The ITC has published The Policy Road Map for Export Success in an attempt to help governments and the private sector of developing countries gain an understanding of the factors that affect the international business environment. This is a continuation of my article on ITC’s Policy Road Map for Export Success. The first part can be found here.
Chapter 3 of the road map looks at elements that influence producer costs while Chapter 4 looks at factors that influence the price that is faced by consumers and user industries in the foreign market. Chapter 5 brings everything together to compile a final road map that attempts to give some idea of the timing for implementation of the various processes involved in international competitiveness and export success.
Here are additional key findings from the rest of the book:
Competitiveness requires an enabling environment for business, including political stability and functioning institutions. The judicial system needs to be transparent, respected and accessible. Contracts have to be enforceable. Registration of business and foreign investment should be facilitated.
Reforms to build international competitiveness often require reforms of tax systems and rates as stable, transparent and moderate corporate tax rates help to induce foreign investment and build competitiveness.
Physical infrastructure has been identified as one of the main areas needed to lift international competitiveness, especially for landlocked countries. While such projects tend to be long term, the construction process itself creates jobs and income for poorer workers, similar to economic stimulus packages.
There is a need to monitor developments in international trade and trade policy. Governments also need to take an active role in international trade negotiations at the multilateral and regional levels to advance their interests in opening markets for their export.
The book is a useful and comprehensive tool for policymakers to objectively look at their country’s export environment in order to build the proper roads to success. While much of this can be achieved through national efforts, developing countries would benefit from international support through organizations such as the ITC in the design and implementation of these trade programs.
The International Trade Centre (ITC) is the joint agency between the World Trade Organization and the United Nations. It is dedicated to helping SMEs enter global markets by expanding trade opportunities and fostering sustainable development. Having worked with SMEs for 50 years, the ITC is familiar with the unique needs of SMEs and has vast experience in improving their international competitiveness and connecting them with markets. Additionally, the ITC hopes to bridge the divide between policymakers and the private sector.
In an attempt to help governments and the private sector of developing countries gain an understanding of the factors that affect the international business environment, the ITC has published The Policy Road Map for Export Success. The publication outlines a specific set of guidelines and frameworks for any country wishing to build a national export strategy while taking into account their local setting.
The road map brings together research, analysis, and experience gathered by countries that have successfully implemented trade policy and regulations. Specifically, it provides a diagnostic methodology to determine the factors that affect competitiveness in order to assist in policy recommendations. While the guide is mainly targeted to policymakers, business and private sector organizations can also use it to assess the impact of regulations to the competitiveness of their business and identify areas where they can influence trade policy.
Here are some key findings from Chapters 1 & 2:
There needs to be a national diagnostic study that will serve as a blueprint for a country. This study covers questions that identify weaknesses of the domestic economy and gauges whether a country’s market is ready for foreign investment. There are questions on trade and infrastructure which point out national policies affecting the allocation of resources such as tariffs and non-tariff measures. The diagnostic study should also cover the political and institutional frameworks affecting the country.
To aid in export competitiveness, a national competitiveness council must also be formed in which the private sector has access to.
Exporters need to be responsive to trends in demand for their exports in foreign markets. Trade ministries should be able to provide analyses of market patterns.
International competitiveness is based on costs of production relative to those of their competitors as well as the services involved in getting their goods and services to the final consumer.
Starting from this May, ITC is planning to develop more job opportunities for people living in that region. Kayah State has been chosen by ITC because its travel and tourism sector is the least developed among all of Myanmar’s regions and yet the beauty of its natural landscape has much potential to attract tourists.
The ITC will support tourism-related technologies for hotels, restaurants, servicing and tour-guide services. As such, more job opportunities for regional people are expected.
The International Trade Center (ITC), which is technically supporting Kayah State, is one of the organizations under the World Trade Organization (WTO) and UNCTAD. The ITC is helping the travel and tour sector because they want to support technology not only in economics but also in the service industry.
Global Enabling Trade Index (2012), which measures institutions, policies and services to facilitate trade in economies. Viet Nam has become more competitive due to a better macroeconomic environment. Political and economic reforms have transformed Viet Nam from one of the poorest countries in the world to a lower middle-income country, and from a centrally planned economy into a more market-oriented economy through gradual integration into the global trading system. Nevertheless, there are significant transport infrastructure deficiencies and higher fees and surcharges on foreign firms that have affected export competitiveness.
Trade Policy and Market Access
Viet Nam has been a member of the WTO since 2007. In the process of economic restructuring and comprehensive international integration, the Vietnamese Government is strongly committed to the multilateral trading system and considers it the main focus of Viet Nam’s economic integration policies. Viet Nam’s average MFN applied tariff in 2012 was 9.5 per cent. Agricultural exports into the country face higher barriers (18.5 per cent) compared to non-agricultural exports (10.4 per cent). Viet Nam became a member of the Association of Southeast Asian Nations (ASEAN) in 1995, and granted referential treatment for goods to its ASEAN partners under the Common Effective Preferential Tariffs in 1996. As a member of ASEAN VietNam signed the ASEAN Trade in Goods Agreement that included provisions on the elimination of non-tariff barriers (NTB) further to WTO requirements and the 2006 ASEAN Work Programme on the Elimination of TBs (WTO 2013a).
According to the World Bank Logistics Performance Index (LPI) (2012) which measures countries’ trade logistics efficiency, Viet Nam is ranked 53rd out of 155. Viet Nam performs better than the averages of Asian and lower middle income countries except in logistics competence, which concerns the quality of logistics services. This finding is supported by the OECD Trade Facilitation Indicators (2013), which finds that Viet Nam outperforms in the areas of: involvement of the trade community and appeal procedures, while it needs to further improve in fees and charges and border agency cooperation. Export competitiveness has been seemingly affected by transport infrastructure deficiencies and increasingly higher fees and surcharges on foreign firms that dominate Viet Nam’s overseas shipping market. Compared to its regional competitors, Viet Nam has a relatively inefficient and expensive transport system. The road network consists predominantly of unpaved, narrow, local road sections; therefore, traffic is greatly affected by environmental and weather conditions. Moreover, according to the World Bank Doing Business Report (2013), exporting one standard container of goods takes 21 days and costs USD 610 in Viet Nam. However, it takes 11 days and USD 450 in Malaysia; 15 days and USD 585 in Philippines; and 14 days and USD 595 in Thailand. No significant business reform has been undertaken by Viet Nam for trading across borders since 2010 when it increased competition in the logistics industry as a part of the WTO membership reform program. (WTO 2013a; World Bank 2013).
Arancha González, Executive Director of International Trade Centre explained the purpose of the guide in the foreword: “One of the main outcomes of the World Trade Organization’s 9th Ministerial Conference in Bali, Indonesia, in December 2013 has been an Agreement on Trade Facilitation. Trade facilitation is important because it can have a major impact on bringing down trade transaction costs. This simple guide aims at explaining why the agreement has been proposed, what the main provisions of the agreement are, how it is intended to ease border controls for business, and how business can ensure its voice is heard in the way that governments implement the obligations and specific commitments they have undertaken in reaching the agreement.”
The Agreement on Trade Facilitation was adopted at the World Trade Organization’s 9th Ministerial Conference in Bali, Indonesia, in December 2013. This Agreement is the first major agreement to have been reached by WTO Member States since the conclusion of the Uruguay Round 20 years ago.
Barely was the ink dry on the Uruguay Round of multilateral trade negotiations concluded in 1993 than some WTO Member States were already thinking about the next round. Amongst the issues that featured in this thinking was trade facilitation. The uncertainty over how long it will take to clear a border crossing creates unpredictability, and adds cost to business that are eventually passed on to consumers in countries where consumers are least able to afford them. Uncertainty in supply chains also acts as a disincentive to potential business investors, who rely on efficient supply chains to minimise inventory costs. Companies have to tie up capital in extra holding costs above the levels that should be necessary. This is especially true for businesses in developing countries, which face these delays and uncertainties on a daily basis. Inefficient border procedures also add costs to the very authorities whose job it is to control the borders. Over-zealous inspection can actually delay revenue collection. When authorities are intent on maximizing
collection from import duties and other border taxes by checking every consignment that passes across the border, they cause queues to form at border points; with faster traffic-flows, revenues could be collected more efficiently post-clearance from compliant traders.
Trade facilitation aims at simplifying not only the documentation required to clear goods, but also the procedures employed by border agencies. Focusing on the biggest risks allows border agencies to speed up the flow of goods across the border, and increases the collection of duties. Trade facilitation has been described as a classic ‘win-win’ subject for developing and developed countries, since there should be no losers. Yet some developing countries have been concerned about the potential costs of implementing
trade facilitation commitments, and have sought commitments from developed countries and other donors to assist in the implementation process.
WTO members finally agreed to add trade facilitation to the Doha Development Agenda in 2004. The Agreement reached at Bali in late 2013 provides a framework of rights and obligations that should see reform of border procedures around the world, if legitimate requests from developing countries for technical assistance are met.
The agreement has the potential to be of particular benefit to traders in developing countries, who continually face lengthy and costly border delays. It will be important for business in developing countries to monitor its implementation in the countries with which they trade. This simple guide aims at helping business understand the obligations that developing countries have accepted – or will in due course accept, so that they can work in partnership with governments to arrive at outcomes that will benefit governments and traders alike.