Jan 23, 1992

INFRASTRUCTURES EFFICIENCY WOULD SAVE $ 75 BILLION – UNCTAD.

GENEVA, JANUARY 22 (CHAKRAVARTHI RAGHAVAN) -- Measures to improve the infrastructures of international trade and their efficiency could save as much as 75 billion dollars a year, according to an estimation by the UN Conference on Trade and Development.

In this view the secretariat of UNCTAD has been conducting its own technical and technological studies and is promoting the idea of international efforts to help the Third World countries to increase their trade efficiency by improving their infrastructures, including by making use of electronic data exchanges and other possibilities of technological change.

Increasing the efficiency of infrastructures and promoting trade facilitation such as through the Electronic Data Interchange (EDI) have been found to be cost-saving and effective for large as well as small and medium enterprises in the Industrial World.

Some of the planned programmes for EDI in the public sector - customs procedures and documents - in the major ICs would also mean that countries, and exporting enterprises and firms within countries, switching or using the EDI for customs and other formalities would be at a considerable trade advantage over their competitors in the major industrial country markets.

For example, the US and EEC plans in this area, would mean that when a shipment leaves the exporting country in Europe, and before it reaches the US, all the customs documentation (invoices, etc.) could be prepared and exchanged and presented on computer to computer communication to the U.S. customs authorities who would be able to process the imports and complete their clearance.

This would mean that the goods could be unloaded and move into the internal market on arrival - saving shipping and turnaround time at ports and benefiting both the exporters and importers.

An international group under the auspices of the UN Economic Commission for Europe (ECE) has already been at work for sometime standardising various requirements in this area including protocols and formats.

With the ICs poised quickly to move into this process over the next few years, Third World countries already at a disadvantage would be put at an even greater disadvantage and find themselves either unable to sell and compete with their rivals using EDI procedures or being forced to have recourse to middlemen in third countries who would undertake this "service" for a profit.

At very early stages of the EDI there were efforts to get the Third World involved. But the latter countries found the costs and investments too high to handle, while the ICs wanted to "negotiate" among themselves and settle the parameters and later tell the Third World countries either to accept and fall in line or lose.

While the consequences of this further marginalisation has been penetrating to the policy-makers of the Third World exporting countries – and several of the NICs are trying to catch up fast – very slowly it has also been penetrating to policy-makers including trade officials of the North that the markets of the developing world do matter to the North and if the South is unable to sell in the North because of these new infrastructural barriers, it could also be unable to buy and the North could be a loser.

In their Teheran documents, the Group of 77 have stressed the urgent need to set up a truly universal EDI in particular and "networked" markets in general to provide developing countries access to new opportunities for trade facilitation add efficiency arising from recent advances in information technologies.

UNCTAD-VIII, the G77 suggested, should launch the processes for an International Conference on Global Infrastructures for Trade and Trade Efficiency, focussing specifically on the infrastructure and technologies needed by developing countries to access new sources of trade competitiveness.

Given the large costs and investments that would be involved in an economy-wide effort in every country - costs beyond the means of most Third World countries, apart from other ancillary infrastructures needed (as simple as electric supplies and at steady voltages to advanced digital telephone and telecommunication networks and computers, etc.) the UNCTAD secretariat has been suggesting more modest efforts.

It has been suggesting that it would be feasible to provide at least some of the highly advanced basic infrastructures - in a two-track or two-speed approach - that would enable these countries to have their domestic trade and economies along current lines (making use of vast unemployed and educated manpower) while creating clusters of modem electronic infrastructures at suitable points for use of export industries and services.

The cost of international trade procedures is estimated at about ten percent of the total value of international trade. A 25 percent reduction in these costs would yield world-wide savings of $75 billion a year, according to UNCTAD.

But promoting global trade efficiency would need formulation of a comprehensive strategy.

At international level it would need to identify and formulate elements of possible international agreements and recommendations capable of producing substantial time and money savings in international trade transactions and procedures.

Ways and means of creating conditions for emergency of new trade links involving all regions of the world would have to be defined in such a strategy, to be achieved by accelerating the process towards a truly universal EDI.

Special attention would be given under such a strategy to integration of countries and regions less advanced in this process in order to give them access to new sources of trade competitiveness.

As a second, but connected component, of the comprehensive strategy, at the national level a set of "domestic models" would need to be formulated and adapted to the various levels of development.

This would help actual and potential traders and the public sector to integrate into the international trade efficiency strategy and build up local infrastructures needed to foster foreign trade and investment.

At the current pre-conference consultations at the Trade and Development Board session, the G77 have been suggesting the establishment of a "trade efficiency expert group" to report regularly to the Board on the progress of its work.

The group, which would make use of expertise in public and private sectors and take account of existing efforts to enhance and accelerate them, would be responsible for producing strategies and guidelines needed to take concrete steps towards achieving trade efficiency at national and international levels.

The group would also identify and formulate the elements of international agreements necessary to promote and implement such strategies and guidelines, focussing on legal, technical and procedural and institutional components.

Such a process should result in launching the international conference on trade efficiency to focus especially on the infrastructures and technologies required by developing countries as well as others to access new sources of trade competitiveness.