Trends in International Trade:
Key Issues for the World Bank
and Customs
Paul Brenton
International Trade Department
World Bank
OUTLINE

What is the World Bank ?
 What do we do on trade? Research,
advocacy, advice, lending.
 Why are we interested in Customs and trade
facilitation ?
 Key trends in trade that will shape our work
and the work of Customs
What is the World Bank?

Global co-operative owned by its 184 shareholders or
member countries – Run by a Board of Governors

The Bank is a UN Specialized Agency

Development agency that provides policy advice, TA,
knowledge sharing and development finance

11254 staff in 111 countries

In FY 04 - IDA - $9 b – 158 projects - 62 countries

In FY 04 - IBRD - $11 b – 87 projects – 33 countries
Trade can be a powerful engine of
growth and poverty reduction
Levers for Intervention
 Before the border (Improving overseas market
access, reforming domestic trade policy)
At the border (Trade Facilitation – Regulatory and
procedural harmonization, simplification and
institutional reform)
 Behind the border (Improving the investment
climate, improving trade and transport
infrastructure, dealing with supply side
constraints)

WHAT IS THE BANK
DOING ON TRADE?

Research, analysis and advocacy
 Elevating Trade to a prominent role in Country Policy
Dialogue
 Established Trade Department including Trade Logistics
Group
– Bringing together Trade Policy, Infrastructure and
Customs/Border Management teams

Stepping up trade–related operations
 Aid for trade?
Why is the World Bank
interested in Customs?

Customs plays a critical role in trade facilitation. The
costs of crossing borders now seen as a more significant
barrier than tariff rates.

Customs performs other important functions such as
revenue collection, community protection and,
increasingly, national security

Customs can act as an effective integrator to ensure all
trade and border related agencies work together to
simplify and harmonize systems and procedures

The Bank believes productive investment in Customs
modernization delivers sound development results
More efficient customs are
associated with more trade
Ratio of total trade to GDP, 90 countries
%
200
150
100
R2 = 0.1354
50
0
0
5
10
15
20
25
Days through customs, imports
Source: WBES and Global Trends as cited in Subramanian, et al 2003
30
35
What is the Bank doing on
Customs?

Stressing importance of Customs in policy dialogue
 Established the Trade Logistics Group
 Building a broader constituency for reform
• Global Facilitation Partnership for T & T, Diagnostic Trade
Integration Studies, Trade and Transport Facilitation
Audits, Trade Facilitation Seminars
 Coordination of donors & international organizations
 Customs Modernization Handbook
 Stepping up operations
Bank Operations - Some current
examples:


Russian Customs Modernization Project ($ 140 m)
Vietnam Customs Modernization Project ($ 75 m)
 Tanzania Tax Administration Project ($ 70 m - WB,
UNCTAD, DANIDA, DFID, EU, FINNIDA, SIDA &
IMF)
 Cambodia Trade Facilitation and Competitiveness
project ($ 10 m - WB, EU & AUSAID)
 EAC Trade Facilitation Project ($30 m)
Despite improvements in trade policies,
many Countries Have Been Left Behind

The experience of individual countries varies
greatly

43 countries had no expansion of exports between
1980 and 2000

Increase in market share mainly associated with
today’s Middle Income Countries

Much growth in South – South trade
Key issues in Bank research
and analysis on trade
 Global
trade agenda
 Regionalism
 Asia
 Standards
 Speed with security
Global integration

Technological change and splitting up of
production chains will continue to drive
greater trade and capital flows. Labour?
 Global companies seeking out lowest cost
locations
 More countries are seeking to integrate into
global markets
 The global market enacts a high price on
those not using competitively supplied
inputs
“Success” in Doha Round will still leave
much to be done at global level
Possible gains in real income in 2015 as percent of full multilateral liberalization for
LMICs (excluding services and trade facilitation)
100
90
Full
80
70
60
50
40
30
Tiered cuts w/ SDT
w/ 2% exclusions
20
10
0
Low & Middle Income
Tiered SDT ~ 70% in HICs and 40 in LMICs in ag, plus NAMA cuts of 50% in HICs, 33 in LMICs;
and 0 in LDCs
Regional Trade Agreements are
proliferating…
Annual number
30
25
20
Annual number
15
10
5
0
1958
1969
1976
1984
1989
1994
1999
2004
Regional Trade Agreements are
proliferating…
Annual number
Total in force
30
300
25
250
Cumulative in force
20
200
New agreements annually
15
150
10
100
5
50
0
0
1958
1969
1976
1984
1989
1994
1999
2004
South-South RTAs predominate in
number, but not in trade covered
Number of RTAs
Percent of World Trade Covered
250
35
30
200
25
SouthSouth
150
SouthSouth
20
15
100
US
10
US
50
5
European
Union
0
1990
1996
European
Union
0
2002
1990
1996
2002
RTAs can help address trade
facilitation issues

RTAs can offer a mechanism to deal with
cross-border issues:
– Customs simplification, cooperation,
harmonisation…….
– Transport cooperation, harmonisation of
regulations, insurance….

But, many RTAs have yet to deliver better
trade facilitation
Proliferation of PTAs is leading to a
complex global trading system
American
and Asian Spaghetti
“
Bowl
-
FTAA
Hong Kong
PR China
Taiwan
Canada
Brunei
Costa
Rica
Cambodia
CACM
Panama
El Salvador
Korea
Guatemala
Honduras
Nicaragua
Thailand
Malaysia
Japan
Mercosur
Paraguay
Argentina Brazil
USA
Uruguay
Philippines
Mexico
Myanmar
Bolivia
ASEAN
Singapore
Colombia
New Zealand
Chile
Venezuela
Laos
Ecuador
Indonesia
Australia
Peru
Vietnam
FTAA
APEC
APEC
Papua New Guinea
Intra -Americas in force
Intra -Asia -Pacific in force
Intra -Asia -Pacific signed
Trans -Pacific signed
Source: Devlin and Estevadeordal (2004)
Russia
Andean
Community
Bahamas
Dominican
Republic
CARICOM
Dominica Trinidad & Tobago
Suriname
Grenada Barbados
Jamaica St. Vincent & Grenadines
Guyana Antigua & Barbuda
St. Kitts & Nevis Belize
Haiti St. Lucia
Overlapping African agreements…
AMU
Nile River Basin
COMESA
ECCAS
IGAD
CEMAC
Somalia
Sao Tomé & Principe
Algeria
Libya
Morocco Mauritania
Tunisia
ECOWAS
Conseil de
L’Entente
Ghana
Nigeria
Egypt
Cameroon
Central African Rep.
Gabon
Equat. Guinea
Rep.Congo
Chad
Cape Verde
Gambia
Djibouti
Ethiopia
Eritrea
Sudan
Burundi*
Rwanda*
DR Congo
Benin
Togo
Cote d’Ivoire
Guinea-Bissau
Liberia
Sierra Leaone
Niger
Burkina Faso
Mali
Senegal
EAC
Guinea
Tanzania*
Malawi*
Zambia*
Zimbabwe*
SACU
WAEMU
Mano River
Union
Kenya*
Uganda*
Angola
CLISS
AMU:
Arab Maghreb Union
CBI:
Cross Border Initiative
CEMAC: Economic & Monetary Community of Central Africa
CILSS:
Permanent Interstate Committee on Drought Control in the Sahel
COMESA: Common Market for Eastern and Southern Africa
EAC:
East African Cooperation
ECOWAS: Economic Community of Western African Studies
IGAD:
Inter-Governmental Authority for Government
IOC:
Indian Ocean Commission
SACU:
Southern African Customs Union
SADC:
Southern African Development Community
WAEMU: West African Economic & Monetary Union
South Africa
Botswana
Lesotho
Mozambique
SADC
Mauritius*
Syechelles*
Comoros*
Madagascar*
Namibia*
Swaziland*
Reunion
*CBI
IOC
Different agreements with different rules of
origin add complexity
Proliferating trade agreements with differing
ROO further complicate customs procedures
•clearance of preferential imports requires more manpower
•overlapping rules of origin cause particular difficulties for customs
Need Clear and consistent ROO with minimal
costs
a) to firms in adhering to them and
b) to customs in implementing them
How about satisfying either a 10% value added requirement OR
change of tariff classification (6 digit HS)
Examples of Complex and Restrictive ROO
EU imports of Fish
To receive preferences under the GSP
•The vessel must be registered in the beneficiary
country or in the EU
•The vessel must sail under the flag of the beneficiary
or of a member state of the EU
•The vessel must be at least 50 per cent owned by
nationals of the beneficiary country or the EU
•The master and the officers must be nationals of the
beneficiary country or an EU member
•At least 75 per cent of the crew must be nationals of the
beneficiary country or the EU.
The Rise of Asia
East Asia’s share of worlds (non-oil) imports has
risen from 2.7% in 1980 to 10.6% in 2004
 East Asia was the key source of export growth for
Africa in 1990s
 Opportunities and challenges

– Tremendous mass of fast growing demand (emerging
tri-polar world): key to improved market access is
global negotiation
– Increasing competition in export and domestic markets:
Need to distinguish unfair from effective competition.
(Perceived) Lack of border control can undermine
efforts towards trade liberalisation.
The Rising Importance of NonTraditional Exports…….
Figure 3 : Changing Structure of Developing Country Agro-food
Exports
Share in Total Agro-food
Exports
100%
Other
Other
80%
C ereal,o il seeds,
feed
C ereal,o il seeds,
feed
60%
High value
commodities
High value
commodities
40%
20%
M ajo r traditio nal
co mmo dities
M ajo r traditio nal
co mmo dities
Other
C ereal,o il seeds,
feed
High value
commodities
M ajo r traditio nal
co mmo dities
0%
80/81
90/91
03/04
…brings greater demands in
terms of standards….

Competitiveness depends on capacity to
satisfy both mandatory (SPS/TBT) and
private standards in export markets

Standards in developed countries are
shaping expectations of consumers in
developing countries
…and increased need for
timeliness to be competitive.





Increasing importance of air transport (30% of US
imports now come by air)
For many products, globalisation means that to be
competitive exporters require access to imported
inputs at world prices
Increasing impetus to hold lower inventories
Security – secure trade is now as important as free
trade, and the two need not be mutually exclusive
Particular problems for land-locked countries
Still much to be done to improve trade
facilitation in developing countries
Average number of days to clear customs for sea cargo
Developed
East Asia and Pacific
Latin America and Caribbean
Africa
South Asia
India
Bangladesh
0
2
4
6
8
10
12
Source: International Exhibition Logistics Associates, based on a sample of countries in each
region as cited in World Bank Global Economic Prospects 2004; country data from World Bank
country surveys
14
Conclusions

Increasing emphasis on customs as a border
management institution to facilitate timely
and secure trade
 Bank a key source of research and
operational experience on trade issues
 Trade facilitation essential element of
Bank’s agenda on trade and poverty
reduction