Time matters for trade and its importance
is likely to grow because of increasingly
segmented production chains across
countries and lean retailing, among other
reasons.* Especially critical is the effectiveness
of public entities that affect the transit
times between origins and destinations
of goods.
This is particularly the case with customs
but also with a number of regulatory
agencies, such as those responsible for health,
food and quarantine. The manner in which
their trade-related regulations are designed
and enforced determines the thickness of the
borders and the time required to cross them.
Trade facilitation measures precisely aim to streamline the administrative processing of
trade flows, thereby narrowing the border
and speeding the movement of goods.
Latin American countries have recently
implemented various initiatives in this direction,
in several cases with technical and
financial support from the Inter-American
Development Bank (IDB).
RISK MANAGEMENT MAKES
A VITAL DIFFERENCE
Among these trade facilitation initiatives
is the introduction of risk-based inspection
procedures which allow for focusing
controls on high risk shipments instead of
inspecting every single shipment.
Results from a recent study conducted
by IDB suggest that if all exports would
have been physically inspected and such
inspections would have taken two days,
total Uruguayan exports in 2011 would
have been approximately 15% lower.**
This highlights why utilization of riskbased
verification procedures and expedited
controls should be key components
of trade facilitation strategies. Still, the
ultimate goal should be the adoption of an
integral risk management system encompassing
all relevant border agencies.***
Despite the significant progress made by
Latin American countries in this area, that
goal remains elusive.
TRANSIT REGIMES AND
THE AEO PROGRAMME
Trade can face more acute problems when
goods have to be shipped through third
countries because multiple border crossing
and agencies from different countries are
involved. This is particularly important for
road-based regional trade and specifically
within regional trade agreements.
Well-functioning transit regimes are
virtually absent in most developing regions
One of the few exceptions can be found in
Latin America: the Central American TIM
(Tránsito International de Mercancías, or
International Transit of Goods). It implied
the gradual adoption of a common electronic
document and the interconnection
of participating border agencies to make
possible a unified transit border control.
This in turn allowed for real-time control of
flows and significant reductions in the time
required to trade across borders and thus in
trade costs. Evidence from an IDB study on
El Salvador and Guatemala revealed that
the TIM favoured an increase in their firms’
exports, primarily through higher shipment
frequency****.
The Authorized Economic Operators
(AEO) programme is another important
trade facilitation initiative in which cooperation
will be essential to maximize its impact on trade. AEOs are firms – certified
by customs administrations as complying
with relevant supply chain security standards
– entitled to trade facilitation benefits,
primarily consisting of less frequent physical
inspections and reduced clearance times.
AEO programmes have been adopted in 11
Latin American countries and two of these
countries have already signed mutual recognition
agreements (MRAs) with partners.*****
Trade facilitation in
Latin America
Progress towards trade facilitation in Latin
America has been noticeable in recent years.
However, much remains to be done. The
implementation of the World Trade Organization’s
Trade Facilitation Agreement provides
countries in the region with a unique opportunity
to move this policy agenda forward.
As such, in addition to endowing border
agencies with proper personnel and technological
means to accomplish their mission,
countries must ensure better coordination
between agencies; better design or re-design their procedures; and put in place effective
and interoperable mechanisms to process
permits and certificates, which would create
the conditions for comprehensive single
windows as well as for integrated border
controls. They would also have to improve
their risk management systems, including
the adoption of an integral risk approach
linking all border agencies; upgrade their
transit regimes; and strengthen and connect
their AEO programmes with those of peers
through MRAs.
The IDB has been and is currently
supporting the efforts of Latin American
countries to implement the aforementioned
trade policy agenda through loans, technical
assistance, capacity building schemes,
and a series of studies that aim to assess and
inform the impact of the different component
of this agenda.
Supported initiatives and countries
include single windows (Chile, Costa Rica,
Colombia, Panama, Peru, Uruguay), interoperability
of single windows (Pacific Alliance
and associated countries), border crossings and
coordinated border management (Ecuador
and Colombia, Nicaragua and Costa Rica),
AEO programmes (most countries), and
training on trade and customs issues, single
window, transit trade, and AEOs.
Trade gains from these measures are likely
to be substantial and so would those additional
rewards from additional employment opportunities
and increased productivity.
* See, e.g., Hummels et al. (2001), Hummels (2007),
Hummels and Schaur (2013), Evans and Harrigan (2005);
and Harrigan and Venables (2006).
** In addition to their actual coverage, the speed of the
controls also matters: if all shipments that were subject to
physical inspection and spent more than two days in customs
would have been released within one day as those
processed without those inspections, exports would have
been 5.9% larger (see Volpe Martincus et al., 2015a).
*** Marquez Fariña and Volpe Martincus (2014).
**** Carballo et al (2015).
**** See Corcuera-Santamaría and García Navarrete
(2014).