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UNCTAD Review of Maritime Transport 2005 — Efficient transport vital to trade, growth

Santanu Sanyal

Referring to the dependence of developing countries on effective trade facilitation to expedite their development process, the Review states that they will benefit from the "new geography of trade" only if imports and exports are not hit by high transaction costs, uncertainty and delays.

With the throughput of containerised traffic having risen seven-fold the last 10 years, countries that are served by transport services not conducive to containerised trade are losing out on a big growth opportunity.

THE UNCTAD (United Nations Conference on Trade and Development) Review of Maritime Transport 2005, while discussing trade and transport efficiency, draws attention to the growing share of transport in international logistics expenditure, and of the significance of faster, more frequent and reliable transport services in rapid trade growth.

Lengthy Customs and other procedures at border crossings and ports, on the other hand, lead to expensive inventory holding, hampering trade or foreign direct investment that would require just-in-time deliveries of unfinished goods and components. An average waiting time of two weeks and more at some borders between the least developed countries (LDCs) are a serious obstacle to these countries' bid to achieve competitiveness and participate in globalised production and trade.

Referring to the dependence of developing countries on effective trade facilitation to expedite their development process, the Review says these countries will benefit from the "new geography of trade" (increased exports of manufactured goods and more South-South trade) only if their imports and exports are not hit by high transaction costs, uncertainty and delays.

Negotiations on trade facilitation were covered in the August 2004 decision of the WTO's General Council, commonly known as the July Package. The WTO members have since been negotiating on improving GATT 1994 Articles V, VIII and X, which deal respectively with "Freedom of Transit", "Fees and Formalities connected with Importation and Exportation" and "Publication and Administration of Trade Regulations".

The inclusion of trade facilitation in the WTO negotiations reflects the recent trends in international trade and the resulting requirements of effective global supply chains. It is now clear that the countries with inadequate trade and transport facilitation will not attract investment, and the required production and trade patterns will not materialise without enhanced transport and logistics systems in place.

Containerisation, for example, significantly facilitates multi-modal door-to-door transport services so much so that, in the past 10 years, the throughput of containerised traffic in ports increased seven-fold and yet many land-locked LDCs are laggards in this regard as they are still served by transport services not conducive to containerised trade.

The negotiations on trade facilitation at the WTO take place within the Negotiating Group of Trade Facilitation (NGTF). Starting its work in late 2004, the NGTF has since met at regular intervals and over 50 documents were tabled by WTO members till the middle of 2005, mostly discussing the wide range of facilitation issues and suggesting necessary measures.

The specific topics included the publication of trade regulations, fees, clearance and release of goods, reduction and simplification of formalities and the use of existing international standards.

Some of the proposals refer to July Package's Annex D, establishing links and conditions with regard to the identification of the needs and priorities of members as well as technical assistance and capacity-building.

These elements are inter-related while at the same time linked to special and differential treatment. In particular, Annex D stipulates that the scope of the commitments resulting from WTO negotiations must be commensurate with the implementation capacity of the developing countries and LDCs.

It further states that the capacity for implementation of the new commitments will, particularly in the case of developing and LDCs, be determined in accordance with their trade facilitation needs and priorities. Finally, technical assistance and capacity creation should help these countries implement the commitments resulting from the negotiations. According to the Review, the inclusion of trade facilitation in the WTO negotiations has pushed it further to the forefront of the development agenda of most developed countries. This has resulted in growing awareness about the need for capacity building in relevant areas.

Several countries have now created new trade and transport facilitation committees, numerous workshops are being held at various levels, regional, national and international and the new research papers on trade and transport facilitation are being published. Many of these activities have been made possible as a consequence of increased funding from donors and international financial institutions keen to support trade and transport facilitation.

UNCTAD, for example, as it is pointed out, has initiated a trust fund to help Geneva and capital-based negotiators from developing and least developed countries to better understand the possible scope and implications of the negotiated trade facilitation measures.

The trust fund aims at assisting WTO members from developing countries in analysing the issues at stake, defining their position regarding their treatment of trade facilitation within the context of WTO negotiations and formulating modalities for effective implementation of the negotiated commitments.

The activities of the major international players in the area of trade and transport facilitation thus, as the Review suggest, are coordinated through established mechanisms, including the Global Facilitation Partnership and the UN inter-agency arrangements.

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