Logistics & Time as a Trade Barrier

Transcription

1 Logistics & Time as a Trade Barrier OECD-UNCTAD Workshop on Services Geneva, 27 June 2006 Dale Andrew and Enrico Pinali Trade Directorate, OECD 1

2 Overview Time matters for trade flows Case studies Cut flowers in Kenya Textiles in Bulgaria and the Dominican Republic Econometric analysis Probability to export Time and export volumes Policy implications Trade Facilitation Transport services and the DDA 2

3 Time matters for trade flows Consumer goods Uncertainty of demand Depreciation Spoilage Obsolescence Interest and storage costs Intermediate goods Time variability disrupts the production process 3

4 Cut Flowers Value chain of a medium producer in Kenya About two thirds of costs is represented by transport and marketing, which consist mainly of logistics services Source: World Bank. 4

5 Cut Flowers Key issues for competitiveness Cut flowers require the availability of reliable air transport services and on-time performance State of freshness at the time they reach the market is critical for market positioning Refrigerated trucks and good quality roads are essential Packaging, design and presentation as well as appropriate labeling are needed to enter markets 5

6 Textiles in Bulgaria and the Dominican Republic Buyers in the EU and in the US are willing to source from producers with higher costs if they can guarantee shorter lead times Proximity favours shorter lead time Customs clearance delays and poor coordination across border agencies are detrimental for competitiveness 6

7 Textiles Border delays undermining competitiveness Overland transport and border delays for selected routes in South Eastern Europe Source: World Bank. 7

8 Econometric analysis Empirical evidence of the gains of more efficient logistics is mounting Literature focuses on trade impact of lower transport costs (the financial and time dimension) Work horse model is the gravity model Trade as a function of GDP, distance and other geographical and institutional variables And a number of (additional) proxies for transport costs, time and logistics Estimates range between 5-20% increase in trade volumes for a 10% decrease in costs Time also affects the probability that exporters will enter the market at all 8

9 Probability to export Intermediates to Australia Intermediates to Japan probability to export probability to export days for exports days for exports Clothing to UK Electronics to UK probability to export probability to export days for exports days for exports 9

10 Who would benefit the most from reform? Countries with probabilities below, but not too far below 0.50 would benefit the most Albania, Belarus, Kenya, Romania, Ukraine, Tanzania and Vietnam are examples of such countries If Ukraine reduced time for exports from its current 34 days to 20 days, probability to export electronics to Japan would increase from 0.32 to 0.51 If Uganda reduced time for exports from its current 58 days to 30 days, probability to export industrial intermediate products to Japan would increase from 0.27 to 0.51, and probability to export clothing to the UK would increase from 0.36 to

11 Time and export volumes % increase in exports following 10% reduction in time for exports Total Intermediate Electronics 5 0 Australia Japan UK 11

12 Policy implications Measures to reduce lead time and time variability in poor countries Trade facilitation Liberalisation and re-regulation of transport and related logistics services Benefits from progress in one area may be reduced if lack of progress in the other 12

13 Transport services and the DDA Notwithstanding the gains of more efficient transport services They remain among the sectors most protected from international competition Multilateral progress under the GATS has so far been modest New possibilities for progress in DDA negotiations in light of unilateral and bilateral reforms Recent call by a number of WTO Members for a holistic approach to liberalisation Most transport services (including air segments) Services auxiliary to all modes of transport Additional commitments on competition measures (and on trade facilitation) Plurilateral requests 13

14 Thank you TD/TC/WP(2006)3/FINAL 14