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Regions and Countries Regional Cooperation Greater Mekong Subregion Publications Proceedings of Ministerial, Forum, and Working Group Meetings Second Meeting of the Trade Facilitation Working Group
Second Meeting of the Trade Facilitation Working GroupIntroductionThe Second Meeting of the GMS Trade Facilitation Working Group (TFWG-2) was held on 28-29 June 2001 at the Le Royal Hotel in Phnom Penh, Cambodia. The Meeting was chaired by His Excellency Cham Prasidh, Minister of Commerce of the Royal Government of Cambodia, and Mr. Sok Siphana, Secretary of State, Ministry of Commerce of Cambodia, and co-chaired by Mr. C. R. Rajendran, Manager, Programs Department West Division 3 (PW3) of the Asian Development Bank (ADB), Mr. Nibhom Debavalaya, Director, International Trade and Industry Division, UN Economic and Social Commission for Asia and the Pacific (UNESCAP); and Mr. Myo Thant, Senior Regional Cooperation Economist, PW3, ADB. The objectives of TFWG are to: (i) review recent developments in the GMS that have implications on trade facilitation; (ii) exchange information on border trade data and policies; (iii) review the status of priority projects identified at the Inception Meeting of the TFWG; (iv) consider the recommendations of the Workshop on Customs Facilitation in the GMS held in Hat Yai on 23-24 May 2001, and identify pilot border crossings for implementing customs cooperation modalities recommended by the Workshop; and (v) formulate a workplan to guide future activities. The Meeting agenda is in Appendix 1. The Meeting was attended by: (i) GMS trade, customs and other officials from the Kingdom of Cambodia, the People's Republic of China (the PRC), Lao People's Democratic Republic (Lao PDR), Union of Myanmar, Kingdom of Thailand, and the Socialist Republic of Viet Nam; (ii) representatives from ESCAP; and (iii) observers from bilateral agencies. ADB staff and consultants also attended as resource persons. The list of participants is in Appendix 2. Opening SessionHis Excellency, Mr. Cham Prasidh, Minister of Commerce of the Royal Government of Cambodia delivered the opening statement on behalf of the Government. He welcomed the participants on behalf of the Government of the Kingdom of Cambodia and extended his appreciation to the ADB and ESCAP for arranging the Meeting in Phnom Penh in close partnership with the Ministry of Commerce. He observed that although trade facilitation is one of eight priority sectors of cooperation under the GMS Program framework, it took seven years to establish the proper mechanism to deal with it. At the Inception Meeting of the Trade Facilitation Working Group Meeting in Bangkok in November in 1999, nine priority areas were identified. Some of these priorities have been discussed at the ESCAP-sponsored Workshop on Trade Facilitation in Indochina held on 26-27 June in Phnom Penh. He reminded the participants of the important issues that need to be addressed by the Meeting, namely: the selection of border-crossings for piloting single-stop and single-window inspection by concerned customs offices; setting up of a system regular exchange of cross-border trade information; institutional arrangements for customs arrangements in the GMS and a workplan to guide future activities. He encouraged participants to be open in their discussions and propose concrete, resolute, and pragmatic recommendations for the GMS Governments that can be considered at the forthcoming Tenth Ministerial Meeting. Mr. Nibhon Debavalya, Director, International Trade and Industry Division, UN Economic and Social Commission for Asia and the Pacific (UNESCAP) extended his greetings and welcome to the Meeting participants. He stated that the establishment of the Trade Facilitation Working Group in 1999 was an important step towards improving business performance and trade competitiveness of the GMS countries and in facilitating intra- and inter-regional subregional trade. As the GMS countries advance towards greater liberalization of trade and open economy, increased movement of goods and services will require trade facilitation measures to support smooth, fast, and cost-effective trade transactions. As discussed in the Workshop on Trade Facilitation in Indochina sponsored by ESCAP, there is a growing realization by the countries in the region that trade facilitation measures are necessary to supplement the trade liberalization process in order to bring about efficiency in trade, improve productivity, and business performance. To assist the GMS countries in their trade liberalization efforts, ESCAP will start the second round of trade facilitation project in two key areas: (i) alignment of trade documents of Cambodia, Myanmar, and Viet Nam, through revisions in the 1998 version of the alignment exercise; in addition the first alignment of trade documents of Lao PDR will be made; and (ii) training for trainers in the public and business sectors, using a training manual with a version in the local lanaguage. He reiterated ESCAP's commitment to provide support to this initiative in close cooperation and other relevant agencies including the ADB and UNCTAD. Mr. C. R. Rajendran, Manager, Programs Department West Division 3, welcomed the participants on behalf of ADB. He cited the significant progress in infrastructure development in the GMS over the last 10 years and how trade has benefited from recent improvements in transport, telecommunications, and energy. For instance, among the countries in the East West Corridor, trade has expanded rapidly by an average of 33 percent a year for the combined value of imports and exports between Myanmar, Lao PDR, and Thailand. To further complement investments in infrastructure, GMS countries have entered into agreements to facilitate cross-border movements of goods and peoples in the subregion. Mr. Rajendran observed that as countries become more integrated with the regional and global trading environment, there is a need to accelerate improvements in trade facilitation measures, starting with neighboring countries. Although GMS countries have made notable progress in reducing trade and non-tariff barriers, as well as customs inefficiencies, several impediments to trade still remain and should be addressed through mutual cooperation among the GMS countries. He emphasized however, that trade facilitation is only a part of the larger macroeconomic reform agenda which countries must continue to undertake in order to achieve their growth targets. Exchange rate and investment policies, as well as sector issues in finance, transport, and telecommunications are equally important dimensions of the national policy agenda in leveraging trade with development objectives. Regional cooperation in trade facilitation can enhance and amplify on national efforts by expanding access to markets, thus providing wider development options for developing countries. In his opening statement, Mr. Urooj Malik, Resident Representative of the ADB Mission in Cambodia, observed that Cambodia's hosting of the Second Trade Facilitation Working Group Meeting underscores the importance that the country gives to trade liberalization and facilitation. Despite the worst floods last year in over 70 years, the Cambodian economy showed resilience, posting a GDP growth of over 5 percent in 2000. The Government's Second Socioeconomic Development Plan, which is currently under preparation with support from the ADB, sets a GDP growth target of 6 to 7 percent over the medium-term, as prudent economic policies and sector reforms are implemented and good governance practices are put in-place. Expansion in trade --- especially garments exports --- agriculture and agro-based industry and tourism are expected to play an important role in this growth scenario. He informed the Meeting that Cambodia has recently decided to accede to the Trilateral Agreement Among Lao PDR, Thailand, and Viet Nam for the Facilitation of Cross-Border Movement of Goods and Peoples in the GMS. This is a significant step towards the goal to have all GMS countries eventually sign this framework agreement by 2001 and to have all annexes and protocols implemented by 2005. Mr. Malik further gave a background of the events leading to the Second Meeting of the Trade Facilitation Working Group. He outlined the key tasks of the Meeting which includes a review of the status of implementation of priority projects on trade facilitation, the selection of border crossings for piloting customs cooperation, regular exchange of trade information, and the formulation of a work plan to guide future activities. Review of Developments in the GMS with Implications on Trade FacilitationOverview of Recent Developments in the GMSTo set the context for Meeting, Mr. Myo Thant, Senior Regional Cooperation Economist, GMS Unit, ADB discussed recent developments in the GMS and its implications on trade facilitation. He noted that the expansion of physical connections, recent policies on market openness, and the gradual integration of the GMS countries into the regional and global trading environments are compelling the need for facilitating economic activities at the borders. Under the GMS Program, major transport routes are in various stages of implementation, among them the Phnom Penh-Ho Chi Minh City Road, the East West Corridor, the North South Corridor, and the Kunming Hanoi Haiphong Multimodal Transport Projects. More recently, the development of transport routes have been expanded into the development of economic corridors which links transport infrastructure to production and trade potentials within a well-defined economic space. In the context of these developments, trade and investment facilitation in the GMS has increasingly become important. At the Inception Meeting of the Trade Facilitation Working Group held in November 1999, the GMS countries agreed to closely cooperate on trade facilitation in nine priority activities, namely: (i) establishment of national institutional arrangements for trade facilitation; (ii) national studies and seminars on regulatory, procedural, and documentation systems for international trade; (iii) pilot testing trade facilitation arrangements in the GMS; (iv) customs cooperation; (v) development of common information systems and trade facilitation e-communication systems; (vi) subregionalization of bilateral arrangements; (vii) cooperation in agricultural trade; (viii) establishment of a dispute settlement mechanism; and (ix) establishment of a payments system for GMS trade. Among these nine activities, it was agreed to give priority to the first four, with ESCAP taking the lead role in supporting the first two, and the ADB taking the lead role in supporting the third and fourth activities. It was agreed to take up the remaining five projects at a later stage. In order to move the activity on customs cooperation forward, an ad-hoc Sub-Group on Customs Matters met on 11 January 2000 and identified seven potential areas of cooperation namely: (a) single window inspection, (b) single stop inspection, (c) coordination of hours of operation, (d) transparency of customs practices, and (e) adherence to the Kyoto Convention, (e) automation of customs procedure system, and (f) compatibility among GMS countries of statistics and data elements of declaration forms for customs purposes. Another Workshop on Customs Facilitation in the GMS was organized in Hat Yai, Thailand from 23-24 May 2001 to discuss the implementation modalities in these areas. Pre-Investment Study of the East West Corridor: Trade and Investment ReportMr. Thant provided further details on the concept of economic corridors and presented the results of the Pre-Investment Study of the East West Economic Corridor which was recently completed. The East West Economic Corridor (EWEC) extends from Mawlamyine (Myanmar) through Mukdahan (Thailand), Savanakhet (Lao PDR), to the port of Da Nang (Viet Nam) and is expected to be realized in 2005 with the completion of road construction along the route. The road, which is being built with the combined efforts of concerned GMS national Governments, the Government of Japan and the ADB, will be linked with production and trade potentials in the area to create a growth zone. With the development other road arteries in the subregion (e.g. Chiang-Rai-Kunming via Lao PDR) and subregional trade liberalization (through the ASEAN Free Trade Agreement or AFTA) converging around the years 2004 to 2008, the opening of gateways borders will increasingly become important. The benefits to be realized from the EWEC include transport routes linking Mawlamyine to Da Nang by 2005, economic growth, regional development especially in the remote rural areas, better use of economic space, and the development of gateway cities and nodal points. Much of the trade potential of the EWEC will be based on complementary resource endowments, and differences in the access to markets and technology. The Trade and Investment Report that is part of the EWEC Pre-Investment Study, has identified several factors that still need to be addressed to realize the full trade potential of the corridor. These include the removal of non-tariff barriers, the reduction in the number of products still excluded from the CEPT Scheme under AFTA (and therefore still with high tariffs), improvements in standard valuation and labeling practices, reduction or elimination of rent-seeking activities, and streamlining of administrative procedures, including for customs, at the borders. Mr. Thant emphasized that without reducing or eliminating these barriers, the full trade potential of the corridor will not be realized. In addressing these impediments, inputs and feed back from the private sector are essential. In this regard, the GMS Business Forum, which has been recently established under the GMS Program should be actively utilized. Other recommendations of the Trade and Investment Report included: (i) the expansion of the functions of the Border Committees to include economic development; the development of a trade and investment information system (data and regulations on border trade); development of subregional marketing facilities; standardization of trade valuation systems at customs checkpoints; institutionalization of informal trade (e.g. through welcome plazas); provision of capital for small and medium enterprises; and closer interaction with the private sector. Trade Developments in the GMS: Recent Trends and PoliciesThe GMS countries presented trade developments in their respective countries, focusing on border trade data and policies. The objective of focusing the presentations on the theme of border trade is to get a more accurate picture of the magnitude of trade transactions and trends at the borders as physical infrastructure expands and economic interactions increase among the GMS countries. The country presentations provided useful information on border trade policies and how these are contributing to the larger agenda of trade liberalization and economic growth. The country presentations highlighted the following points:
The following are the highlights of country presentations: CambodiaMr. Sok Sopheak, Director, ASEAN and International Organizations Department, Ministry of Commerce, Cambodia stated that in the last two years, Cambodia has responded positively to changes in the world economic environment through trade liberalization measures. The main goal of trade policy in Cambodia is to establish a liberal trade regime through regional and global integration of the Cambodian economy, as well as to promote trade and investment. Towards these goals, Cambodia became a member of ASEAN in 1999 and joined the Common Effective Preferential Tariff Scheme (CEPT) for AFTA, and is now preparing for membership in the WTO. As part of its commitment to these trading arrangements, Cambodia has (i) harmonized its tariff structure at the 6 to 8 digit level following the Harmonized System (HS); (ii) reduced tariff rates under the CEPT Scheme for AFTA; and (iii) bound tariffs on imported goods consistent with WTO principles. There has been a rapid growth in imports and exports as a result of trade liberalization policies, as well as trade promotion and facilitation measures. The average share of imports from ASEAN and/or GMS countries between 1998 to 2000 is approximately 45 percent of total imports. Trade facilitation in the GMS has the potential to further increase this level of trade. Cambodia has signed trade, transport, tourism, visa exemption, and economic cooperation agreements with Lao PDR, Thailand, Viet Nam, China and Myanmar. Since many of the required physical infrastructure is still lacking or inadequate, it has been proposed that existing facilities among the neighboring countries can temporarily be shared for purposes of trade facilitation. In this regard, Thailand and Cambodia are currently taking steps to establish a free trade and/or export processing zone for the mutual benefit of the two countries. Mr. Sok Sopheak stressed that capacity building for trade policy, trade promotion and trade facilitation would be required for both the public and private sectors. In this regard, technical assistance from donors and other international organizations is required. In particular, technical assistance would be required for improving the capacity of customs authorities; setting of national training centers that could be utilized by both private and public sectors; review of legislation; and the design of a masterplan for transport networking in the GMS. People's Republic of ChinaMs. Yan Luyun, Deputy Director, Department of Foreign Trade, Ministry of Foreign Trade and Economic Cooperation, PRC explained that the policy of opening up border areas was implemented by the Chinese Government in the early 1990s. China has border trading activities with Myanmar, Viet Nam and Lao PDR which has contributed to overall economic development, prosperity, and good relations in the local areas. Overall import and export value of border trade reached US$200 million in 1998, US$310 million in 1999, and US$640 million in 2000. The rapid development of border trade is attributed to four factors, namely: (i) improved and strengthened economic and trade relations between China and the border countries; (ii) China's rapid economic growth rate and improvements in the national industrial structure which have created mutual trade complementarity between China and its border countries (iii) the Chinese Government's incentive policies towards border trade; and (iv) increased public expenditure on border infrastructure. The Chinese Government's Foreign Trade Law encourages the promotion of border trade through lower tax rates on small value transactions, and delegated authority to the provinces to issue import and export licenses for some commodities covered by border trade. At present China has signed bilateral agreements on border trade with Myanmar (1994 and 1997) and Viet Nam (1998) that have facilitated border trade development. No agreement has yet been signed with Lao PDR. China indicated that it would take continuing efforts to enhance coordination with bordering countries through regular dialogue, consultation and information exchange, and improving mechanisms for dispute settlement. Lao PDRMr. Sirisamphanh Vorachith, Deputy Director-General, Economic Research Institute for Trade, Ministry of Commerce, Lao PDR presented the country's trade policy agenda in the context of the country's overarching development goal of graduating from Least Developed Country Status by 2020 through poverty reduction, and sustained growth and equity. Lao PDR has taken steps to shift to a market-based economy, and in recent years have experienced steady growth in GDP, as well as in the trade and investment sectors. The country's short-term growth prospects are positive. Trade is an important sector, with exports comprising 22 percent of GDP, and imports, 36 percent. The trade sector however, has been adversely affected by the economic crisis, with the resulting trade deficit causing a deterioration of the exchange rate, weak balance of payments, and high inflation. To reduce the trade deficit, the Government has restricted imports of luxury goods, regulated border trade to curb illegal trade and smuggling, and encouraged local production and import substitution. The Government has also taken steps to diversify export products and markets, concentrating on products where Laos has a comparative advantage. In addition to prudent economic management, Lao PDR has also focused on building the capacity of its institutions to integrate with subregional, regional, and global trading systems. Further trade liberalization will be brought in line with WTO agreements in order to facilitate the accession process. The participation of Lao PDR in the CEPT for AFTA is an important step in this direction. However, because the Lao economy is highly dependent on neighboring countries, much will depend on the management of foreign economic relations. MyanmarU Nyunt Aye, Director General, Directorate of Trade, Ministry of Commerce of Myanmar cited three border trade agreements with GMS countries, namely PRC (1994), Thailand (1996), and Lao PDR (2000). To provide closer supervision and further facilitate border trade, the Ministry of Commerce established the Department of Border Trade in 1996 with 10 branch offices. Import-export permits are issued by these branch offices at the borders. Among the GMS countries, China and Thailand are Myanmar's major trading partners; trade with Viet Nam, Lao PDR and Cambodia has been negligible. The volume of border trade has increased, reaching the peak level of US$411 million in 2000-2001 of which 65 percent is accounted for by trade with China. Myanmar-Thai border trade increased in 2000-2001 to US$105 million, with Myanmar realizing a trade surplus over Thailand. To facilitate trade at the border, Myanmar has allowed the use of other currencies such as Kyat, Yuan, Thai Baht, and the Lao Kip. U Nyunt Aye also described investment laws and policies in Myanmar to encourage foreign direct investments. Investment incentives in the form of tax holidays and exemptions, guarantees against naturalization, and other forms of privileges and incentives are provided to attract foreign investments into the country. ThailandMr. Chana Kanaratanadilok, Assistant Director General for Policy and Planning of the Deaprtment of Business Economics, Thailand provided information on border trade statistics with Cambodia, Lao PDR, Myanmar, and transit trade statistics with Viet Nam and Yunnan Province of PRC, as well as the status of agreements with these countries. Border trade between Thailand and these countries have increased tremendously from a level of 35.9 million Baht in 1995 to 99.4 million Baht in 2000. Transit trade with Viet Nam comprise the largest share, ranging from 12.7 percent in 1995 and increasing to almost half of total border trade in 2000. Border trade with Lao PDR is about 21 percent in 2000 from a level of 29 percent in 1995. Thailand's policies on border trade are directed towards further promoting trade gateways along the border, enhancing economic cooperation with neighbors for mutual benefit, and the application of new technology to improve efficiency in operations. Supporting policies include the reduction of non-tariff barriers, and facilitation of trade, investment and cross-border transport of goods and people. The institutional mechanisms that implement border trade are the Committee on Promoting Border Trade, the Subcommittee for Solving Border Trade Problems, and the Border Trade Information Center. The Committee on Promoting Border Trade operates at the policy level and is responsible for formulating recommendations on border trade policy, improvement of regulations and laws to facilitate border trade, and national positions and strategies. The Subcommittee for Solving Border Trade on the other hand, functions at the operating level and is responsible for promoting trade relations with neighboring countries, solving border trade problems, and providing trade information to the public. Meanwhile the Border Trade Information Center serves as a supporting agency for providing trade information and data, and conducts research and analysis on the impact of economic and political factors on border trade. An important issue in the present conduct of border trade is the implementation of the WTO Valuation Agreement (WVA) that started in May 2000. Customs officers as well as importers need to be trained in the WVA in order to clarify and solve problems on valuation. Viet NamMrs. Tran Phoung Lan, Deputy Chief, ASEAN Division, Multilateral Department Ministry of Trade, Viet Nam informed the Meeting that cross-border trade at the Vietnamese border zones of Lao PDR, Cambodia, and PRC have been increasing as a result of the 1998 Government policy to establish pilot economic zones at these borders. The policy expanded the scope of activities in the border zones to include re-exports, goods in transit, warehousing, and the operations of duty free-shops. Privileges have been extended to firms doing business in these areas in terms of investment, trade, tourism, land rentals, and tax privileges. In addition, the Vietnamese Government has promulgated several legal issuances on cross-border trade. These pertain to the regulation of formally- and informally-traded goods, and the conduct of cross-border trade regimes between Viet Nam and three countries---PRC, Lao PDR, and Cambodia. These regulations deal with simplification of customs clearance procedures, customs valuation, and waiver of business registration. Despite progress in cross-border trade in recent years, difficulties remain. These include: (i) lack of information on management mechanisms for traded goods; (ii) increased risk for traders who are required to make payments only in cash; (iii) non-compulsory application of sanitary and phytosanitary measures for imports and exports; and (iv) lack of mechanisms by which traders could settle their disputes. A recent government decision has provided certain incentives for companies or firms doing business in a cross-border area as a means to promote trade between Viet Nam and neighboring countries. As a result of these policies, cross-border trade in specific crossings between Viet Nam and Lao PDR, Cambodia, and Viet Nam increased by 170 percent from US$1.012 billion in 1995 to US$2.717 billion in 2000. To further pursue its policy of promoting border trade, Viet Nam proposed the Lao Bao border crossing in Lao PDR for pilot testing customs cooperation modalities agreed upon under the GMS framework. In selecting the pilot sites, Viet Nam was guided by the following criteria: (i) increasing volume of trade and transit goods; (ii) availability of inter-agency personnel; and (iii) potential of a major road network or facilities. Trade Facilitation in the GMSMr. Grant Vinning, ADB Consultant under RETA 5713, presented the highlights of his Report on Trade Facilitation in the GMS. He stressed the importance of approaching trade facilitation in a holistic manner, incorporating both the software and hardware components, and the perspective from the business sector. The key points emphasized in his presentation are as follows: (i) improvement in the management of freight logistics is important to realize the economic pay-offs from transport infrastructure; (ii) cool chain management should be given priority attention since GMS economies are primarily agriculture-based; (iii) transaction costs must be reduced to attract businesses to the subregion; (iv) the large number of exclusions from the CEPT, and in particular those highly-traded commodities, should be reduced to further liberalize trade in the context of AFTA; (v) trade agreements are in place but implementation is weak because of inadequate capacities in the national bureaucracies; and (vi) customs automation would be difficult, not only because of the costs involved, but also because of possible resistance from private business. To address some of these issues, Mr. Vinning put forward the following recommendations: (i) electronic funds transfers should be piloted as an initial step towards automation; (ii) training should be provided to the private sector on customs procedures; (iii) a time release study should be conducted for selected commodities with the view to identifying areas where operations could be made more efficient; (iv) take steps to initiate improvements in cool chain management; (v) supply chain studies are needed to achieve the most competitive position for the GMS countries; and (vi) training in supply chain management should be conducted. The Meeting made the following comments and observations on the presentation made under Session II:
Status of Implementation of Priority Projects on Trade FacilitationIn Session III, the Meeting reviewed the status of implementation of nine priority areas that were identified at the Inception Meeting of the TFWG. ESCAP presented a report of the first two projects combined since these are related, and ADB did the same for the third and fourth projects. The GMS countries also reviewed the remaining five projects and came up with proposals for possible implementation. 1) Establishment of National Institutional Arrangements for Trade Facilitation in the GMS 2) National Studies and Seminars on Regulatory, Procedural, and Documentation Systems for International Trade Ms. Kimiko Uno, Chief, Trade Promotion and Facilitation Section, UN ESCAP, presented the Summary of ESCAP's Initiatives on Trade Development in the GMS Countries and for the Trade Facilitation Working Group. She stressed the importance of addressing trade facilitation in a holistic manner because it involves a complex set of issues that includes not only import-export procedures, but also transport formalities, insurance, and payment and supply chain issues. It was recognized that several international development organizations, including ESCAP and ADB, are assisting the GMS in addressing various aspects of trade facilitation. In the case of ESCAP, the objectives of trade facilitation assistance to the GMS are to: (i) simplify, standardize, and harmonize trade related documents and procedures of the GMS countries; and (ii) develop national institutional arrangements for trade facilitation. In line with these objectives, ESCAP has taken the following initiatives: (i) alignment of trade documentation; (ii) national workshops on trade facilitation; and (iii) development of training manuals for trade facilitation. In connection with the first activity, ESCAP has initiated a project called "Alignment of Trade Documents of Cambodia, Myanmar and Viet Nam" in 1999 that had the objective of aligning the documents of these countries with the UN Layout Key for Trade Documents. The output of this project is a published guidebook that can be used by countries for assessing the degree of alignment of their documents with the UN Layout Key. For the second activity, ESCAP implemented a project on "National Workshops on Trade Facilitation" for Cambodia, Lao PDR, and Viet Nam in 2001, with the objective of raising awareness among various agents---both from the public and private sectors---of the various issues involved in trade facilitation and providing inputs to policy makers. The Workshops came up with several useful and important recommendations. To assist the countries in conducting such seminars and workshops on a structured and regular basis, ESCAP developed a training manual on trade facilitation. The manual will be translated into several languages. Ms. Uno informed the Meeting that ESCAP would continue to assist the GMS countries in improving their trade promotion and trade facilitation capacities. Among the projects under consideration by ESCAP are: (i) institutionalization and strengthening of existing national trade facilitation bodies; (ii) development of relevant trade information resources; and (iii) trainors training on trade facilitation which is planned for September 2001. Through these initiatives, ESCAP hopes to promote greater efficiency and productivity in service standards that could eventually generate higher revenues from foreign trade. The Meeting noted the report of ESCAP which reflected the results of the Workshop on Trade Facilitation in Indochina held on 26-27 June 2001 just prior to TFWG-2. The following additional observations and suggestions were made on the ESCAP presentation:
3) Customs Cooperation in the GMS 4) Pilot Testing Trade Facilitation Arrangements in the GMS Mr. Myo Thant, ADB presented the highlights of the Workshop on Trade Facilitation held in Hat Yai on 23-24 May 2001. The Workshop reviewed and affirmed the areas of cooperation agreed upon by the Ad Hoc Sub-group on Customs Matters that met last January 2000 and grouped five of the seven areas into three cooperation modalities for purposes of phasing the implementation. These modalities are: Modality 1: Pilot-testing of single stop, single-window inspection and common hours of business operations; Modality 2: improvement of transparency of customs practices; and Modality 3: adherence to the Kyoto Convention. The Workshop decided to propose focusing cooperation initially on Modality 1 in a pilot border crossing to be mutually identified by the concerned countries, with the eventual replication of these across all borders. They also agreed to pursue the two other modalities at a later stage. The Workshop participants visited Padang Besar Customs House at the border of Malaysia and Thailand which provided an opportunity for them to observe working cooperation arrangements between the customs authorities of Malaysia and Thailand. The Workshop also agreed to designate customs focal point for each country to facilitate coordination among the GMS countries and with ADB. To further pursue the agreements at the Hat Yai Workshop, Mr. Florian Alburo, ADB Trade and Customs Facilitation Consultant under RETA 5713, ADB presented alternative instruments of agreement on customs cooperation. These include: (i) an new agreement; that could require the lengthy process of legislative ratification; (ii) utilization of full powers given to a Minister (e.g. Trade or Finance) for committing to the scope of activities under Modality 1; or (iii) identify existing agreements as basis for expansion, and inclusion of customs cooperation. In this regard, he proposed for the countries to consider two instruments of agreement: one is a Joint Declaration by all GMS countries expressing a collective resolve to cooperate on customs matters on the three modalities, and the second would be a Bilateral Agreement between cooperating GMS countries involved in a pilot border crossing under Modality 1. This Bilateral Agreement could be simply an expansion or extension of existing agreements relevant to customs. The Joint Declaration would be signed by all relevant GMS Ministers, while the Bilateral Agreements for pilot border crossings would be signed by two Ministers and witnessed by the rest of GMS Ministers to show support and interest in the replication of the results of cooperation. The activities for the pilot border crossings would include soft components (i.e., cross-visits to customs areas; training programs, studies on customs procedures, documents, etc., workshops) and hard components (possible new infrastructure for a joint customs warehouse or customs facilities, and equipment). The critical activities would be: (i) preparation and discussions of draft Joint Declaration and Bilateral Agreement (including identification of relevant existing bilateral agreements) in July and August 2001; (ii) formal signing in September on the occasion of the Tenth Ministerial Meeting; and (iii) implementation by November or December 2001. Mr. Alburo also discussed the possible institutional arrangements for implementing cooperation under Modality 1. He proposed that a GMS Sub-Group on Customs Cooperation-Phase I could be set up to formulate the policy framework for Modality 1. This Subgroup would be composed of focal persons from each GMS country that would serve as the principal liaison between customs departments and external agencies and other GMS country customs departments. In addition, or within the Subgroup, there would be a Joint Committee of two countries to oversee the implementation of the bilateral agreement. The following discussions followed from the presentations:
Having made the above clarifications and suggestions, the Meeting agreed on the three modalities for customs cooperation, with priority given to Modality 1, as recommended by the Workshop on Customs Facilitation in the GMS held in Hat Yai on 23-24 May 2001. The delegates of Lao PDR, Thailand, and Viet Nam had a side Meeting to discuss further the implementation modalities for customs cooperation. The results of this side Meeting are as follows:
5) Agricultural Cooperation in the GMS Ms. Ratchanee Wongchantrakarn, Senior Policy and Plan Analyst, Office of Agricultural Economics, Thailand presented some proposals for agricultural cooperation in the GMS. She noted the importance of the agriculture sector in the economies of the GMS countries, but observed that agriculture has also become increasingly vulnerable to changes under free trade conditions. New issues of protection have emerged in the form of non-tariff barriers affecting agriculture; among these are sanitary and phytosanitary rules (SPS) and regulations that have tended to impose difficulties on agricultural exports from developing countries. To maintain export competitiveness, she suggested that the GMS countries should collectively address modalities of cooperation. Three possible areas of cooperation include: (i) joint research and development on pre-and post harvest technology to improve and maintain product quality; (ii) joint development of product quality and standards through training; and (iii) standardization of the system of quality control inspection and SPS procedures to meet international requirements. The participants provided the following comments and reactions to the Thai proposal:
The Meeting agreed to request Thailand to develop their proposals further for consideration at the GMS Senior Officials Meeting prior to the Tenth Ministerial Meeting. In further developing the proposal, Thailand was requested to consider the following: (i) the appropriateness of including research and development as part of the activities of the TFWG; (ii) other recommendations on agriculture cooperation as contained in the EWEC Pre-Investment Study, Thailand-Cambodia bilateral cooperation, and other regional cooperation programs; and (iii) possibility of Thailand extending assistance to other GMS countries for certain activities. 6) Establishment of a Payments System in the GMS The PRC delegation noted that since the beginning of the 1990s, the trade, including border trade, border crossing transaction, investment among the GMS countries have been greatly increased. Therefore, it is imperative to make a study on how to remove the currency payments obstacles in order to promote further development of trade and investment in the subregion. The Meeting made the following observations and comments on the PRC proposal:
ADB proposed to further develop the proposal on payments system for consideration of the GMS Senior Officials Meeting, taking into account the observations that have been made.
ESCAP informed the Meeting that in the course of assisting the GMS countries in streamlining regulatory systems and documents, they will incorporate elements of information networking and e-networking. ESCAP informed the Meeting that they are collaborating with KOTRA and JETRO which have developed a software for information networking.
8) Establishment of a Dispute Settlement Mechanism in the GMS
9) Subregionalization of Bilateral Agreements in the GMS
The above projects were not discussed by the Meeting.
Mr. Myo Thant, ADB proposed a regular system of exchanging the following trade information with the following content: value, flows, type, major import commodities, trends, agreements, policies, and institutions (e.g. border committees, and dispute settlement mechanisms). He proposed a format which the GMS countries could use to provide information that could be exchanged on a regular basis. ADB will send a questionnaire/format for the countries to accomplish. On the basis of the information submitted by the countries, the ADB can make an initial compilation that could be presented to the Tenth Ministerial Meeting.
The GMS countries agreed to the proposal for a regular and systematic exchange of trade information. In the case of PRC, the information will be provided at the provincial level for Yunnan.
Mr. Hans Peter Brunner, Senior Project Economist, Financial Sector and Industry Division West (IWFI), ADB presented a summary of the activities and proposals that were discussed by the Meeting. The key ideas include:
Mr. Myo Thant, ADB reminded that participants of resource constraints that could affect the implementation of new initiatives in the GMS. Based on the discussions of the Meeting, he indicated that the priority activities for ADB support are as follows:
On trade document alignment and harmonization, training on trade facilitation, and institutional strengthening of national trade facilitation bodies, ESCAP will start the second round of trade facilitation project in two key areas: (i) alignment of trade documents of Cambodia, Myanmar, and Viet Nam, through revisions in the 1998 version of the alignment exercise; in addition the first alignment of trade documents of Lao PDR will be made; (ii)training for trainers in the public and business sectors, using a training manual with a version in the local lanaguage; and (iii) activities for institutionalization and strengthening of existing national trade facilitation bodies.
Thailand will prepare a more detailed proposal on agriculture cooperation, and PRC on payments system, for consideration at the next GMS Senior Officials Meeting
To promote private sector participation in the activities of the TFWG, the Meeting endorsed the following ideas: (i) expansion of the GMS-BF to include local chambers of commerce; (ii) participation of the private sector in the next TFWG Meeting; (iii) organization a private sector tour along the East West Economic Corridor; (iv) development of trade and investment brochures; and (v) conduct private sector training on customs.
As regards the designation of trade focal points, the GMS countries agreed to convey the names of their designated focal points to ADB. ADB will subsequently compile the list of trade focal points and disseminate it to the GMS countries.
The Meeting expressed the view that the TFWG meetings should be maintained at the working level to promote a results-oriented approach to the implementation of priority activities. GMS countries however, suggested that there should be closer coordination with other regional cooperation schemes to promote complementarity in projects and activities.
Mr. Myo Thant thanked the Royal Government of Cambodia for hosting the Meeting, and for the support extended to all the delegates, including for ADB. He also expressed his appreciation to the GMS delegations for their active participation in the deliberations of the Meeting, which contributed to positive and concrete results.
On behalf of the Royal Government of Cambodia, Mr. Sok Siphana also expressed his sincere thanks to ADB and ESCAP for organizing the TFWG-2. He expressed the hope that with the concrete results generated from the Meeting, cooperation in trade facilitation can move ahead and contribute even greater to the development goals of the GMS countries.
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