Overcoming Border Bottlenecks

The Costs and Benefits of Trade Facilitation

image of Overcoming Border Bottlenecks

International trade has grown rapidly in recent years, thanks in part to the progressive reduction of tariffs and quotas through successive rounds of multilateral trade liberalisation. However, this progress brings to light one of the remaining weak links of international trade, which prevents countries from drawing full benefits from the advantages of open global markets: border bottlenecks generated by inefficient, outdated and complex trade procedures and formalities. This book brings together six studies that examine to what extent and in which ways the costs of inefficient border processes influence trade and investment flows, how institutional and political factors affect the design and implementation of efficiency-enhancing measures, whether the expected benefits of these measures enough to justify the expenses of putting them in place, and whether the expenses involved are within the reach of developing and least developed countries, especially in light of other development priorities.

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The Role of Automation in Trade Facilitation

This chapter analyses customs automation, one of the most powerful tools for increasing customs efficiency. It focuses in particular on benefits and implementation costs. It aims to contribute to discussions in the WTO Negotiating Group on Trade Facilitation. Cost estimates for customs-related lending projects show that the costs of implementing, maintaining and operating automated customs systems are substantial. However, the very great majority of WTO members have already implemented such systems and past experience shows that, over time, the financial benefits have very often exceeded costs. Among the various lessons learned from successful implementation of automated customs systems, two are particularly highlighted. First, automation should not be considered a panacea for facilitating trade; and second, commitment and financial sustainability are prerequisites for successful customs modernisation involving automation.

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