Implementing the WTO Trade Challenges and Opportunities
Implementing the WTO Trade Facilitation Agreement;
Challenges and Opportunities
Ankur Huria Senior Private Sector Specialist ? Trade Facilitation and Logistics
World Bank Group
PRESENTATION OUTLINE
I. Background II. Role of the WBG in trade facilitation III. Challenges and opportunities
Background
TRADE FACILITATION LEADS TO BIG GLOBAL GAINS
Full implementation of TFA:
Benefits
US$110 billion
US$ 210 billion/year
Through reductions in time spent at customs
[Hillberry & Zhang 2015]
Adoption of e-documentation for air cargo:
= US$12 billion annual savings through reduced paperwork related delays (70-80%)
[WEF, WB and Bain & Company 2013]
Reduction of supply chain barriers: If all countries reduce halfway to global best
practice (Singapore)
= + 4.7% Global GDP (US$ 2.6 trillion)
+14.5% World Trade (US$ 1.6 trillion)
(WEF 2103)
Reduction of delay prior to shipment:
+ 1 day = - 1% trade
[Djankov, Freund, & Pham 2006]
Background
IMPORTANCE OF LOGISTICS COSTS
Logistics costs drive competitiveness
[Barbero 2010; Guerreroa, Lucenti and Galarza 2010]
Logistics costs are critical for the efficiency of the manufacturing global value chains, as well as sourcing decisions by GVCs and potential participation of domestic manufacturing firms in GVCs
Logistics costs have different impacts on industries (logistics intensity) and firms (size)--higher for logistics-intensive operations such as food, metal, chemical and paper manufacturing and higher for SMEs
[Memedovic et al. 2008; Farahani, Asgari & Davarzani 2009, 59; Guasch 2011]
Background
LOGISTICS COSTS BURDEN ON SMALLER FIRMS
Average logistics cost as a % of sales
45
42
40
35
12.7
30
25
20
18
18
18
15
29.4
6.28
7.31
11
10
5
11.36
10.63
6.9
0
Les s than US$ 5 M US$ 5 M to US$ 50 M US$ 50 M to US$ 500 M More than US$ 500 M
InventoryManagement &Warehousing Transport &Dis tribution
Source: Centro Log?stico de Latinoamerica, Bogota, Colombia. Benchmarking 2007: Estado de la Log?stica en America Latina Anexo, Mar?a Rey LogisticSummit 2008
Background
LOGISTICS COSTS IMPACT CONSUMER PRICES
60% of the cost related to the importation of pineapples CR to Saint Lucia related to documentation preparation, border clearance, transportation and logistics.
US$/lb
Retail Profits
2
+ Other Costs
1.8
CRiocsat tborSetakLduociwan for Pineapples imported from Costa 1.6
Farm Gate Price
Duties
Land
Land Transport
Transport + Storage
& Handling
30%
Consumer Cost
Landed
1.4
Transport & Logistics
Ocean
Cost
Transport
1.2
Consumer
+ Port SL
1
60%
0.8 Other Costs
0.6
0.4 Producer
0.2 Price
Ocean Transport Land + Port CR Transport
Wholesale
Consolidated
Port
Cost
Miami
10%
0
Farm Gate CR FAS Ocean to Miami Port Miami Miami FOBOcean to SSt.t. Lucia PorWt holesale DistributionRetail Price
(CR)
Miami
Warehouse Price
Lucia
Transport and Logistics Costs
Farm Gate price
Source: Adapted from : Logistics, Transport and Food Prices in LAC (2009) and OECS Backward Linkages Study (2008)
Background
OBJECTIVE & BENEFITS OF THE WTO TFA
Objectives
Transparency + Fairness
Better Governance
Benefits for Traders
?Predictability ?Reduced time/costs ?Creation of mechanism of accountability for the government
?Reduced costs ?Reduced delays ?Reduced complexity
Benefits for Government
?Better compliance ?More informed decisions
?Better compliance ?More effective government ?More efficient government
Modernized Border Procedures and Controls
?Reduce clearance times and costs
?Align with modern business practices ?More effective government
Role of the World Bank
TRADE AND COMPETITIVENESS GLOBAL PRACTICE
World Bank Group is a major provider of
trade related assistance
Analysis and Diagnostics Technical Assistance
Financing of major trade infrastructure and institutional reform projects
Research and data products (LPI/Doing Business) Global advocacy and partnerships
Part of this is the WBG's support to the WTO's TFA agenda through the Trade Facilitation Support Program (TFSP)
................
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