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Borders Without Barriers: Facilitating Trade in SASEC Countries

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Borders Without Barriers: Facilitating Trade in SASEC Countries BORDERS WITHOUT BARRIERS FACILITATING TRADE IN SASEC COUNTRIES EDITED BY: MARWA ABDOU • RONALD BUTIONG • UTSAV KUMAR • BEN SHEPHERD DECEMBER 2019 BORDERS WITHOUT BARRIERS FACILITATING TRADE IN SASEC COUNTRIES EDITED BY: MARWA ABDOU • RONALD BUTIONG • UTSAV KUMAR • BEN SHEPHERD DECEMBER 2019 Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 2019 Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 8632 4444; Fax +63 2 8636 2444 www.adb.org Some rights reserved. Published in 2019. ISBN 978-92-9261-868-1 (print), 978-92-9261-869-8 (electronic) Publication Stock No. TCS190523-2 DOI: http://dx.doi.org/10.22617/TCS190523-2 The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of this license. For attribution, translations, adaptations, and permissions, please read the provisions and terms of use at https://www.adb.org/terms-use #openaccess. This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material. Please contact [email protected] if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo. Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda. Notes: In this publication, “$” refers to United States dollars. ADB recognizes “Ceylon” as Sri Lanka and “Korea” as the Republic of Korea. Data and information in this publication are generally as of April 2019. Cover design by Edith Creus. All photos are by ADB. iii Contents Tables, Figures, and Boxes iv Foreword vii Acknowledgments ix Abbreviations x 1 Introduction 1 Marwa Abdou, Ronald Butiong, Utsav Kumar, and Ben Shepherd 2 Trade Facilitation in SASEC Countries: What’s at Stake 14 Marwa Abdou, Utsav Kumar, and Ben Shepherd 3 SASEC Countries’ Performance in Trade Facilitation— 49 A Comparative Perspective Marwa Abdou, Utsav Kumar, and Ben Shepherd 4 Bangladesh 95 Mashuk Al Hossain 5 Bhutan 123 Phuntsho Wangdi 6 India 152 Satish Reddy 7 Nepal 189 Shyam Prasad Dahal 8 Sri Lanka 217 Utsav Kumar, Leticia de Leon, and Satish Reddy 9 ADB’s SASEC Program Trade Facilitation Assistance: Status, 260 Progress, and Future Directions Tito Tranquilino 10 Conclusion and Way Forward 306 Marwa Abdou, Ronald Butiong, Utsav Kumar, and Ben Shepherd Index 316 About the Contributors 330 iv Tables, Figures, and Boxes Tables 2.1 Summary of the Economic Effects of Tariffs and Poor Trade 21 Facilitation 2.2 Operative Provisions of the Trade Facilitation33 Agreement 3.1 World Bank Doing Business Indicators 54 3.2 Trade Facilitation Measures in the United Nations Global 63 Survey on Trade Facilitation and Paperless Trade Implementation 3.3 LPI Rankings of SASEC Countries and Regional Comparators, 76 2018 3.4 Performance of SASEC Countries and Regional Comparators, 79 by LPI Indicator Group, 2007–2018 3.5 OECD Trade Facilitation Indicators 84 3.6 Score on OECD’s TFI for SASEC Countries and Regional 86 Comparators, 2012–2017 4.1 Bangladesh’s Category Commitments Under the Trade 107 Facilitation Agreement 5.1 Overall and Bilateral Balance of Trade in Goods, Excluding 124 Electricity (Nu million) 5.2 Bilateral Balance of Trade in Goods with SAARC Countries, 126 Excluding Electricity (Nu million) 5.3 Border Agencies in Bhutan—Roles, Responsibilities, and 130 Regulatory Framework 5.4 Prioritizing Trade Facilitation Agreement Articles for Reforms138 6.1 Key Cross-Border Regulatory Agencies in India154 6.2 Criteria for Authorized Economic Operator 160Classification 6.3 India's Category Commitments Under the Trade Facilitation 169 Agreement 6.4 Trade Facilitation Agreement Measures Under the National 183 Trade Facilitation Action Plan 6.5 Examples of Remedial Measures Under the NTFAP 185 to Address Constraints 7.1 Implementation Status of Trade Facilitation Agreement 199 Measures in Nepal 8.1 Sri Lanka's Category Commitments Under the Trade 227 Facilitation Agreement 8.2 Important Milestones in the Implementation of Trade 230 Facilitation Agreement by Sri Lanka Tables, Figures, and Boxes v 8.3 Assistance Required for Implementation of Sri Lanka’s 231 Category C Notifications 8.4 Template for Assessment of the Risk Management246 System 8.5 Type of Authorized Economic Operator Programs in the 249 European Union 8.6 Benefits of Different Authorized Economic Operator 249 Programs in the European Union 9.1 ADB Priorities for SASEC Trade Facilitation274 9.2 Trade Facilitation Priority Projects and Country Breakdown 276 ($ million) A9.1 Key Outcomes of SASEC Customs Subgroup Meetings, 281 2013–2017 A9.2 SASEC Trade Facilitation Training Programs, 2017–2018288 A9.3.1 SASEC Trade Facilitation Projects in Bangladesh 296 A9.3.2 SASEC Trade Facilitation Projects in Bhutan 299 A9.3.3 SASEC Trade Facilitation Projects in India 300 A9.3.4 SASEC Trade Facilitation Projects in Maldives 302 A9.3.5 SASEC Trade Facilitation Projects in Myanmar 304 A9.3.6 SASEC Trade Facilitation Projects in Nepal 305 Figures 1.1 Stakeholders and Beneficiaries of Trade Facilitation7 2.1 Different Meanings of Trade Facilitation 15 2.2 Implementation Schedule of TFA Commitments for WTO 34 Developing and LDC Members 2.3 Status of TFA Notifications of SASEC and Selected Asian 35 Economies 2.4 Trade Facilitation Indicators by Income Group—Average 37 and Range, 2017 2.5 Share of LPI Respondents Indicating that Service Quality 38 is “Good” or “Very Good,” 2018 2.6 Share of Shipments Meeting Quality Criteria, SASEC WTO 40 Members and Selected Asian Economies, 2018 2.7 LPI Score versus Share of Parts and Components in Total Exports 41 3.1 Average Trade Costs of SASEC (2003=100), 1995–2015 51 3.2 Average Trade Costs of ASEAN6 (2003=100), 1995–2015 52 3.3 Trade Costs of SASEC Countries (2003=100), 1995–2015 53 3.4 Ease of Doing Business Ranking for SASEC Countries, 2019 56 3.5 Trading Across Borders Ranking for SASEC Countries, 2019 56 3.6 Time to Comply with Documentary Requirements to Export 58 and Import, SASEC Countries and Regional Comparators, 2019 vi Tables, Figures, and Boxes 3.7 Cost to Comply with Documentary Requirements to Export 59 and Import, SASEC Countries and Regional Comparators, 2019 3.8 Time to Comply with Border Requirements to Export and 60 Import, SASEC Countries and Regional Comparators, 2019 3.9 Cost to Comply with Border Requirements to Export and 61 Import, SASEC Countries and Regional Comparators, 2019 3.10 General Trade Facilitation Measures—Performance 66 by Indicator Group, 2019 3.11 SASEC versus ASEAN6 Performance—General Trade 68 Facilitation Measures, 2019 3.12 SASEC versus ASEAN6 Performance—Paperless Trade, Cross- 69 Border Paperless Trade, and Transit Facilitation Measures, 2019 3.13 Implementation of Trade Facilitation Measures—SASEC 71 and Regional Comparators, 2019 3.14 LPI Performance of SASEC Countries, 2007–2018 74 3.15 Performance of SASEC Countries by LPI Component 77 3.16 Average LPI Scores for SASEC Countries and Regional 78 Comparators, 2007–2018 3.17 SASEC Countries’ TFI Performance, 2012–2017 90 3.18 SASEC Countries’ TFI Performance for Indicators E–H, 91 2012–2017 3.19 SASEC Countries’ TFI Performance for Indicators D and K, 92 2012–2017 3.20 Average TFI Performance—SASEC versus ASEAN6 93 8.1 Role of Feedback Loop in Improving the Risk Management 246 System 10.1 Borders without Barriers—Trade Facilitation Priorities 312 in SASEC Countries Boxes 2.1 Did Asia-Pacific Economic Cooperation Trade Facilitation 17 Action Plans Deliver the Goods? 2.2 The Main Data Sources on Trade Facilitation 23 2.3 What Can SASEC Countries Gain from Improving Trade 26 Facilitation? 2.4 Is Trade Facilitation a “Good Deal” for Developing Economies? 30 6.1 Benefits at Different Tiers of the Authorized Economic 160 Operator Program in India 8.1 Prioritized Recommendations for Action—SPS and TBT 253 National Diagnostic Study in Sri Lanka 10.1 SASEC Priorities in Trade Facilitation 312 vii Foreword One key feature of international trade in recent years has been the rise of multistage production networks—across regions and across the globe— in which firms fragment manufacturing processes by locating individual production stages in the countries where they can be performed at least cost. Trade facilitation will have an important role to play in the movement of goods all the way from the factory or warehouse gate to the end user. Trade facilitation can be defined in multiple ways, including focusing exclusively on border procedures, establishing standards and conformance requirements, and improving logistics and strengthening infrastructure to move goods domestically and across borders.
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