High-Level Meeting for the Euro-Asia Region on Improving Cooperation on Transit, Trade Facilitation and the 2030 Agenda for Sustainable Development

Delivered at High-Level Meeting for the Euro-Asia Region on Improving Cooperation on Transit, Trade Facilitation and the 2030 Agenda for Sustainable Development, Hanoi, Viet Nam

Your Excellency, Mr. Prime Minister,
Distinguished Delegates,
Ladies and Gentlemen,

Asian LLDCs face a number of critical barriers to both trade and transport connectivity. The 12 Asian LLDCs account for 0.7 per cent of global exports, while the entire Asia-Pacific region’s exports account for 40 per cent of the global total. The low share of global exports by LLDCs is a result of their lack of export diversification. For example the leading export sector in 6 Asian LLDCS is either hydrocarbon or minerals. As a result, LLDCs have had limited participation in Global Value Chains, or GVCs. Meanwhile, depending on the industry and measurement methods, the share of GVC-related trade stands at between 20 per cent and 60 per cent in the total trade of the Asia-Pacific.

In addition to these challenges, trade costs in Asian LLDCs are 50 per cent higher than the Asia-Pacific regional average. Complex and cumbersome trade and transit procedures account for a significant share of trade costs. For instance in Central Asian LLDCs, each transaction typically involves over 20 procedures and more than 20 public and private agencies. Reducing these types of costs and delays can be the difference between a business failing or thriving, and is indispensable to realizing the full benefits of enhanced transport infrastructure.

It is critical to tackle these issues comprehensively. Global trade grew by less than 3 per cent for the sixth consecutive year since 2010. Continued cyclical downturn in demand, rising trade protectionism, a deceleration in the expansion of Global Value Chain related trade and the structural rebalancing of China, a major regional player which will shape regional export dynamics and trends, will further complicate the future trade scenario for Asian LLDCs.

In this environment, swift action to land-link LLDCs is critical. Such action, however, must also be accompanied by concerted efforts to diversify LLDCs’ exporting capacities. Illustrating this need, 4 fuel exporting economies account for 87 per cent of the group’s total exports. Action in both of these areas will be aided by the development of multimodal transport networks and the soft infrastructure of investment in trade facilitation, as they have the combined potential to spur trade and open up access to regional and global import and export markets.

Over the years, LLDCs in our region have made ad-hoc progress in simplifying procedures. Building on this, further standardization and harmonization of procedures as well as adoption of next generation trade facilitation measures, such as cross-border paperless trade, must be a priority for LLDCs. Not only will such measures aid in increasing investments in optimal routes and in closing missing transport links of the Asia transport corridors, but they will also enhance the efficiency and speed of procedures and processing of trade documents.

Through the systematic promotion of regional economic cooperation and integration, ESCAP has adopted a multi-sectoral approach to dealing with the deep rooted structural challenges of LLDCs.

ESCAP’s work in the transport sector has opened up new opportunities for LLDCs. The 2015 Agreement on Dry Ports, which has been ratified by 12 countries, complements the Asian Highway and Asian Railway network agreements, which together are focused on addressing missing links and efficiently linking LLDCs to seaports. ESCAP has brought together LLDCs and transit countries to coordinate the land links technical standards, and to develop the Model Subregional Agreement on Transport Facilitation, the Model Bilateral Agreement on International Road Transport, and the Model Multilateral Permit for International Road Transport. More concretely, the Facilitation of International Road Transport Agreement signed in 2014, opened traffic for LLDCs in Central Asia to access China and the Russian Federation, and has connected LLDCs to Lian-yun-gang and St. Petersburg seaports. In 2016 China, Mongolia and the Russian Federation signed an agreement to allow Mongolia access to Tianjin Port, Beijing and Urumqi in China and Novosibirsk and Ulan-Ude in the Russian Federation. A Regional Network of Legal and Technical Experts on Transport Facilitation assists countries in fostering an enabling legal environment for efficient cross-border and transit transport. These transactions have enhanced cooperation between LLDCs and transit countries, as well as unlocked LLDCs’ trade potential with neighbouring countries and beyond through providing them with better sea access.

To further support the reduction in non-physical barriers and delays at border crossings, ESCAP has (i) developed the Time/Cost-Distance Methodology to measure and monitor performance of transit transport; (ii) promoted the Secure Cross-border Transport Model in South Asia to facilitate transit transport of landlocked Bhutan and Nepal through India; and (iii) published a Guide on Paperless Transit in 2015 to promote the use of electronic systems to efficiently clear paperwork for transit transport.

Complementing our work in the transport sector, ESCAP has also been engaged in promoting trade facilitation in the Asia-Pacific region. Our work in this area has received renewed impetus following the entry into force of the WTO Trade Facilitation Agreement (TFA) just two weeks ago. Implementation of the WTO TFA in our region could reduce trade costs of developing countries by as much as 11 per cent. Recognizing the important role that ICT can play in trade facilitation, ESCAP led the consultations and negotiations for the Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific. This new regional United Nations treaty, which was finalized in 2016, is a regional digital complement to the WTO TFA and will be open for signature by ESCAP members until 30 September 2017. Under this agreement, there will be an electronic exchange and mutual recognition of cross border paperless trade-related data and documents. The Agreement will also facilitate interoperability among national and subregional single windows and/or other paperless trade systems.

Drawing on South-South Cooperation and the United Nations Network of Experts for Paperless Trade and Transport in Asia and the Pacific (UNNExT), ESCAP is organizing UNNExT Masterclass on digital customs and single window for implementation of the WTO TFA in collaboration with WCO and Korea Customs. The UNNExT Business Process Analysis Guide to Simplify Trade Procedures provides LLDCs a simple and efficient method to identify bottlenecks to facilitate trade and design solutions, thereby helping to mainstream key outcomes of trade facilitation studies into policy formulation and action.

Since 2015, ESCAP and ADB have been supporting Bhutan and Nepal in developing Trade and Transport Facilitation Monitoring Mechanisms (TTFMMs), building their capacity to self-assess and prioritize trade facilitation reform and monitor implementation. The ESCAP-ADB TTFMM guide is basis for an upcoming UN/CEFACT Recommendation on trade facilitation monitoring to be released in the coming months. Streamlining issuance and exchange of sanitary and phyto-sanitary certificates is another case of close collaboration with IPPC, WTO and FAO. The ESCAP-World Bank trade costs database offers the key trade facilitation indicators in the Aid for Trade global reviews. The ESCAP-led UNRCs Global Survey on Trade Facilitation and Paperless Trade Implementation is also expected to support implementation of the WTO TFA as well as emerging regional and global initiatives on paperless trade and e-trade.

To conclude, harmonizing the over 400 bilateral agreements and 40 plus subregional agreements in Asia which relate to cross-border and transit transport is critical to consolidating fragmented frameworks that contribute to the current delays in the transit transport process. At the same time, global trade facilitation efforts must be harnessed effectively through operationalization of paperless cross border trade. Collaboration and cooperation to ensure multilateral and bilateral efforts conform to harmonized standards and guidelines will ensure cost savings and greater time efficiency.