Investment and Trade

Facilitation

Presented to: Prof. Navdeep Kaur

Presented by: Nainika Gupta
(Roll no.: 16)
 What is Investment?
In general, to invest is to allocate money (or sometimes
another resource, such as time) in the expectation of some
benefit in the future.
Investment – domestic and foreign – results in jobs and
incomes, brings new technologies and knowhow,
increases productivity
 What is Investment?
• Inward trade flows provide goods and services that are
essential to wellbeing and development and provide inputs for
export related industries
• Outward trade flows generate incomes and are essential to pay
for goods and services from abroad
• Economic integration: in an increasingly globally connected
world, maximising the economic connections with the world
allows participation in new economic opportunities
• Competitiveness: Competitive, efficient markets are essential
to maximising opportunities for trade and investment
• Inclusive growth: FDI isn’t enough. Need to ensure that
benefits are shared
 Foreign direct investment is the largest source of
development finance

FDI, remittances and ODA to developing economies, 2000-2012

(Billions of dollars)

2
 Different types of investment not only generate different socio-
economic impacts but also different trade patterns

Natural
resource-
seeking

Strategic- Market-
asset seeking
seeking

Efficiency-
seeking

5
 Trade liberalization: a key factor for the expansion of efficiency-seeking
investment & international production

Source: Baldwin 2011

6
 Investment policy covers the entire investment cycle

• Elimination of Vision and Strategy

performance
requirements • Investment promotion
• Opening FDI in • Locational incentives
services
• Behavioral
incentives Investment Attraction
Linkages & Spillovers
• Non-equity modes
of investment
(NEM)

• Upgrading investment
protection guarantees
Investment Retention & Investment Entry &
• Mechanizing Protection Establishment
investment retention
and confidence • Eliminating barriers to
• Improving investment FDI
aftercare • Streamlining entry
procedures

7 9
Why Trade Facilitation?
Overarching Rationale

Globalization and the desire to be

part of global networks

Attracting private investment is a

key objective for developing
countries

Faster, leaner & responsive supply

chains essential for competitiveness

Enhanced trade

Governments and private sector energized to

improve trade logistics services
What is trade Facilitation?
No clear definition of trade facilitation.
Facilitate: To make easy or easier
It is basically a set of actions by public and
private sector to create a trade environment which
is more predictable, secure and cost efficient.
Formal Definition: “The simplification,
standardization and harmonization of procedures
and associated information flows required to
move goods from seller to buyer and to make
payment “
 What is trade Facilitation?
TRADE FACILITATION

Simplification Harmonisation Standardisation

Process of eliminating Alignment of national Process of developing

all unnecessary procedures, operations internationally agreed
elements and and documents with formats for practices
duplications in international and procedures,
formalities, processes conventions, standards documents and
and procedures and practices. information.
 The Trade Transaction

GOODS

S INFORMATION
B
PAYMENT
Data exchange
in International Trade
Purchase Exportation Importation • 20 actors;
• > 200 data
Bill of lading, Documentation
Vessel Booking Request elements;
Confirmed Line of Credit
Vessel Booking Confirmation
• Manual procedures;
Release/Approval
Importer’s Exporter’s Bill of Lading • Multiple data
Bank Bank
Rated Bill of Lading Arrival Notice
systems;
Original B/L, Import
Fund Transfer
Invoice, PO, Terminal
• > 30 documents or
Dock Receipt Ocean Carrier
Packing List Operator messages.
Demurrage
Line of Credit guarantee &
Proforma Invoice payment Cargo
LC Export Status
Confirmation Terminal
Purchase Order Operator
Customs House Broker
Importer Exporter
Dock receipt Pick-up &
Import Delivery Order
Proforma Invoice Pick-up & Delivery Order Docs
Letter of Release/Hold
Instruction Notice Cargo Status Inland
Invoice, PO Freight Forwarder / Carrier
Inland
NVOCC
Carrier
Manifest Customs ( Import )
Shipping & Funding Detail Dock receipt
Export Declaration
Marine Insurance Shipping & funding detail Vessel Manifest
Company AES Export Declaration
Port
Converted Vessel
Customs (Export)
Manifest
Importer Notice
INTERNATIONAL TRADE
TRANSACTION PROCESS

BUY SHIP PAY

Prepare For Prepare For

Export Transport Import
Export Import

INVOLVES
Commercial Transport Regulatory Financial
Procedures Procedures Procudures Procedures

• Establish • Establish Transport • Obtain Import/Export • Provide Credit

Contract Licences etc
Contract • Collect,Transport • Provide Customs
Rating
• Order Goods • Provide
and Deliver Goods Declarations
• Advise On • Provide Waybills, • Provide Cargo Insurance
Delivery Goods Receipts Declaration • Provide Credit
• Request Payment • Apply Trade Security • Execute Payment
Status reports
Procedures • Issue Statements
• Clear Goods for
Export/Import
 Benefits of Trade Facilitation
 If all countries reduce supply chain barriers halfway to global best practice (i.e. Singapore),
global GDP could increase by 4.7% or US$ 2.6 trillion and world trade by 14.5% or US$
1.6 trillion, far outweighing the benefits from the elimination of all import tariffs (WEF).

 Each additional day that a product is delayed prior to being shipped reduces trade by more
than 1 percent.

 Improving the quality of physical infrastructure increases exports by more than 10 percent.

 Adopting electronic documentation for the air cargo industry could yield US$ 12 billion in
annual savings and prevent 70-80% of paperwork-related delays.

 Full implementation of the Trade Facilitation Agreement is tentatively estimated to result in

global gains of $210 billion per year through reductions in time spent at customs, with a
more certain lower bound estimate of $101 billion, These estimates range from $16 to $33
annually per resident of WTO member countries.

Source: Hillberry, Russell, & Zhang, Xiaohui. (2015). Trade facilitation policies and customs
performance: An evaluation of the Bali agreement. World Bank Group Policy Research
Working Paper Series. February 2015
The Trade Facilitation Agreement
WTO members concluded negotiations at the 2013 Bali
Ministerial Conference on the landmark Trade Facilitation
Agreement (TFA), which entered into force on 22
February 2017 following its ratification by two-thirds of
the WTO membership.
The TFA contains provisions for expediting the movement,
release and clearance of goods, including goods in transit.
It also sets out measures for effective cooperation between
customs and other appropriate authorities on trade
facilitation and customs compliance issues.
It further contains provisions for technical assistance and
capacity building in this area.
Objectives of WTO-TFA
Objectives Benefits for Traders Benefits for
Government
Transparency + Fairness Predictability Better compliance
Reduced time/costs More informed decisions
Creation of mechanism of
accountability for the government

Better Governance Reduced costs Better compliance

Reduced delays More effective government
Reduced complexity More efficient government

Modernized Border Reduce clearance times and costs Align with modern business
Procedures and Controls practice
More effective government
More efficient government
Implementation of TFA
Developed countries have committed to apply the substantive
portions of the TFA from the date it takes effect.
Developing countries and least-developed countries (LDCs),
meanwhile, will only apply those substantive provisions of the TFA
which they have indicated they are in a position to do so from the
date of the TFA's entry into force. LDCs were given an additional
year to do so. These commitments are set out in the submitted
Category A notifications.
Category B notifications from developing countries and LDCs list
the provisions the WTO member will implement after a transitional
period following the entry into force of the TFA.
Category C notifications contain provisions that a developing
country or LDC designates for implementation on a date after a
transition period and requiring the acquisition of implementation
capacity through the provision and assistance of capacity building.
Technical Support Provided by WTO
Technical assistance for trade facilitation is provided
by the WTO, WTO members and other
intergovernmental organizations, including the World
Bank, the World Customs Organization and the United
Nations Conference on Trade and Development
(UNCTAD).
 In July 2014, the WTO announced the launch of
the Trade Facilitation Agreement Facility, which will
assist developing and least-developed countries in
implementing the Trade Facilitation Agreement.
The Facility became operational with the adoption of
the Trade Facilitation Protocol on 27 November 2014.
Challenges faced by WTO - TFA
Challenges around prioritization and sequencing of reforms:
Challenges exist with building consensus around reform priorities
amongst all relevant stakeholders
Technical Challenges:
A general lack of awareness of processes and procedures exists among
traders
Mandatory documents and official fees and charges are often not
published or made easily accessible
Excessive manual processes and outdated legislation
Lack of an integrated ICT environment & inefficient logistics
Lack of an integrated approach to risk management for border
clearance across border agencies
Multiple checking of documents and duplication in data entry and
recording