Trade facilitation in Central Asia: A regional perspective Seminar on Trade Facilitation at the Border in Central Asia May 2009, Dushanbe, Tajikistan Mr. Peng Bin Economic Affairs Officer Trade Facilitation Section Trade and Investment Division ESCAP

2 Trade in Central Asia: An overview  The growth of international merchandise trade is above the world’s average in recent years  International merchandise trade volume is still small The rank in world merchandise export among 180 economies: Afghanistan 160, Kyrgyzstan 141, Tajikistan 131, Uzbekistan 86, Turkmenistan 81, Azerbaijan 78, Kazakhstan 51 (WTO, 2007)  High percentage of fuels and mining products in export and manufactures in import  High trade dependence Trade to GDP ratio 65 – 105%  Low level of intra-regional trade

3 Trade to GDP ratio, Central AsiaEast and Southeast AsiaSouth AsiaDeveloped economies CountryRatioCountryRatioCountryRatioCountryRatio Azerbaijan105China71.3Bangladesh45EU (27)26.4 Kazakhstan93.3Mongolia127.1Bhutan97.3US27.2 Kyrgyzstan126Korea (Rep. of)85.7India44.7 Tajikistan139Brunei96.9Maldives184.2 Uzbekistan65.1Cambodia139.2Nepal46.9 Indonesia60.4Pakistan41.6 Lao73.5Sri Lanka70.7 Malaysia209.6 Philippines92.3 Singapore443.7 Thailand143.9 Vietnam156 Sources: WTO, 2008

4 Intra-regional trade in Central Asia Matrix of import shares, 2007 (change from 1995 in brackets) ENASEASANCAPacificESCAPEU ENA {-1.0}{2.9}{1.4}{0.4}{-0.1}{-2}{-2.9} SEA {9.8}{6.4}{1.1}{0.2}{0}{5.6}{-3.9} SA {8.2}{1.5}{0.7}{3.1}{0}{9.4}{-10.2} NCA {14.5}{0.1}{-0.2}{-7.2}{0}{9.5}{2.0} Pacific {2.6}{10.4}{0.7}{0}{2.3}{2.8}{-1.5} ESCAP {5.4}{1.5}{1.2}{0.9}{-0.1}{3.4}{-2.0} EU {3.9}{-0.4}{0.6}{2.1}{0}{4.3}{-0.7} World {5.7}{0.2}{1.0}{1.3}{-0.1}{4.1}{-2.2} Source: ESCAP Commission paper based on IMF (2008)

5 Constraints of doing business  SPECA countries are among the most remote countries, the distance to the closest seaport More than 2000 km for Afghanistan 3750 km for Kazakhstan 3600 km for Kyrgyzstan 3100 km for Tajikistan 2950 km for Uzbekistan  High trade costs in doing business Transport costs Cost of transporting a container from an LLDC to a developed country port was about US$4,500, about 20% more than from a coastal country (World Bank) Transport costs in the CIS-7 are at least three times higher than in the developed countries (Corporate Technologies Center) Trade procedures compliance costs, including transit procedures

6 Constraints of doing business Timeliness: Perceived likelihood of on-schedule delivery (Subregional averages; 5: nearly always on schedule) Source: Based on data from the World Bank Logistic Performance Index (2007)

7 Constraints of doing business Complicated trade procedures comparison with China, India and Thailand Countries Export proceduresImport procedures Duration of documents preparation (days) Duration of inland transportation and handling (days) Cost of inland transportation and handling (USD) Duration of documents preparation (days) Duration of inland transportation and handling (days) Cost of inland trasportation and handling (USD) Afghanistan Azerbaijan Kazakhstan Kyrgyzstan Tajikistan Uzbekistan China India Thailand Source: Compiled based on Trading Across Border, World Bank (2009)

8 Constraints of doing business Logistics to be improved CountriesCustomsInfrastructureInternational shipment Tracking & tracing Domestic logistics costs TimelinessLPI Afghanistan Azerbaijan Kazakhstan Kyrgyz Tajikistan Uzbekistan Logistics performance index rank in Central Asia Source: Logistics Performance Index, World Bank (2007)

9 Constraints of doing business Transit procedures and costs Sea transportPort of transit country Inland transport in transit country BorderInland transportDestination  Unloading at port  Uploading  Customs and border inspection  Unloading at destination  Customs inspection and clearance  Convoy  Control en route

10 Constraints of doing business Border checks: Cross border road freight transport Transported cargoVehiclesDrivers 1. Check on trade documentation:1. Fuel tax assessment: Check quantity of fuel in1. Passport and visa · Waybill/Bill of Ladingtank vs. quantity which is allowed free into the · Invoicescountry · Packing lists · Certificates of Origin · Letters of Credit · Import licenses · Export permits 2. Physical inspection of cargo2. Vehicle tax, road charge, or transit fee2. Customs inspection 3. Quarantine (agriculture and3. Compulsory vehicle insurance3. Quarantine (agriculture and veterinary)/health inspection 4. Collection of statistical data4. Transport authorization (bilateral, transit, third4. Driver license country, multilateral) 5. Payments for special transport permits5. Inspection re driving time and 6. Weights and dimensionsrest period requirements 7. Vehicle certificate 8. Vehicle roadworthiness 9. Customs security of vehicles (including Customs seals affixed to vehicles or containers) 10. Quarantine (agriculture and veterinary) /health inspection 11. Collection of statistical data Source: ESCAP, 2007

11 Trade facilitation in Central Asia  With the elimination tariff barriers, importance of removing non tariff barriers increased  Movement of trade facilitation from technical issue to policy issue, particularly the adoption of trade facilitation into WTO negotiations  Inherent linkage between trade liberalization and facilitation, such as Customs clearance of tariff preferential goods under FTAs and RTAs  Technical development, particularly use of IT in trade administration  Market requirements – reduction of costs and timely delivery becomes a prerequisite to participate into global and regional supply chain Trade facilitation: Why it becomes important?

12 Trade facilitation in Central Asia Facilitate trade: What can we do? Simplified trade procedures and documents Improved institutional quality and governance Aligned and transparent trade policies and regulations Improved trade infrastructures Trade documents and procedures Quality of trade documents Process of flow of information Means of conveying trade documents and data including the use of IT facilities Trade documents and procedures Quality of trade documents Process of flow of information Means of conveying trade documents and data including the use of IT facilities Institution Institutional structure Bureaucracy Corruption and illegal payment Institution Institutional structure Bureaucracy Corruption and illegal payment Trade policy and regulations Align trade policies and regulations with international agreements (remove TBT and other NTBs) Transparency of trade policies and regulations Trade policy and regulations Align trade policies and regulations with international agreements (remove TBT and other NTBs) Transparency of trade policies and regulations Trade infrastructure Transport and logistics infrastructure Inspection facilities Laboratory and test equipment IT infrastructure Financial infrastructure Trade infrastructure Transport and logistics infrastructure Inspection facilities Laboratory and test equipment IT infrastructure Financial infrastructure Reduced trade costs and time

13 Trade facilitation in Central Asia Mongolia CAREC SPECA Turkmenistan Afghanistan Azerbaijan Kazakhstan Kyrgyzstan Tajikistan Uzbekistan APEC China Canada, Chile, Hong Kong, China, Japan, Korea, Mexico, Peru, Russia, Chinese Taipei, United States Australia New Zealand Papua New Guinea GMS Cambodia Thailand Brunei Darussalam LaoPDR Vietnam Indonesia Myanmar Malaysia Philippines Singapore ASEAN (AFTA) Cook Islands Micronesia, Fiji Kiribati PIF (PICTA) Marshall Islands Nauru, Niue, Palau Samoa Solomon Islands Tonga, Tuvalu Vanuatu Bangladesh, Bhutan, India Maldives, Nepal, Pakistan, Sri Lanka SAARC (SAFTA) Regional trade facilitation cooperation: Central Asia and other subregions

14 Trade facilitation in Central Asia Accession of Central Asian countries to international conventions StateWTOTIRWCO Kyoto Convention Harmonization Convention Customs Convention on Containers CMR AfghanistanX AzerbaijanXXXX KazakhstanXXXX KyrgyzstanXXXXX TajikistanXX TurkmenistanX UzbekistanXXXX

15 Trade facilitation in Central Asia National Coordination mechanism in SPECA CountryNational Trade/Transport Facilitation Body Afghanistan National Trade and Transport Facilitation Committee of Afghanistan (AFPRO) Azerbaijan National Trade and Transport Facilitation Committee of Azerbaijan (AZERPRO) Kazakhstan Inter-ministry commission for transport with a focus on cross- border transport Kyrgyzstan Separate mechanisms for coordinating trade and transport facilitation Tajikistan Inter-ministry commission for transport with a focus on cross- border transport UzbekistanUZINCOMCENTER

16 Trade facilitation in Central Asia Benefit of coordination and cooperation of border agencies Lower compliance costs for traders Good governance and anti-corruption Faster border crossing Improve institutional and human capacity Reduce pressure on the infrastructure Costs savings for regulatory agencies

17 Trade facilitation in Central Asia Tools and instruments for border management  UNECE instruments United Nations Layout Key for Trade Documents (UNLK, ISO 6422) United Nations Trade Data Elements Directory (UNTDED, ISO 7372) United Nations Electronic Data Interchange for Administration, Commerce and Transport (UN/EDIFACT) UN/CEFACT Single Window The International Convention on the Harmonisation of Frontier Controls of Goods  WCO instruments WCO SAFE Framework  UNCTAD The Automated System for Customs Data (ASYCUDA)

18 Thank you Seminar on Trade Facilitation at the Border in Central Asia May 2009, Dushanbe, Tajikistan