ADMINISTRATIVE TRADE BARRIERS AND TRADE FACILITATION

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ADMINISTRATIVE TRADE BARRIERS AND TRADE
FACILITATION Predrag Bjelic, Ph.D Ivana Popovic
Petrovic, M.Sc.
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ADMINISTRATIVE BARRIERS AS OBSTACLES TO
INTERNATIONAL TRADE Golden age period after
1945 GATT eight rounds of multilateral trade
negotiations trade regime liberalisation Non-ta
riff barriers -traditional -technical -administ
rative
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Graph1 Evolution of Non-tariff Barriers by Broad
Category, in
Graph1 Evolution of Non-tariff Barriers by Broad
Category, in
Source UNCTAD Globalisation and Development
Fact and Figures Geneva, 2009, p.53
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• Administrative barriers to trade are a special
  category of non-tariff barriers
• Source administrative regulations and
  procedures with
• a restrictive effect on international trade
• AB are obstacles to international trade
• derived from differences in national legal and
  administrative regulations
• and administrative procedures that exporter had
  to carry out
• in order to put its products on a foreign market

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All administrative barriers, by their origin, can
be divided into two main groups Legal barriers
to trade Procedural barriers to trade. We have
to distinguish naturally occurring non-tariff
barriers, which are caused from differences in
national standards and inefficient customs
authorities clearance of goods, from politically
introduced measures that are intended to obstruct
import in country which introduce these
measures.
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The group of administrative barriers to trade is
consisted of many different measures and
procedures, some of them being Customs
valuation Application of Sanitary and
Phytosanitary measures Rules of
origin Special customs formalities Preshipment
inspection Procedures of Export licences.
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Main indicators The World Bank Trading across
borders Number of documents needed to obtain to
execute export or import in the economy Number
of days need for a procedure of export or import
in the economy Costs of exporting and importing
measured in USD per container.
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Table 1 Indicators of Foreign Trade
Administrative Procedures in Southeast Europe,
2008.
Economy Rank EXPORT EXPORT EXPORT IMPORT IMPORT IMPORT
Economy Rank Documents (number) Time (days) Cost (USD per container) Documents (number) Time (days) Cost (USD per container)
Albania 77 7 21 770 9 22 775
Bosnia and Herzegovina 55 6 16 1,070 7 16 1,035
Bulgaria 102 5 23 1,626 7 21 1,776
Croatia 97 7 20 1,281 8 16 1,141
Macedonia 64 6 17 1,315 6 15 1,325
Moldova 135 6 32 1,775 7 35 1,895
Montenegro 125 9 18 1,710 7 19 1,910
Romania 40 5 12 1,275 6 13 1,175
Serbia 62 6 12 1,398 6 14 1,559
Source World Bank, Doing Business 2009 Report,
Trading Across Borders Indicators, April 2009.
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Table 2 Trading across borders indicators for
Serbia
Indicators Indicators 2005 2006 2007 2008
Trading across borders rank - 51 58 62
Export Export Export Export Export Export
Documents to export number 9 6 6 6
Time to export days 32 11 12 12
Cost to export USD per container ... 1,240 1,240 1,398
Import Import Import Import Import Import
Documents to import number 15 8 6 6
Time to import days 44 12 14 14
Cost to import USD per container ... 1,440 1,440 1,559
() Data for 2005 are for Serbia and
Montenegro Source World Bank data from Doing
Business Report for 2006, 2007, 2008 and 2009.
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Removing administrative barriers Individual
national economies vs. multilateral and regional
initiatives
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TRADE FACILITATION INITIATIVES FOR THE REMOVAL
OF ADMINISTRATIVE TRADE BARRIERS
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The World Trade Organization as a Pillar of
Multilateral Regulation of Trade Facilitation
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The Trade Facilitation process is based on the
three articles in GATT from 1994. Article 5
which deals with freedom of transit for
goods, Article 8 concerned with fees and
formalities connected to importation and
exportation Article 10 which requires all trade
regulations to be clearly published and fairly
administered. The Trade Facilitationto
strengthen GATT articles
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TF topic of discussion in 1996 at the Singapore
Ministerial Conference. Doha Ministerial
Declaration adopted on 14th November 2001, the
Council for Trade in Goods should review,
clarify and improve relevant aspects of
Articles 5, 8 and 10 of the GATT 1994 and
identify the Trade Facilitation needs and
priorities of all members
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in July 2004 - July Package TF was put on the
negotiation agenda of the Doha round On 12th
October 2004 the Trade Negotiations Committee
established the Negotiating Group on Trade
Facilitation
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The Agenda of the Negotiating Group consists
of -Clarification and improvement of relevant
aspects of Articles 5, 8 and 10 of the GATT
1994 -Special and differential treatment for
developing and LDC -Identification of Trade
Facilitation needs and priorities -Concerns
related to cost implications of proposed
measures -Technical assistance and support for
capacity-building and -Working with and the work
of other relevant international organizations
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The initiative of the WCO - More than 50 years
of work important technical progress in
customs clearance and in developing the process
of administering and co-operation of custom
services of its member countries. International
Convention on the Simplification and
Harmonization of Customs Procedures also called
Kyoto Convention, adopted in 1973, revised in
1999.
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Trade Capacity Building The trade capacity -
human, institutional and infrastructure capacity
necessary for all subjects who participate
effectively in international trade. - more
efficient ports, road networks, automated
equipment for customs officials and significant
investments in infrastructure The sixth WTO
Ministerial Conference, Hong Kong (13 -18 12
2005) help for the project Aid for Trade -USA
grants of USD 2.7 billion a year by 2010 -EU EUR
2 billion per year by 2010 For trade related
development assistance
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Trade Transaction Costs (TTCs) costs arising
from supplying documents and information
required for border procedures or procedural
delays Direct incurred costs - expenses
relating to supplying information and documents
to the concerned authority and indirect
incurred costs - mostly results of procedural
delays.
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Table 3. Welfare effects from Trade Facilitation
measures
Key findings Key findings
Francois et al. (2005) Based on a CGE model exercise, the authors estimate that world annual income will increase by USD 72 billion (USD 151 billion) following a 1.5 (3.0) reduction in TTCs for goods trade. In proportion to national income, most of these gains would benefit developing countries. All regions or major trading nations would benefit except China in the 1.5 reduction scenario. All countries/regions would benefit in the 3.0, or full liberalisation
OECD Based on a CGE (GTAP Global Trade Analysis Project) model exercise, the authors estimate that a 1 reduction in TTCs for goods trade will bring annual gains of about USD 40 billion on a world basis. Most of these gains will benefit developing countries in relative terms. There are no losers. Estimates as share of GDP reveals that Middle East and North Africa (0.27), non-OECD Asia Pacific (0.25), OECD Europe (0.19) and Sub-Saharan Africa (0.18) would be particularly well off.
Wilson et al. (2002) Based on a CGE model execise for APEC economies, the authors estimate that a 5 reduction in TTCs for goods trade will raise APEC GDP by USD 154 billion, or 0.9.
Commonwealth of Australia (2002) In terms of annual increases in real incomes measured in 1997 prices, gains from reforms of customs procedures are estimated to be USD 0.4 billion in the Philippines, USD 2.3 billion in Singapore and USD 1.2 billion in Thailand.
UNCTAD (2001) A 1 reduction in the costs of maritime and air transport services in developing countries could increase global GDP by USD 7 billion (1997 value).
Source Michael Engman, (2009), The Economic
Impact of Trade Facilitation, in Overcoming
Border Bottlenecks The Costs and Benefits of
Trade Facilitation, OECD, p.85.
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TTCs -15 of the value of the traded goods The
arch is from 2 to 15. UNCTAD TF results
savings of 2-3 of the value of traded goods
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Table 4 Estimated benefits of Trade Facilitation
in different studies
Additional GDP growth (billions UDS) Share of Trade Facilitation benefits in overall liberalization
Dutch study 72 34
OECD study 76 65
APEC study 154 56
Source Anthony Kleitz (2003), Costs and
Benefits of Trade Facilitation, in Sharing the
Gains of Globalization in the New Security
Environment The Challenges to Trade
Facilitation, United Nations Economic Commission
for Europe, New York and Geneva, p. 65.