Transport and Trade Linkages: Central Asia & Eastern Europe Henry Kerali Senior Transport Specialist The World Bank

Presentation Outline Central Asia Transport & Trade Status review Main trade corridors & linkages Trade & transport trends Impediments & suggested reforms Transport & Trade Facilitation in Southeast Europe (TTFSE) Current issues, project objectives & key actions Project components & achievements Recommendations & Scaling-up The results of the TRRL studies were used to develop the RTIM2 model whilst the World Bank developed a more comprehensive model incorporating the findings from all previous studies and this led to HDM-III. Both models were originally designed to operate on mainframe computers and, as computer technology advanced, the University of Birmingham produced a microcomputer version of RTIM2 for TRRL. Later, the World Bank produced HDM-PC, a microcomputer version of HDM-III. Further developments of both models continued with the TRRL producing RTIM3 in 1993 to provide a user-friendly version of the software running as a spreadsheet, and in 1994, the World Bank produced two further versions; HDM-Q incorporating the effects of traffic congestion into the HDM-III program, and HDM Manager providing a menu-driven front end to HDM-III.

Road & Rail Links to/from Central Asia

Exports from Central Asia Source: TRACECA (Tons/Year) 2001

Imports to Central Asia Source: TRACECA (Tons/Year) 2001

Main International Corridors

Southern linkages for Central Asia

Central Asia Corridor Performance

Impediments to Trade & Transport High transportation and handling costs Poor transport infrastructure and transport performance Trade barriers of neighbouring countries Long and costly customs procedures and other inspections Lack of coordination between countries in the region Impediments amount to between 10 – 15% for roads and 2 – 10% for rail Transportation costs amount up to 50%

Suggested Reforms Need for regional trade and transport policy Diversification of the transport industry including forwarding, handling, containerization, etc Regional harmonization and implementation of customs procedures Promotion of trade and transport standards Common and transparent transit fees Development of rail shuttle services Implementation of international freight handling standards, e.g. TIR, ASYCUDA, etc.

Trade and Transport Facilitation in Southeast Europe (TTFSE) World Bank supported project

Program Countries Albania Bosnia and Herzegovina Bulgaria Croatia Macedonia Moldova Romania Serbia & Montenegro

The Issues The high cost and uncertainties of trade and transport in Southeast Europe are major constraints on economic recovery and development in the region Complicated, opaque and non-standardized border procedures affect the business environment and deter foreign investment (the Paper Curtain) Countries concerned with high level of corruption, smuggling, organized crime Customs administrations do not have aligned legislation and procedures with EU standards

Project Objectives Reduce non-tariff costs to trade and transport Reduce smuggling and corruption at border crossings

Actions (1) Getting donors on board to complement / coordinate / provide assistance Regional approach/mechanisms: Regional Forum: Steering Committee Public – Private Partnerships (PPP) Training programs for transport operators, freight-forwarders, importers, exporters TTFSE website Survey of users

Actions (2) Focus on Customs procedural reforms Border Inter-agency awareness and cooperation Pilot approach: 27 selected border crossing points and in-land stations National Coordinator Performance monitoring: overall Customs and pilot indicators Local Project Teams

Country & Regional Program Regional Investment Program: US$120 m WB $78 million US Government (grant) $13 million; Others: France, Austria Each project was designed to be country specific, but supported the development objectives by the selection of elements under similar components

Total Program Costs

Common Components Supporting customs reform Strengthening mechanisms of interaction and cooperation between private and public parties at regional, national, and local levels Disseminating information and providing training to the private sector

Achievements in 2 ½ years … Significant reduction of waiting time at the border and inland pilot points (50% and more) leading to US$8million savings annually Improved dialogue among Customs administrations through regional consultation and information sharing (8 RSC meetings) “Institutional awareness”: the facilitation role of border agencies vs. revenue collection & control classic roles Transparent and public Customs performance monitoring system in place

Achievements in 2 ½ years .. User participation in the evaluation of border agencies’ performance A collaborative culture of partnership between the public and the private sectors Certified learning opportunities in road transport operations (85 locations and on-line) Detailed information available to the public at: www.TTFSE.org

Achievements in 2 ½ years. Revenue collected by Customs doubled through risk management and selectivity approach Higher than estimated trade volumes increase (e.g almost doubled in Romania) EC – WB Policy Notes from lessons learned

Scaling-up TTF REPLICATE the program to other/all borders, and cross-border projects in SEE EXPAND the approach and methods to railways, inland water-ways, ports, airports STREAMLINE international transport documentation & linkages REPLICATE the program to other regions, e.g. Caucasus, Central Asia, South Asia, East Asia, etc.