Trade Facilitation and Development Presentation by Emily Mburu-Ndoria Coordinator, Trade in Services and Trade Facilitation Unit COMESA Secretariat

Outline What and why trade facilitation Challenges and opportunities of trade facilitation Trade facilitation in COMESA – mandate, instruments and institutions Trade facilitation and the Tripartite Free Trade Area Development implications of trade facilitation Conclusion

What is Trade Facilitation? OECD ‘simplification and standardization of procedures and associated information flows required to move goods internationally from seller to buyer and to pass payments in the other direction’. UN/ECE ‘comprehensive and integrated approach to reducing the complexity and cost of the trade transation process, and ensuring that all these activities can take place in an efficient, transparent and predictable manner, based on internationally accepted norms, standards and best practices’. WTO ‘simplification and harmonization of international trade procedures, including activities, practices, and formalities involved in collecting, presenting, communicating, and processing data required for the movement of goods in international trade’.

What to consider…….. The simplification and harmonization of international trade procedures; The increase of economic growth for countries and their companies by reducing unnecessary bureaucratic demands and procedures; The strengthening of each country’s autonomous right to defend itself against illegal and unwanted trade practices; Trade procedures cover activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in regional and international trade.

Why Trade Facilitation? Removing Non Tariff Barriers (NTBs) is essential to free-up regional trade in goods - transport, customs and logistics inefficiencies raise trade costs Restrictive rules of origin limit preferential trade Poorly designed technical regulations and standards limit consumer choice and hamper trade Other non-tariff barriers restrict opportunities for national and regional sourcing

Why does Trade Facilitation Matter for businesses? Increase in international trade volumes and change in business environment Not matched by reform and modernisation Global expansion of regulatory requirements (health, safety, preferential tariffs, environmental issues) Cost implications for businesses Number, diversity & complexity of documentation and information requirements Varying procureral requirement Red tape → Increase in effeciency in port handing, customs and regulatory envoronments and use of e-commerce by enterprises would increase welfare 95% of the volume of cargo transported in the region is by road transport. The typical charge for a stationary truck is between US$200 to US$400 a day. If a truck takes 3 days to clear a border the transporter will pass on an additional cost of between US$600 to US$1,200 for the cost of the truck sitting idle at the border to the importer.

Challenges and Opportunities of Trade Facilitation Technical: e.g. risk management procedures, application of standards Institutional: e.g. inter-agency cooperation, Single Window Financial: e.g. buying hard & software, hiring professionals Legal : new or more sophisticated rules needed to reflect processes and concepts, e.g. (legally binding) advance rulings, authorized trader Economic – e.g. deferred collection of duties from authorized traders Political – e.g. abolishment of shipping notes, pre-shipment inspection and other “cash cows” Opportunities Reform & Reduce cost for business Importance of assessing Trade Facilitation situation at the national and regional levels

Regional Cooperation on Trade Facilitation in COMESA COMESA Treaty recognizes the important role that infrastructure, transport and communications play in promoting socio- economic development and inter-connectivity between and among Member States Chapter 11 is on cooperation in the development of transport and communications – individual and collective provisions to interconnect the infrastructure and communications networks COMESA has and continues to be a leader in trade facilitation COMESA Protocol on Transit Trade and Transit Facilities

Trade Facilitation in COMESA-Instruments The Yellow Card – Third Party Insurance COMESA Carrier License – road freight operators Harmonized axle road and Gross Vehicle Mass limits Customs Declaration Document Regional Customs and Transit Guarantee Scheme (RCTG) – COMESA CARNET Simplified Trade Regime (STR) One border post (Chirundu etc) Trade in services: ICT, telecommunication, banking, insurance, transport

Some COMESA Autonomous and semi-autonomous agencies that facilitate trade PTA Bank African Trade Insurance Agency (ATI) PTA Re Insurance Company (ZEP-RE) COMESA Infrastructure Fund COMESA Clearing House COMESA Monetary Institute COMESA Regional Investment Agency (RIA) COMESA Business Council (CBC) COMESA Federation of Women in Business COMESA Regional Competition Commission

Trade Facilitation in COMESA- New Developments Two flagship programmes on trade and transit facilitation COMESA Virtual Trade Facilitation System (CVTFS) COMESA Electronic Market Exchange Systems (still under development) The CVTFS was launched in September 2012 in Addis Ababa, Ethiopia (Djibouti-Addis Ababa- Khartoum-Juba Corridors) Real time metric for measuring the efficiency of transit and indicators of the cost of doing business Real time information to both Government agencies and economic operators (customs & transport operators)

Regional Cooperation on Trade Facilitation - Tripartite Tripartite comprises of 3 Regional Economic Communities (RECs) namely, COMESA, EAC and SADC Membership of 26 Countries in the Eastern and Southern African Region Started with the purpose of strengthening economic integration in the region through harmonizing and/or promoting joint implementation of respective economic, trade, infrastructure and related programmes

Tripartite and Trade Facilitation To address trade facilitation challenges the Tripartite developed the Comprehensive Trade and Transport Facilitation Programme (CTTTFP) The programme encompasses regulatory and policy reforms encouraging the adoption of: international instruments and best practices; national and regional capacity building activities to facilitate cross-border movements; and enhancement of infrastructure facilities at border posts to improve efficiency of cross-border movements. This is also coupled with an attempt to introduce Rules of Origin that will encourage intra-regional trade but also limit trade deflection and diversion

Elements of the Comprehensive Tripartite Trade and Transport Facilitation Programme (CTTTFP) The NTB Monitoring, Reporting and Removal System Border and Customs procedures (one-stop border posts; Integrated Border Management, regional customs bond, transit management) Immigration procedures (movement of business persons) Transport procedures (regional 3rd party insurance, vehicle standards and regulation, self- regulation of transporters, overload control, harmonised road user charges, regional corridor management systems The establishment of the Joint Competition Authority linked to air transport liberalisation.

Objectives of the CTTTFP Increase trade and promote economic growth by supporting the improvements in policies and regional regulatory and economic environment Reduce high costs of trading & help national administrations to address barriers to trade and growth Reduce transit times and transaction costs along the principal corridors through better infrastructure development, faster border crossings and harmonized trade and transit regulations Improve aid effectiveness by coordinating donor funding

Development Implications of Trade Facilitation TF is part of the general development process and the structural change of economies TF and development mutually benefit each other TF has to be accompanied by other measures (e.g. investment in transport infrastructure, capacity building, and modernization of banking) New technologies and streamlining of procedures will also require development of human skills Introduction of institutional reform, capacity building and new technologies might require support from development partners

Development Implications of TF (2) Determining the TF solutions adapted at the regional level (also national) require: assessment of TF needs and priorities determination of the gap between requirements derived from mandatory international instruments and countries’ capacity to comply joint efforts by the trade and transport communities

Conclusion Ensure that all the objectives contained in the mandates (COMESA & Tripartite) are addressed in a balanced way Ensure the outcome of the negotiations allow for TF initiatives that are commensurate, in terms of implementation time and scope, with achievement of national and regional trade objectives. Implementation of initiatives and mandates on trade facilitation is crucial for development in the region

Thank you/ Merci/Shukran/Asante