Corridor/Border Management: examples from outside the Caucasus

Gerald Ollivier

Transport Specialist

Overview

Time as a trade barrier

Corridor Approach

Integrated Border Management and Single Electronic Window

Developing countries are moving up the technology ladder…(GEP 2004)

0

10

20

30

40

50

60

70

80

90

100

Resource-based

Low tech MediumTech

High tech

1981

2001

Low income countries: Share of exports, 1981-2001 (percent)

0102030405060708090

Resource-based Low tech Medium Tech High tech

1981

2001

Middle income countries: Share of exports, 1981-2001 (percent)

Time is a Trade Barrier (1)Trade occurs in physical space and moving goods requires time.Trade logistics costs are as important as tariffs Each day saved is equivalent to 0.5% tariff (Hummels) 7% of value of world trade is cost of administration of trade

logistics (UNCTAD)

Time/reliability/adaptability more important in multi-stage production (global supply chain) % of vertical specialization in trade (use of imported inputs

for exports) has grown 30% in the past 20 yrs and accts for half of overall trade growth.

Willingness to pay to save time: Share of airfreight in US grew from 7% in 65 to 30% in 98 Airfreight 7 times as expensive as ocean shipping.

Time is a Trade Barrier (2)

Imagine if the contents of a ship can be processed in half a day instead of a day …or a truck can do 6 roundtrips instead of 2 a month Infrastructure capacity increased Twice the cargo, twice the # of ships serviced,

twice the number of containers, increased harbor fees, considerably lower cost to traders

…even more benefits: These efficiencies offer wider attraction to trading

partners Efficiency in vessel turnaround attracts new trading,

market center, distribution business.

Time is a Trade Barrier (3)

A wide-body jet can carry fresh produce from supplier in one hemisphere to the buyer in the other hemisphere on the same or next day.BUT it can take 10 days to : Process orders Obtain customs and border agency approvals Book and schedule transport and distribution Obtain payment approvals Complete the transaction

This means removing 10 days from the selling season, revenue that cannot be replaced

CorridorsDefinition

A linear system of transport infrastructure and related services connecting centers of economic activity and bounded by transport gateways which provide access to sources and destinations outside the corridor

ConstructionCorridors are usually created through back-to-back bilateral agreements which are framed for international or regional protocols

ManagementCorridors are not managed in an operational sense as most of the activities are performed by individual logistics service providers operating in the private sector. The important management function is coordination of policies between adjoining countries

ExamplesWest BengalGMSMaputoTranskalihariNorth BorneoNorthern CorridorEWECAsian HighwayCan-Mex

Corridor ComponentsPhysical Gateways and Border Crossings Designated Routes, Single and Multimodal

Regulatory Trade and Transit Policy Cargo Inspection and documentation Security, Entry and Enroute Transport Services and Equipment Cargo Ownership Liability and Arbitration Rules Duties and Taxes Cost Recovery Mechanism

Functions

Access to Landlocked Countries

Integrate Trading Communities

Economic Development Corridors

Coordinate Infrastructure Development

Control Smuggling

Corridor Economic Benefits

Domestic Transport Services

Complementary Logistics Services

Toll Revenues/user charges

Trade Facilitation

Regional Economic Development

Inhibitors to Trade FacilitationTraditional PracticesLack of TransparencyTechnical ControlsRegulationsPaper DocumentsPayment MethodsICT and E-Commerce Infrastructure and Experience

Physical Space and Capital

Costs of Admin/logistics 14%

Customs-Centric Systems but other agencies

Customs only 15% of Trade Data

Post 911

Cultural Issues

Integrated Border Management

Enhancing services to usersWTO TF discussionGeneva/Kyoto ConventionsOrganizing processing by function (an agency can apply regulations for another one at low cost)Coordination across border (joint crossing points)

W h a t a b o rd e r c ro s s in g ca n lo o k lik e

P ol ic e C u s to m s P oli c e C u s to m s

C o u n t r y A C o u n tr y B

S e co n d a r y Po li c e C u s to m s P oli c e C u s to m s

Se c o n da r y

S e c o n d a ry

Se c o n da r yPo lic e C u s t o m s Po li ce C u s to m s

Po li c e C u s to m s Po li ce C u s to m s

J o in t c o ac h e xa m in a t io n

A d m i n s tr a t iv e A A d m in is tr at iv e B

J o i n t co a c h e x a m i n a t i on

Se c on d a ry e x am div er sio n

A c t ua l b o rde r lin e

Ca rs ( re d a nd

g re en c h a n ne ls)

Ex it c o u nt ry c o nt ro l bo t hs

T ru cks

G re en ch a n ne l e x it

Tr uc k pa rkin g lo t

Co u n try A 's e n c la v e in th e te r r it or y of C ou n try B

(b or de r lin e)

S e pa ra t or

S ep a ra to r

Se c on d a ry e x am d iv e rs io n

T ru ck pa rkin g lo t

Co u n try A 's e n c la v e in th e t er r it or y of C ou n try B

(b or de r lin e)

T ruc k pa rkin g lo t

Se p ar at or

T ru c k p a rkin g lo t

Gre e n c ha n n el e x it

T ruc ks

Source: M. Zarnowiecki

Principles of Electronic Trade Facilitation Electronics Replaces

Paper Reengineer

Processes: Codes and Standards

Upgrade Customs ICT Systems and Processes

Transparency Electronic Payment

Pre and Post Event Audits

Container Scanning Straight-Through

Processing Risk Management Create Facilitation

Agency Provide a Gateway to

Customs Systems Automate Communities

“Single Window”A facility providing standardized information and documents with a single body to fulfill requirements for import, export and transit regulations and clearance.

Expedite and simplify information flows between trading community and the government

SEW Success Factors

High political mandate (Tunisia)First detailed analysis, followed by process and documentary reengineering/streamlining with all key players (border agencies, transport, traders…)Baseline indicators and performance measurementNeeded minimum infrastructureFacilitating exchange of information: Common and intelligent network, international standards,regulatory framework for e-signature

Models of “Single Window”Single Authority Sweden, Sokhna for its clients

Single automated system for the collection and dissemination of information Integrated system: data is processed through the

system (USA) Interfaced system: data is sent to the agency for

processing (Tunisia, but elements of transactions) Combination of the above

Automated information transactions system Singapore, Mauritius

ICT reduces Time and Increases Efficiency - Examples

Mauritius Trade Net has reduced average clearance times of goods from 4 hours to 15 minutes

Tunisie Trade Net (TTN) has reduced processing times of trade documents from max of 18 to 7 (3.5 days in cases not requiring technical controls).

Time savings in Singapore (STN) translate into 1% of GDP per year.

Implementation ApproachPhased Approach Complexity Quick wins to secure confidence

International Standards (UN EDIFACT, WCO Data Model, etc.) International information exchange requires standards

Pilot users Surveys / evaluation / fine –tune

Implementing body

IssuesTrade Processes - Chain effect As good as weakest link in the chain Benefits only visible when everything works

Complex Many details that must fit together

Resistance to change Organizational Shift from paper to electronic processes

Prepare to manage project risks-Multiple activities / issues to addressInter-institutional dependencies

Players in the Trade Value Chain Importer/Exporter Trade Professionals

Customs Broker Freight Forwarder Shipping Agent

Container Terminal Ports and Harbours Storage Transport Shippers

Customs Revenue Technical Controls

PIAs Cert. of Origin PSI “Legal Invoices”

Banks Insurers etc.

•Manifest•Bills of Lading•Sea/AW Bill•Container Plans

•Invoice•Packing List•Declaration•Delivery Note

Storage

Air, Sea, LandInternational

TransportCustoms Port

Pay TaxesClear CustomsRelease Goods

Ship’sDocuments

•CertificatesOf Origin

•Licenses•Certificates•Government Approvals

Chamber ofCommerce

ForeignChambersCommerce

OverseasEmbassies

Post/Courier

•“LegalInvoices”

DOMESTICSUPPLY CHAIN

Raw MaterialsPackagingTransportStorage

•Quotations•P.O.s•Delivery Notes•Con. Notes•Invoices•Statements

•Payments•Remittance Advice

IMPORTER

MANUFACTURER

EXPORTERFOREIGNBUYER

IMPORT

•Licenses•Certificates•Government Approvals

•Certificates Of Origin•Form A•EUR.1

GovernmentDepartments

FinanceMinistry

Port

•Invoice•Packing List•Declaration•Delivery Note

Customs

“InformalProcesses”

Pay TaxesClear CustomsRelease to Port

InformalProcesses

Port Processes•Internal Transport•Storage•Container Handling•Loading

Port Customs

MANUFACTURING/ VALUE ADDED EXPORT

ReceiveGoods

Bank

•P.O.•Contract Terms•Delivery Instructions•L.O.C.

PayBank

L.O.C.Packing ListInvoice LOC Courier

LOC Approval

ShippingDocuments

Book/Confirm Transport

/Dues

/Dues

Processing of TCE

2 - 3 D

1 D

0 Goods Arrival

Validation, Amendments, Data Capture of Manifest

2 D

Deliver Manifest hardcopy to Customs and STAM

1/4 D

Goods discharged from vessel

STAM submits hardcopy report of unloaded cargo discrepancies to ship agent

2 - 4D

Shiping Agent reconciles discrepancies regarding cargo unloaded

2 - 5 D

1/2 D 1 -2 D

Shipping Agent delivers final manifest to Customs and STAM

Importer / Broker prepares customs declaration.and delivers to Customs

2 - 3 D Importer / Broker picks up processed declaration.

1 D

Payment of customs duty, storage charges and port dues

0 - 2 D

Confirmation of goods landed byShipping Agent and issue of delivery note

Goods removed from port area

1/4 D 15 mins

Prior to Trade Facilitation Initiative

1 2 3 15 10 5

After Trade Facilitation Initiative

Days

Figure C

Trade Facilitation Network

1

Customs

Customs Brokers

CargoHandling

Port Authority

Traders

Ministry ofCommerce

Freight Forwarders

Shipping Agents

Banks

EDI Server

Figure B

CustomsCustoms

Customs Brokers

CargoHandling

Port Authority

Traders

Ministry ofCommerce

Freight Forwarders

Shipping Agents

Banks

EDI Server

Figure B

Port Computerized Systems: Some examples

• Spain Portal Servicios Telemàticos• UK CNS Port Community Systems and Martime Cargo Processing• Germany DAK OSYS• Belgium DEAGHA• Netherlands PCR• France ADEMAR 2000/PORTIS 2001• Singapore PORTNET• Finland PORTNET

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Gerald Ollivier (golliver@worldbank.org)

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