Trade Facilitation and Transport Global Economic Prospects 2004 ECA Briefing John S. Wilson April 28, 2003

Chapter Themes Trade Facilitation – More than Transport New Measurement Tools - Critical Security and Trade - Potential Win-Win WTO Negotiations – Potential Benefit – TA Framework Critical

Wilson, Mann and Otsuki (2003) Econometric approach – gravity model Define trade facilitation as: Port efficiency, Customs environment, Regulatory environment and E-commerce Usage Generate results for trade gains Raising below-average members half-way to APEC average intra-APEC trade raised by $254 billion

New Analysis for GEP 2004 Wilson, Mann, Otsuki (mimeo) Dataset – 75 countries Importer and exporter improvements considered

Data Sources World Economic Forum Global Competitiveness Report (GCR) 1. Port Efficiency 2. Customs Environment Domestic Regulatory Environment E-business usage World Economic Forum Global Competitiveness Report (GCR) IMD Lausanne, World Competitiveness Yearbook (WCY) Kaufmann, Kraay and Zoido-Lobaton (KKZ)

Tentative Findings Total global export gains - $350 billion - $40 billion accrued to ECA region. Trade gains from improvements in exporter ($250 billion) much greater than from importers’ improvements ($100 billion).

Overview of Simulation: Bring Below-Average Countries Half-way to up to the Global Average (Gains in billions of US dollar)

Increase in Exports by Region

Increase in Exports by Region and Trade Facilitation Measure

Security and Trade Facilitation Doubling number of terrorist incidents between 1968-1979 led to a 6% decrease in bilateral trade between the targeted economies (Nitsch and Schumacher, 2002). Enhanced security fosters private investment and growth in developing economies Poirson (1998). Private investment in the short run increased by 0.5 to 1 percentage point of GDP, in countries that adopted security measures in ‘best practice’ regions. Economic growth rose by 0.5 to 1.25 percentage points per year in the long term. The Bali bombing 2002 - tourists to Indonesia declined by 2.2 percent – costing 1% of its GDP

Security Conclusions…. Necessary to ensure that less developed countries are not excluded from the plan of balancing security with trade facilitation objectives. Potential Win-Win situation - higher costs can be recovered through greater efficiencies in the supply chain. Need Coordinated Multilateral Plan – G-8 and Developing Countries.

WTO Negotiations? GATT Article V- Freedom of transit GATT Article VIII- Fees and formalities connected with imports and exports GATT Article X- Publication and administration of trade regulations

Tentative Conclusions….. Trade facilitation – development context central role. WTO negotiations – Beneficial but need coordinated development plan - WCO, World Bank, bilateral donors, private sector.