WTO SPS WORKSHOP

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

WBG IS A MAJOR PROVIDER OF TRADE RELATED ASSISTANCE

The World Bank Group has implemented more than 120 customs, border management and trade facilitation projects over the past 20 years that have resulted in major improvements in terms of reduced time to import and export, as well as better transparency, predictability, and reduced transaction costs for traders.

Part of this is the WBG’s support to the WTO’s TFA agenda through the Trade Facilitation Support Program (TFSP)

The current portfolio is over $7 billion for trade facilitation projects.

2

TRADE FACILITATION SUPPORT PROGRAM (TFSP)

Launched in 2014 Designed to provide practical and demand-driven assistance Focuses on supporting the full and effective implementation of the WTO TFA and related trade

facilitation reforms Helps client countries identify constraints, plan reforms implementation, and align procedures with

international standards covering import, export, and transit activities.

OBJECTIVE Assist developing countries in reforming and aligning their trade facilitation laws, procedures, processes & systems to enable implementation of the WTO TFA Requirements

BIG GLOBAL GAINS

Reducing supply chain barriers could increase global gross domestic product (GDP) by US$ 2.6 trillion, around 5%. This estimate relies on countries improving just two key areas of trade facilitation – border administration and transport and communications infrastructure – halfway to global best practice. A less ambitious scenario, that of improvement halfway to regional best practice, would already lead to a global GDP boost of approximately US$ 1.5 trillion, or 2.6%. Source: World Economic Forum, the World Bank and Bain & Co. in 2012 in ITC 2013

Trade facilitation leads to big local gains

4 Subramanian, Uma, William Anderson, and Kihoon Lee. 2012. “Less Time, More Trade: Results from an Export Logistics Model.” Draft, Investment Climate Department, World Bank Group, Washington, DC

SO WHO IS AT THE BORDER?

Border Security

Customs

Animal Health

Plant Protection

Food Safety

Border

Management

Standards & Quality Control

Maritime, Aviation, Sea & Air Ports

Sanitary & Phytosanitary

Anti Narcotics

What is the reality? • Differing mandates - Security - Trade facilitation - Revenue - Public health • Resource constraints - Trained personnel - Modern equipment / ICT

TRADITIONAL BORDER MANAGEMENT APPROACH

• Silos / stand-alone operation

• Uneven use of ICT across agencies (paper-based vs some level of

ICT)

• Isolated data capture and processing

• Limited cooperation (incl ltd sharing of equipment) • Limited information sharing particularly on risk • High levels of physical inspection: seldom risk-based • Focus on physical border controls • Limited transparency • Mistrust of supply chain actors

• Single treatment of all clients (“one size fits all” regardless of

compliance)

WHAT DOES IT MATTER TO COUNTRIES?

Trade facilitation practices impact time and cost to trade, and a country’s performance both within and across regions

Time of Trade across Borders Cost of Trading across Borders

High Income OECD Countries

TRADE TRANSACTION TIME

Trade transactions vary widely from country to country. In 2017 these transactions involved

EXPORT IMPORT

Border Compliance 1 hour – 21.5 days

Document Compliance 1 hour – 92 days

Document Compliance 1 hour – 52.5 days

Border Compliance 1 hour – 24.5 days

Source: World Bank ‘Doing Business” Project, 2018

1 hour – 1.8 days 1 hour – 2.6 days 1 hour – 2.5 days 1 hour – 1 day

AND …

DA

YS

14 days

4 days

5 days

4.5 days

DOCUMENTS ASSEMBLY AND PROCEDURES

CUSTOMS AND TECHNICAL CONTROL

TERMINAL AND PORT

HANDLING

INLAND TRANSPORT

These categories account for more than 50 – 60% of the total time to export and import in many countries around the world.

Software issues Hardware and software issues

ECA county average import time

12

3

3

8

12

3 3

8

0

2

4

6

8

10

12

14

IN MANY COUNTRIES, HIGH COSTS ARE DRIVEN BY

DOCUMENTARY AND CLEARANCE PROCESSES

These categories account for 40% or less of the total time to export and import around the world.

Source: DB

29.4

11.36 10.636.9

12.7

6.28 7.3111

0

5

10

15

20

25

30

35

40

45

Less than US$ 5 M US$ 5 M to US$ 50 M US$ 50 M to US$ 500 M More than US$ 500 M

Inventory Management & WarehousingTransport & Distribution

42

18 18 18

Logistics costs have a disproportionate burden on smaller firms

Average logistics cost as a % of sales

Source: Centro Logístico de Latinoamerica, Bogotá, Colombia. Benchmarking 2007: Estado de la Logística en America Latina Anexo, María Rey Logistics Summit 2008

WHAT DOES IT MATTER TO THE CONSUMER ?

Cost breakdown for Pineapples imported from Costa Rica to St Lucia

10%

Producer Price

Land Transport

Ocean Transport + Port CR

Port Miami

Wholesale Consolidated

Cost

Other Costs

Ocean Transport + Port SL

Duties

Land Transport & Handling

Land Transport + Storage

Retail Profits + Other Costs

60%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Farm Gate (CR)

CR FAS Ocean to Miami

Miami Port Miami Warehouse

Miami FOB Price

Ocean to St. Lucia

St. Lucia Port Wholesale Distribution Retail Price

US$

/lb

Logistics costs increase prices for the consumers: 60% of the cost related to the importation of pineapples CR to Saint Lucia related to documentation preparation, border clearance,

transportation and logistics.

Source: Gain, 2013, Adapted from : Logistics, Transport and Food Prices in LAC (2009) and OECS Backward Linkages Study (2008)

Farm Gate price

30%

Transport and Logistics Costs

Consumer Cost Landed Cost

Farm Gate Price

Transport & Logistics

Consumer

WHAT DOES IT MATTER TO THE CONSUMER ? (II)

1.40 1.20 1.00 .80 .60 .40 .20 0

US$

per

kilo

gram

Farm

Gat

e Pr

ice

Pr

oduc

er

Pric

e

Customs – 11% Taxes – 6% Transportation – 23% Other – 9% Farm Gate Price – 31%

Logistics Costs – 40%

Cost of Exporting Tomatoes from Costa Rica to Nicaragua Logistics costs and customs clearance are greater than taxes in the final price of the product, and are therefor a major challenge for regional competitiveness

Source: modifications from IDB (2010), “How to Reduce Integration Gaps” and WBG study Supply Chain Analyses of Exports and Imports of Agricultural Products: Case Studies of Costa Rica, Honduras, and Nicaragua