - human, institutional and infrastructure capacity necessary for all subjects who participate effectively in international trade. - more efficient ports, road networks, automated equipment for customs officials and significant investments in infrastructure The sixth WTO Ministerial Conference, Hong Kong (13-18 12 2005) help for the project Aid for Trade -USA grants of USD 2.7 billion a year by 2010 -EU EUR 2 billion per year by 2010 For trade related development assistance
Trade Transaction Costs (TTCs) costs arising from supplying documents and information required for border procedures or procedural delays Direct incurred costs - expenses relating to supplying information and documents to the concerned authority and indirect incurred costs - mostly results of procedural delays.
Table 3. Welfare effects from Trade Facilitation measures Source: Michael Engman, (2009), „The Economic Impact of Trade Facilitation“, in Overcoming Border Bottlenecks — The Costs and Benefits of Trade Facilitation, OECD, p.85.
TTCs -15% of the value of the traded goods The arch is from 2% to 15%. UNCTAD TF results – savings of 2-3% of the value of traded goods
Table 4: Estimated benefits of Trade Facilitation in different studies Source: Anthony Kleitz (2003), “Costs and Benefits of Trade Facilitation”, in Sharing the Gains of Globalization in the New Security Environment— The Challenges to Trade Facilitation, United Nations Economic Commission for Europe, New York and Geneva, p. 65.