DOING BUSINESS 2009 - JOHN J. HADDAD, Ph.D.

TRADING ACROSS BORDERS 45Table 9.2Electronic data interchange—the most popular reform feature in 2007/08Introduced or improved electronic datainterchange systemIntroduced or improved risk-based inspectionsImproved procedures at portsReduced number of trade documentsImproved customs administrationIntroduced or improved single windowImplemented border cooperation agreementsSource: Doing Business database.transmitted online. Traders can beginthe clearance process before goods arriveat the port. Because risk-based inspectionsapply, only about 2% of cargo isphysically inspected. It takes only 5 daysfor goods to leave the factory, clear customsand be on a vessel heading to itsdestination.Other countries might take note. Arecent study of 126 economies calculatesthe loss from export delays at around 1%of trade for each extra day. For perishableagricultural products the cost is nearly3% of the volume of trade for each day’sdelay. 2 Some nonagricultural productsare time-sensitive too, such as fashionapparel and consumer electronics.Another study finds that each extrasignature an exporter has to collect reducestrade by 4.2%. For high-end exportsthe reduction is nearly 5%. 3 Hightrade costs constrain participation inglobal trade for many countries, particularlyin Africa. One study finds thatpreferences under the tariff-free regimesfor the U.S. market (under the AfricanGrowth and Opportunity Act) and theEuropean Union (under the Cotonouagreement) are significantly underused. 4Delays and cumbersome proceduresin importing hurt economies too. ManyBotswana, Brazil, Colombia, Dominican Republic,El Salvador, France, India, Kenya, Madagascar,Mali, Mongolia, Morocco, Palau, Philippines,Rwanda, Senegal, Syria, Thailand, UruguayBrazil, Colombia, Dominican Republic, El Salvador,Haiti, Kenya, former Yugoslav Republic ofMacedonia, Madagascar, Mali, Mongolia,Philippines, Rwanda, SenegalBenin, Croatia, Djibouti, Ecuador, Egypt,El Salvador, Eritrea, Kenya, Liberia, Madagascar,Nigeria, UkraineDjibouti, Ecuador, El Salvador, France, Honduras,former Yugoslav Republic of Macedonia, Senegal,Sierra Leone, ThailandBelarus, Botswana, Egypt, Kenya, Liberia, formerYugoslav Republic of Macedonia, Rwanda,Senegal, ThailandEl Salvador, Korea, Madagascar, Mongolia,SenegalBotswana, Maliexports are part of global supply chains.To be part of these chains, producersdepend on timely delivery of importedinputs. Imported materials account fora third of China’s export value for electronicproducts, for example. They accountfor 55% of export value for Ireland,65% for Thailand. 5 Economies thatreduce delays can integrate more rapidlyin global trade.Who reformed in 2007/08?Thirty-four economies made it easier totrade in 2007/08. Making it possible tosubmit customs documents electronicallywas the most popular reform feature,done in 19 economies (table 9.2).Africa had the most reforms in easingtrade. Senegal was the top reformer,easing the administrative requirementsfor trading across borders. One bigchange: linking those involved in theclearance process—customs, customsbrokers, banks, the treasury, traders andseveral government ministries—throughan electronic single-window system.Traders no longer need to visit eachof these entities to obtain the requiredclearances. Instead, they can fill out asingle form. In addition, customs hasimplemented a risk-based inspection regimeand extended its operating scheduleby 4 hours.Reforms to ease trade were extendedto neighboring countries. Senegal signeda border cooperation agreement withMali, harmonizing trade documents betweenthe 2 countries. Once goods arecleared at Dakar, Malian traders need noadditional documents. And the numberof checkpoints between Dakar and Bamakohas dropped from 25 to 4. Tripsthat used to take 7–10 days now takeonly 1 or 2. Recognizing this, Maliantraders increasingly use the port of Dakarrather than Abidjan. Mali also abolisheda requirement for an official escort tothe border for all cargo trucks carryingexports—something that had inevitablymeant big delays.In Madagascar traders can nowsubmit customs declarations and paymentsonline, thanks to the MadagascarCommunity Network (figure 9.3).Sierra Leone abolished the requirementfor an export license for coffee. Rwandaextended the end of customs operatinghours at its borders from 6:00 p.m to10:00 p.m. Now fewer trucks stay at theborder overnight.Botswana licensed more customsbrokers, spurring competition and leadingto lower customs brokerage fees.Liberia cut the customs administrativefee from 3% of the cargo value to 1.5%.Kenya extended ports’ operating scheduleto 24 hours. In addition, postclearanceaudits allow some traders to fasttracktheir cargo for clearance. Nigeriais beginning to reap the rewards fromconcessioning its container terminals toprivate operators: clearing goods at theport of Apapa now takes 2 days less.In Latin America, El Salvador madeit easier to trade for the second year running.It set up a single window betweencustoms, government ministries and taxand social security authorities. That cutthe number of documents traders needto submit by 2. Guatemala reduced theshare of goods that are physically inspectedfrom 54% to 33%, thanks toongoing implementation of its risk man-(c) The International Bank for Reconstruction and Development / The World Bank