TL_wk1_Mustra

WORLD BANK GROUP

LogisMed Network November 23-24, 2010

TRADE AND TRANSPORT FACILITATION and LOGISTICS Diagnostic Tools and Action Plans

Monica Alina Mustra Trade Facilitation and Logistics Specialist INTERNATIONAL TRADE DEPARTMENT

Agenda

1. Context: International Trade 2. Trade Facilitation Agenda and Knowledge Map 3. Trade and Transport Facilitation Assessment 4. Regional Cross-Border Program/Project

Context: International Trade  World trade has grown twice as fast as global domestic product  Trade: many interconnected strands  Connecting people to international markets and building capacity can boost economic opportunities for all Many constraints to international trade and competitiveness lie “behind the border”  high-cost services inputs  supply-chain bottlenecks 3

Context: Thick Borders

High trade costs create “thick” borders Are a key barrier to regional and global integration Source: World Development Report, 2009

World Bank Group and Trade MULTIDIMENSIONAL AND CROSS-CUTTING Technical Assistance and Capacity Building

36 projects per year. Trade Facilitation Facility.

WBI South-South knowledge transfer programs Investment climate advisory services (trade rules; SEZs)

Policy Analysis and Advice

70+ policy notes, country and regional studies per year DTIS; EPAs; country-specific studies; services

Financing, Loans and Credits

$ 7.5bn concessional in 2007-2008 (IDA), focusing on export competitiveness and trade facilitation IFC investments and trade finance facilities

Global Programs and Partnerships

Participation in the Aid for Trade initiative; Enhanced Integrated Framework Geneva office Global Facilitation Partnership

Data, Indicators and Research

Logistics Performance Index, World Trade Indicators, Agricultural Distortions Database; Services policies

5

World Bank Group and Trade  Country Level  Two-thirds of all Country Strategies include trade as a focus area

 Regional Level

 Investments in regional infrastructure—both “hard” and “soft”

 Global Level

 Research supports developing countries’ interests in trade agreements and analysis of policy options/impacts

 Private Sector

 Around half of total Bank Group aid for trade supports the private sector directly (IFC) 6

2. Trade Facilitation Agenda and Knowledge Map

A Changing TF Agenda New agenda Cross-cutting issues: • Making transit work • Collaborative border management Trade Related infrastructure • Roads • Ports • Railways

Quality and efficiency of service providers • Customs brokers • Truckers • Freight forwarders Customs reform and modernization • Fiscal focus • IT orientation Old agenda

Both the old and new agendas needed

The knowledge Map Broad

Data

Implementation

Data: LPI

New indicators Connectivity

Logistics costs/ performance Councils observatories Services

Performance metrics/ Modeling Specific

ongoing new TTFA

Transit Regional TF

Border Management

Corridor Toolkit

Transport Toolkits Ports, SCS

Lagging Regions

Partnerships UN Regional Banks WCO Strategic Alliances

WTO WEF FIATA

GEA MNCs ACADEMIA

LPI 2010 www.worldbank.org/lpi  Broad indication of where problems are  Awareness raising to stimulate public-private dialogue on priorities for reform  Trigger fresh impetus for reforms  Monitor progress over time Most comprehensive data on country performance

data.worldbank.org

Logistics broadly defined matters most Effects of convergence by low income countries to middle income average Indicator/policy area Increase in trade (%) Logistics Performance Index 15.2 Doing Business, cost of trading

7.4

Tariffs for low income countries reduced to 5%

5.7

All trade barriers for low income countries reduced to 10%

8.4

Note: LPI = Logistics Performance Index; Tariffs = TTRI = Trade Restrictiveness Index; All barriers = OTRI = Overall Trade Restrictiveness Index.

Upcoming “Connecting to Market…”

Corridor Management toolkit

©This page is promotional material

Our next contribution

TTFA 2010

A toolkit for policy makers and remedial action

From benchmarks to in-depth assessments TTFA Toolkit Revision 2010

 Initially proposed by Raven (2001)  Currently high demand for implementation  Scope of work – Respond to new demand and put TTFA in a broader policy perspective (competitiveness); – Beyond the initial focus on simplification of procedures to better cover service and transport infrastructure – Take into account the experience of actually carrying out such assessments – Enhance the role of the toolkit as a pedagogical instrument and provide Guidelines for policy makers and other practitioners

More comprehensive, more policy oriented and more practical

Background on the TTFA: Objectives  Trade and Transport Facilitation provides important benefits: – Increase trade competitiveness through better logistics, border management, and availability of services for overall improved supply chain performance – Result is better cash flow, lower risk, just in time delivery, and more market opportunities (volume and diversification)

 The TTFA as a tool for countries and the Bank to perform a better assessment and inform policy

Background on the TTFA: History

 Original concept (phase 1) initiated in 2000  About 45 TTFA audits conducted since 2005  Generally as part of broader exercises of economic or trade diagnostics  Implemented by WB and other organizations (IADB, UNCTAD, USAID)

“In theory there is no difference between theory and practice.

In practice there is.�

Yogi Berra

Implementing the TTFA A toolkit for policy makers and remedial action

What has been implemented?

Original concept of the audit = phase 1  More than 40 audits over the last 5 years – Half were in the context of DTIS – The rest in CEM or Bank ESW on trade and competitiveness – Very few independent TTFA audits  Currently 5 are ongoing

What has been implemented?

Phase 2 trade facilitation and logistics ESW in several MIC:    

Colombia, Uruguay, Argentina, Brazil Morocco, Tunisia Indonesia Demand for a few other countries  Phase 2 Emphasis on  Logistics Services  General Regulation  Government Participation

In all cases, a notion of phase 2 was identified from the start

What has been implemented?  In addition, some regional audits (ECA, SAR, MNA, CAFTA) =  more than the sum of component national audits

 Implemented by other organizations (IADB, UNCTAD, USAID)  Posted on the GFP website

The outcome (phase 1 TTFA)  Leads to practical implementation activities when there is involvement of Bank technical unit which is leading the policy dialogue from the start:  Implies good coordination within the Bank since typically the unit sponsoring the TTFA work is not involved in implementation activities  Possible follow up activities:  Lending (e.g. corridors, ports, customs)  TA now supported by the Trade Facilitation Facility (e.g. capacity building in customs, transit systems, monitoring indicators)

Clear definition of objectives and effort to identify possible outcomes prior to the TTFA

Typical constraints (LIC/ LDCs)         

Domestic capacities in Customs Border management Inadequacy of transit provision Port performance Weak road maintenance policy Performance of railroad Low quality of service and parasitic activities Poorly developed infrastructure projects Governance and political economy

Hierarchy of the constraints Prioritization of remedial actions

Phase 2 has significant impact When:

 Demand from a strong and hopefully visionary focal point (transport, customs, eventually trade)  Adequate consultation mechanisms to insure large ownership in the country (PMU, steering committee)  Good scope of work relevant to the country, budget and time frame, quality control  Substantial participation of TTLs in field work and interaction with client  Data driven  Customized plans of actions and remedies

Phase 2 outcomes Country Ownership of  Plan of actions: approval, charters, logistics councils  Sustainable data collection mechanisms to monitor implementation

Bank supported implementation  DPL in Colombia, Tunisia  Lending (LAC)  Follow up TA (MNA) to support implementation initiatives, data collection, design of reforms or private participation…

Proposal

TTFA TRAINING

Training objectives  Offer an introductory training on the TTFA to a group of regional experts in the domain of trade and transport facilitation  Raise awareness about the toolkit availability  Create the seeds of a network of practitioners in the regions  Quality test the Spanish/French/Russian? language version of the toolkit  Investigate opportunities for a future TTFA professional training course and national training courses (to be also pursued with participants after the seminar)

Audience

 Policy makers willing to implement an assessment  ideally a senior civil servant from Customs Directorate or Ministry of Finance

 Other International organizations interested in the subject  Private sector professionals from the region, including local consultants and firms  Ideally 1 person for each group for a total of 18 participants

Basic Structure of Training  The seminar will take place over the course of 4 days.

The toolkit will be distributed before the seminar to participants to give them the time to study it.  1st day

a) Presentation of the toolkit, its objectives (section I-II of guide) b) Review of TTFA implementation examples

 2nd day

c) TTFA methodology: guidelines and survey instruments (section III of guide) d)TTFA questionnaire (1st part: border control & Logistics infrastructure)

 3rd day

c) TTFA questionnaire (2nd part: logistics services and other TF services); d) TTFA Analysis: remedial actions

 4th day

Feedback on Spanish/French/Russian? TTFA; Roundtable on prospects for TTFA implementation in the region and follow up actions.

Resource persons

ď Ž Indicative list of RP to be used for training and area of specialization

Training outcomes and follow up

 TTFA work in the region is initiated  TTFA phase I/II implementation  Preparation of TTFA workshop based on implementation of TTFA in region

4. Regional Cross-Border Program/Project

Trade Facilitation and Infrastructure Mashreq Countries (Iraq, Jordan, Lebanon, Palestine , Syria)

A recent study completed end 2009 identified main Regional issues as: 1.

Lack of coordination in implementation of national projects and policies related to trade facilitation, logistics and transport

2.

No integration of cross border facilities or procedures between countries

3.

Lack of confidence in application of rules of origin within PAFTA…

4.

Low quality of trucking fleets …low level of use of TIR …long delays at borders with third countries

5.

No regional trade hub to serve north of Mashreq region

6.

Lack of sub-regional economic or corridor management agency

and proposed implementation of recommendations  Implementation of the recommendations would be best in a trade corridor context, which is quite new to the region  The Mashreq countries do not have a sub-regional economic institution…..needs to be addressed  Set up a Corridor Management Agency to fulfill this role , easier to establish than a new economic institution

Methodology of the Study  The Study was based on a review of many relevant previous studies and on Trade and Transport Facilitation Assessments (TTFAs)  Both the Program and the Project are built on the recommendations of the recent World Bank Study, which took into account the extensive previous work:  UNESCWA  European Union (through its EuroMed scheme)  World Bank  Other international and bilateral organizations

Trade of the Mashreq countries 1. Total Mashreq exports as a share of GDP are much lower (25% rather than 45%) and imports are much higher (55% instead of 44%) than for comparable countries 2. Intra-Mashreq trade (11% of the total) is higher than between other LAS countries‌.but other trade groups such as ASEAN have higher intra-regional trade (26% of their total) and these shares are increasing rapidly 3. Mashreq countries trade more with the EU (25% of their total) than with each other (17% of their total) 4. Iraq (66%) and Jordan (51%) have comparatively high export shares to the rest of the world compared with Lebanon (26%) and Syria (9%)

Benefits of improved trade facilitation for the subset of Mashreq countries Potential trade and GDP benefits of improved trade facilitation , measured using macroeconomic and microeconomic methods would include: ď Ž Annual cost savings to current trade through improved facilitation and transport would be more than USD600 million per year ď Ž This translates into additional exports of about USD6 billion per year by 2020, equivalent to about 2% of GDP, or about USD50 billion per year

The Mashreq main routes

Projections of corridor trade  By 2020 the daily transit in the North South corridor will be about 12,500 TEU per day - 2,500 trucks and 15 trains in each direction  The combined transit in the two East West corridors will be about 11,000 TEU per day – 2,200 trucks and 12 trains in each direction  This volume of freight would overwhelm the road capacity and cross border facilities. Corridor rail links could attract between one third and one half of the longer distance traffic. So new rail links are planned for all three corridors None of the above projections take account of the return of empty containers

The Proposed Program and Project The Mashreq Corridor Program (MCP) includes all the feasible recommendations made in the Study and to be implemented in two or more phases over fifteen years.

The total Program will cost about USD6.8 billion The first Project includes all unfunded but feasible short term recommendations included in the Study. It will be implemented over a period of up to five years at a total cost of about USD1.5 billion The “Corridor� approach is expected to have a catalytic effect in the region, contributing to building and consolidating a strong and sustainable regional trade partnership

Project Objective

The objective of the proposed project is to lay the ground for improved trade within the region and between the region and the rest of the world  The overall outcome of the Project will be access to improved transport infrastructure, more efficient and fluid logistics chains leading to increased trade potential at a probably reduced transaction cost  The “Corridor” approach is expected to have a catalytic effect in the region, contributing to building and consolidating a strong and sustainable regional trade partnership

Role of Training Project Cost is mostly in infrastructure, including border crossings facilities, road and rail improvements in the three corridors and truck scanners, but the main benefits will come from the trade facilitation measures which include:

 Certification of Professional Competence and Training Programs:  Forwarders (with FIATA)  Customs Brokers (with IFCBA)  Truck Companies (with IRU – play a major role)  Also an important part of the Logistics Action Plan proposed for Egypt

Upcoming Meeting Program Financing Meeting January 15, 2011  In support of a proposed Cross Border Trade Facilitation and Infrastructure Program and Project for the Mashreq Countries  Hosted by the Islamic Development Bank, before next scheduled meeting of the Arab and Islamic Funds Coordination Group in Jeddah  World Bank, UNESCWA, Islamic Development Bank strongly supports both the long term Program and the shorter term Project  Invited: Ministers, Development Banks, Investment Banks, Private Investors, Development Funds and Aid Agencies

Further Regional Studies: Maghreb Countries  The Mashreq study was the first in a series  The World Bank is currently undertaking a similar study in the Maghreb Countries (Algeria, Libya, Morocco, Tunisia and will include Mauritania)  And has been asked to undertake a complementary study (trade facilitation assessment) in Egypt

Contact Us The World Bank Group International Trade Department www.worldbank.org/trade www.worldbank.org/tradefacilitation www.worldbank.org/tradelogistics www.worldbank.org/lpi www.gfptt.org Washington Office 1818 H Street NW Washington DC 20433 Contact: tradefacilitation@worldbank.org

Additional Slides

5. Trade Facilitation Facility (TFF)

What is the TFF

Multi-donor trust fund

TRADE FACILITATION FACILITY

Managed by the World Bank Support concrete improvements in TF systems Help reduce developing countries’ trade costs Emphasis on Africa/low-income countries

Focus Areas include Border management

Improvement in border management in a broad sense: integration of customs, product standards, tax, rules of origin, etc.

Trade Infrastructure

Improvement in the management of key trade related infrastructure, especially gateways and multimodal facilities

Logistics services

Improvement of the quality/professionalism of private logistics services, through technical/economic regulation and capacity building

Regional

Regional trade facilitation including transit systems

Indicators

Performance monitoring and indicators: e.g., data on time, cost, and reliability along corridors

Action plan

Implementation of comprehensive action plan addressing all of the above

6. Logistics Councils and Observatories

From knowledge dependence International agencies have provided:  General benchmarks in the form of series of indicators like logistics or connectivity indices  Analytical Advisory Assistance usually with significant reliance on international expertise  Methodological toolkits, case studies best practices in a series of area  Repository of reference legal and regulatory instruments

To home grown analytical competence  Capacities to analyze, implement and measure Especially in MICs  Dual concept of  Logistics Council to implement consistent packages of investment and reform and bring together policy makers  Observatories to second Councils, policy makers and stakeholders with analytical information and monitor results

And networks Emergent body of experience  OECD (notably northern Europe)  LAC (Brazil), South-Africa  MNA Tunisia, Morocco  EAP Yet no definitive business models for both council and observatories Potential for a network?

Observatory, existing business models  Canada (government led data intensive)  Germany, Nordic, CH, very detailed government+ university+ private sector, survey intensive  USA: private sector primarily interpretation of national account data (CSMLP)  Emerging economies: Brazil  Interest in developing new observatories (WB MNA, LCR, IDB, USAID…)

A Global Network  Logistics Performance International Observatory concept    

Push for comparability Cooperative network TA for Middle income countries Partnerships: academia, private sector, government

Expert meeting May 7th 2010 Stocktaking available early FY11