Trade Facilitation – Impossible without Facilitating Logistics

Trade Facilitation – Impossible without Facilitating Logistics
Contribution by the International Road Transport Union (IRU) Peter Krausz, Head, Goods Transport and Facilitation 2008 WTO Public Forum Geneva, 25 September 2008 Ladies and Gentlemen, It is an honour for the International Road Transport Union (IRU) to be here. We thank WTO for the opportunity offered and we have been pleased to coordinate the preparations of this Public Forum session. The IRU, but possibly also my colleagues, members of this panel, have been extremely concerned about the failure to conclude the Doha Round in July this year. We clearly fear negative consequences for the multilateral trading system and more particularly the further progress of trade and transport facilitation in the world in the coming years.

Contents Importance of Road Transport Cost of Barriers
Ways of Facilitation UN Conventions WTO instruments GATT Article V and Road Transport

Importance of Road Transport

Importance of Road Transport
Irreplaceable door-to-door service, major tool of human and economic mobility, driver of globalisation Vital part of GDP production in spite of modest direct contribution (France: 1.5%; India: 3.69%) Integral part of the logistic chain (logistics’ contribution to GDP in India: 13%; Europe: 10%; US: 9.9%) job creator (3-4%) Road = decisive role in land transport modal split Importance of Road Transport Road freight transport is irreplaceable because being the only transport mode offering door-to-door services, a taken-for-granted service in the 21st century. This profession has become a major tool of human and economic mobility and a driver of globalisation. The road transport sector is an important contributor to GDP production in spite of its seemingly modest direct share in GDP (for example in France: 1.5%; in India: 3.69%). As everybody knows however the production and delivery to the consumers of any physical goods involves at one stage or another the use of road transport in the supply chain either as a principal or as a complementary mode of transport. It is not just commonplace to state that transport, in particular road transport, represents the blood circulation system of any modern society. The road freight transport activity is an integral part of the total logistic chain with the logistics industry contributing to the GDP in India by 13%; in Europe by 10% and the US by 9.9%. In addition, road transport is an important job creator with 3-4% of the total workforce being employed in this area. Actually, the road mode fulfils a decisive role in the land transport modal split almost all over the world.

Transport Volume (tkm) – GDP Development in EU25, 1995=100%
Transport development trends cannot be de-coupled from general economic development tendencies. Road freight transport is a service industry whose growth rate is rightly compared to that of the GDP. In EU25, in the period of , the development of total transport output was oscillating around the development trend of the GDP with road transport representing a more dynamic growth rate than other modes of transport. Eurostat, 2008

Road Transport Share (tkm) in EU25
This dynamism can be perceived when looking at the growth of the tkm share of road transport among land transport modes in the EU in the same period of investigation. Eurostat, 2008

Road transport tonnage distances in Europe
Though the relationship between sustainable development and transport is not on the agenda of today’s meeting, it should be emphasised at this point that road transport is aware of the problems of the protection of the environment and has its own vision and strategy to fight the negative phenomena with success. A basic information is extremely relevant here, which is that road freight transport is doing a job basically only in the transport distance categories which it is most apt for, that is on short distances. About 85% of all road freight movements is being made over an average distance of less than 150 km! This is indeed the distance where this transport mode is almost unbeatable. Page 7 © International Road Transport Union (IRU) 2008 7

The road transport profession operates under strict market conditions
The road transport profession operates under strict market conditions. It is typically the business of SMEs. The companies unite their forces in national road transport associations which conduct their international cooperation under the umbrella of the International Road Transport Union (IRU). The IRU’s strength is its strong network of national associations and this is the source of its recognition as partner of national Governments and international organisations. Page 8 © International Road Transport Union (IRU) 2008 8

Evolution of IRU Membership
Members 72 Countries Created 1948 8 Founder States: This organisation was created in 1948 and today it embraces 180 member associations in 72 countries of the world. Belgium Denmark France Netherlands Norway Sweden UK Switzerland Updated January 2008 Page 9 © International Road Transport Union (IRU) 2008 9

Cost of Barriers

Cost of Barriers Source: Hague Consulting Group, 1998
One of IRU’s strategic priorities is the facilitation of international trade and road transport. The unreasonable direct costs of and therefore losses due to non-tariff barriers like congestion, waiting times at borders, traffic restrictions, blockades and strikes on roads represent almost USD 8 billion in 5 investigated European countries (F, UK, I, CZ and PL) annually according to a study made at the end of the 90s. If lost business opportunities are also considered, this amount can be doubled. Source: Hague Consulting Group, 1998 * Includes lost opportunities © International Road Transport Union (IRU) 2008

Border Waiting Time Costs Money!
Indicator Value Average number of TIR carnets issued per year 2’923’481 Minimum number of border crossings in the TIR system per year 8’770’443 Total waiting time, hour per year, for TIR traffic Value of an hour lost per truck, USD per hour 50 Total lost value per year, TIR traffic, USD 438’522’188 Total lost value** , TIR traffic, USD 3’508’177’500 In international trade and transport, border waiting time in itself represents an unfortunate source of extensive economic losses. For the period of , the direct loss due to idling at borders of traffic conducted under the TIR customs transit system, represented some USD 3.5 billion without considering lost businesses. These figures indicate that pulling down barriers hampering smooth trade and road freight transport, the best representative and most succinct indicator of which is the time needed to cross a border, can yield benefits of the order of magnitude of billions of USD! Similar conclusions have been drawn by the World Bank and other international institutions dealing with this phenomenon. Furthermore the elimination of internal borders of the European Union has proven this in practice. * EU25 External, EU4, CIS & Balkan Borders, **Direct costs can double through losses to producers and traders, including lost opportunities due to longer and unreliable transport time, thus: total USD 7.0 billion. Source: IRU 2006 © International Road Transport Union (IRU) 2008

IRU Border Waiting Times Observatory
In more pragmatic sense, the IRU operates a border waiting time observatory on its website. It can embrace borders anywhere in the world. © International Road Transport Union (IRU) 2008

At present, it is mainly applied at borders between the EU and non-EU countries… © International Road Transport Union (IRU) 2008

… for example at the border between Poland and Belarus or Ukraine. © International Road Transport Union (IRU) 2008

Border Crossing Stopping Point in Europe 2009
A border (Crossing) Stopping point in Europe in 2008 © International Road Transport Union (IRU) 2008

UN Conventions There are a few basic international legal instruments on facilitating border crossing trade and transport operations. These are for example the Kyoto Convention, customs transit agreements like the TIR convention, or the International Convention on the harmonisation of frontier controls of goods (1982), in our case its recent Annex 8 on the facilitation of border crossing freight transport.

TIR System An excellent example of UN Conventions facilitating trade and transport is the TIR convention managed by the IRU as mandated to do so by the United Nations Economic Commission for Europe. It allows seamless border crossing for road vehicles in the framework of a customs transit system backed up by an international guarantee chain.

UN Border Control Harmonisation Convention (1982) & Annex 8 (2008)
Covering main conditions of smooth border crossing Driver Procedure Vehicle Another example is the new Annex 8 of the Border Control Harmonisation Convention, which is an inventory of main problems containing remedies for their prevention or elimination. It is worth considering here today its main provisions. Article 2 – facilitation of visa procedures Article 3 – Transport Operation The industry can only be in agreement with Move away controls from borders Special transport >> special treatment: speed, lane, advance notification Perishable cargo, live animals = special treatment Ideally this could be completed by + special treatment for Transit under TIR or other customs transit system + the application of Single Window, risk management, modern control equipment, + the application of pre-notification, linking up customs transit systems Articles 4 and 5 – Vehicle We agree with the Use International Technical Inspection Certificate but we need also + replace all other vehicle certificates Use International Vehicle Weight Certificate but we need also + implement in practice! + complex institutional and physical infrastructure needed … and ideally we need more: + harmonise HGV traffic restrictions + fair HGV road user charge systems Article 6-7 – border crossing Yes to Joint controls, one-stop, 24/24, But we need also Single Window modern control equipment and trained & honest staff easy information access full coordination of various control services at one and the same as well as both sides of the borders security Welcome to Traffic separation at a certain distance from the border control point (goods and means of transport in transit separated from other goods and means of transport, traffic under customs transit system separated from other traffic, perishable goods separated from other goods, etc.); off-lane control Driver facilities Competitive forwarding agents but we need also Reporting mechanism A real monitoring function for the UNECE PPP These are all elements to reduce the disastrous loss caused to the economy by idling at borders. The new Annex 8 negotiated during 10 years (!) by UNECE member governments entered into force on 20 May this year. It is a challenge to governments to properly implement all its provisions. Infrastructure Monitoring

GATT Article V and Road Transport
It is crucial to consider benefits of WTO instruments for trade and transport at this Forum.

Articles V, VIII and X - equally important for transport
Art. V: Transit freedom Art. VIII: Fees & charges Art. X: Information, appeals The three GATT artciles under review are of equal importance for efficient supply chain operations. Art V covers the freedom of transit – I shall speak about it in details. Art VIII deals with fair and proportional fees and charges which are vital for the transport industry. Finally Art X is crucial to facilitate access to information needed for international transport operations, create transparency, reduce the chance for red tape and corruption. It creates the appropriate conditions of a fair appeal procedure against decisions of control authorities. All these are to be implemented in full scale, whereby the state themselves are the good guardians of proper implementation via the dispute settlement tool of the WTO if need be. It is important to see that there is no overlap among the major international legal instruments mentioned: TIR, border control harmonisation convention and GATT. Dispute settlement

The IRU’s Views on GATT Article V on the Freedom of Transit
General comments facilitation of int’l road transport has been neglected trade facilitation - impossible without facilitated transport (cargo, vehicle & driver) GATT Article V - best legal instrument providing for the Freedom of Transit Doha failure deals a blow to trade & transport facilitation At this session, which is part of the 2008 WTO public Forum, we should pay particular attention to WTO legal instruments and the possibility to improve the described situation by their development and implementation. Of the three GATT Articles on the trade negotiating group’s agenda, many of the issues I have so far been talking about are covered by Articles VIII and X. Let me focus my attention only on Article V on the freedom of transit. Before entering some important details, let me say that Facilitation of int’l road transport has been neglected in particular if compared to freedoms granted to sea transport Further trade facilitation measures under any of the three GATT Articles are extremely welcome but impossible without facilitated transport (facilitation for the cargo, the vehicle & the driver) GATT Article V has proven to be the best available legal instrument on the Freedom of Transit but it must be applied, without any restrictions by all WTO Members! The failure of the Doha Round as its stands today deals a hard blow to multilateral trade and transport facilitation Page 22 © International Road Transport Union (IRU) 2008

Consequences for new Agreement do not to substitute, simply complement do not edit, reduce or summarise freely, neither change order of items do not “overwrite” multilateral conventions (like on customs transit) do submit regional transit agreements to multilateral conventions do agree on the new WTO trade facilitation tool separately As general consequences of above statements for the new WTO agreement, we must say: Do not to substitute any part of Article V which remains in force anyway. Just simply complement the original text with clear interpretative clauses. Do not edit, reduce or summarise freely the text of the present Article V, neither change the order of items since it may result in misinterpretations and the change of the Article's intended contents Do not “overwrite” multilateral conventions by introducing provisions in the future new agreement on issues adequately covered by these multilateral conventions (like on customs transit) Do submit regional transit agreements, if promoted in the future new trade facilitation agreement, to international standards as per existing multilateral conventions The newly planned WTO trade facilitation agreement should be separated from the Doha package and agreed upon as an independent legal instrument. Page 23 © International Road Transport Union (IRU) 2008

Definition of Transit covers the most recent changes in transport technology and techniques but does not cover the domestic transport legs ( exportation and importation) of the international transit of goods The present definition of transit in the Article covers the most recent changes in transport technology and techniques, i.e. it has not become outdated over the last few decades However, it does not cover the domestic transport legs (exportation and importation) of the international transit of goods. Example: Goods from Ukraine to France or vice versa. Those goods are in transit through Polish and German territories and therefore are submitted to article V of GATT. But the positive impact of implementing GATT art V in the transit countries may be done away if there are limitations applied by the French authorities in respect of the UA-registered vehicle in importation (or vice versa). A certain level of rule harmonisation is desirable. Page 24 © International Road Transport Union (IRU) 2008

Consequences for the Definition of Transit no need for new definitions, only precisions distinguish “transit” of goods and/or of means of transport from “customs transit systems” complement Article V to apply mutatis mutandis to domestic transport legs of international transit of goods and in specific transit situations (e.g. ports traffic) In respect of the definition of transit in Article V: There is no need for new definitions, only for certain precisions, in particular in respect of: The Governments should distinguish between the physical “transit” of goods and/or of the means of transport from the application “customs transit systems” Governments should complement Article V to apply mutatis mutandis to domestic transport legs of international transit of goods as well as in specific transit situations (port traffic) Example for post traffic: Goods from Switzerland to Algeria or vice versa. The goods on the truck are in transit through French territory and therefore are submitted to article V of GATT. But the means of transport registered in Switzerland and travelling to Marseille or vice versa is not covered by article V of GATT, because strictly speaking the truck is not in transit through French territory. The truck is performing a simple bilateral transport (e.g. Geneva-Marseille). Thus the goods and the means of transport are subject to two different legal status. Page 25 © International Road Transport Union (IRU) 2008

Article V, a cornerstone of the GATT– too often disregarded non-discrimination - has suffered many infringements MFN treatment - has been subject to too many flagrant infractions Article V - for how long a “Sleeping Beauty”? The Freedom of Transit as prescribed by Article V is very progressive and depicts an ideal world. In reality Article V, which is a cornerstone of the GATT, is too often disregarded The non-discrimination principle has suffered many infringements The MFN treatment principle has been subject to too many flagrant infractions Thus, the question raised by an EU expert last year in a special presentation to a WTO meeting on Article V is valid: for how long will Article V be a “Sleeping Beauty”? One can only guess why infringements of this article have never been subject to a dispute settlement procedure of the WTO. My guess is that there is hardly any Contracting Party to the GATT, which has not committed an infraction of this Article yet and they are all too well aware of this fact hampering any initiative of a dispute among the parties. Furthermore, road transport interests have often been sacrificed on the altar of “other foreign trade related interests” of the countries concerned. Page 26 © International Road Transport Union (IRU) 2008

Consequences for the Freedom of Transit reinforce the freedom of transit no discrimination on any grounds no quantitative limitations of means of transport prescribed routes or escort only exceptionally NT or MFN: whichever is more favourable for international transit Here are a few conclusions on the principle of transit freedom and aspects to be considered by negotiators when drafting the new agreement: reinforce the freedom of transit as applying in all WTO Members to road vehicles, cargo and, as far as possible to drivers Do not allow any discrimination on any grounds of goods and means of transport Do not allow any quantitative limitations of means of transport (e.g. quotas of transport permits) Allow prescribed routes or escort only exceptionally Apply NT or MFN - whichever is more favourable for international transit in the given situation. Page 27 © International Road Transport Union (IRU) 2008

Most Convenient Routes, no Delays & no Restrictions
The IRU’s Views on GATT Article V on the Freedom of Transit Most Convenient Routes, no Delays & no Restrictions shippers and transport operators must be free to choose the most convenient itinerary for transit obviously limited to using appropriate customs houses transit traffic of goods and/or means of transport must not be subject to unnecessary delays or restrictions In respect of the Most Convenient Routes, the no Delays & no Restrictions principle applies: shippers and transport operators must be free to choose the most convenient itinerary they want to use – keep this requirement This choice must obviously be limited to using appropriate customs houses as Article V states in its present form Transit traffic of goods and/or means of transport must not be subject to unnecessary delays or restrictions. Page 28 © International Road Transport Union (IRU) 2008

Consequences for the Most Convenient Routes, No delays & No Restrictions routes must always remain most convenient new control technology or joint controls at borders do not produce desired effects without access lanes and routine controls / physical inspections being separated Consequences for the Most Convenient Routes, No delays & No Restrictions routes must always remain most convenient - temporary closure e.g. due to repair works must be allowed new control technology or joint controls at borders do not produce desired effects without access lanes and routine controls / physical inspections being separated (discussed already) Page 29 © International Road Transport Union (IRU) 2008

Duties and Charges; Regulations and Formalities – principles to preserve transit must be exempt from customs duties and other charges except for services rendered – to reinforce drivers and operators are very often victims of rent-seeking practices as well as procedural failures at borders (leading to unjustified customs claims) Duties and Charges; Regulations and Formalities – principles to preserve! transit must be exempt from customs duties and other charges except for services rendered as stated in Article V in the current version This principle should be reinforced since drivers and operators are very often victims of rent-seeking practices as well as procedural failures at borders (leading to unjustified customs claims) Page 30 © International Road Transport Union (IRU) 2008

General Conclusions Road transport – indispensable
Losses are preventable Principal ways of facilitation: UN Conventions and WTO instruments Freedom of sea routes has enormously contributed to progress – high time to provide same freedom to road transport GATT Article V to be reconfirmed by new WTO facilitation instrument as an independent WTO tool Road transport should be appreciated as an indispensable mode of transport in the 21st century. It is an important contributor to and facilitator of GDP production. Without road transport, trade is impossible. Losses due to barriers can be measured only in billions of USD or Euros. These are preventable losses to economy and society alike. On the international scene, there are two principal ways of facilitation: UN Conventions and WTO instruments Road Transport Facilitation has been neglected in the 20th century while it is an acknowledged fact that the freedom of sea routes has enormously contributed to economic and social progress all around the world. It is high time to provide the same freedom to inland transport such as road transport. The disappearance of borders in the EU has created a benefit for economies measurable in hundreds of millions of Euros. GATT Article V on the freedom of transit is to be reconfirmed in a new WTO facilitation instrument since its proper implementation, including the use of the dispute settlement facility of the WTO, is an excellent tool to support the progress of trade and international cooperation via facilitated road transport. The new WTO agreement should be concluded without further delays as an independent WTO tool separated from the ill-fated Doha package. Page 31 © International Road Transport Union (IRU) 2008

Trade Facilitation – Impossible without Facilitating Logistics

Similar presentations

Presentation on theme: "Trade Facilitation – Impossible without Facilitating Logistics"— Presentation transcript:

Similar presentations

About project

Feedback

Log in

Auth with social network:

Trade Facilitation – Impossible without Facilitating Logistics

Similar presentations

Presentation on theme: "Trade Facilitation – Impossible without Facilitating Logistics"— Presentation transcript:

Similar presentations

About project

Feedback