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BUSINESS GUARDIAN guardian.co.tt MARCH 23 • 2017
The cost of trading in the
Greater Caribbean region
How costly it is to trade across
the Greater Caribbean?
How does one measure
the progress of trade facil-
Using the United Nations
Centre for Trade Facilitation and Electronic
Business (UN/CEFACT) definition: trade fa-
cilitation is typically defined as "the simplifi-
cation, standardisation and harmonisation of
procedures and associated information flows
required to move goods from seller to buyer
and to make payment."
Trade facilitation continues to be a popular
buzz phrase within contemporary international
trade circles. Global recognition of the exces-
sive "red tape" caused by customs and border
procedures to global trade, has propelled trade
facilitation to the forefront of the World Trade
Several years of exploratory work and nego-
tiations later have been codified in the WTO's
Trade Facilitation Agreement (TFA) in 2013.
The TFA officially came into force February
Within the ACS, there are two customs un-
ions, eight free trade agreements and 15 pref-
erential trade agreements (of the PTAs, nine
of are currently enforced).
Yet, the gains from intra-regional trade are
minimal in comparison to trade with extra-re-
gional partners. Part of the problem is diffi-
culty the aforementioned "red tape" across
the ACS region.
The Association of Caribbean States has
remained committed to this issue through
This article is the third installment on trade
facilitation in the Greater Caribbean adding to
last year's publications. These include Navigat-
ing the Caribbean Sea: Charting New Paths for
Better Trade, Business and Cooperation (19th
May, 2016) which addressed the Association's
efforts to use hydrographic capacity building to
improving maritime routes and maps for trade.
The association also produced a related ar-
ticle, Streamlining Trade: A Window of Op-
portunity (July 28, 2016) where it detailed the
ACS' ongoing work in the Greater Caribbean
in making trading across the Caribbean Sea
easier through the harmonisation of customs
procedures and documentation.
This present article attempts to briefly an-
alyse trade facilitation using various global
We seek to understand how costly it is to
trade across the Greater Caribbean.
How does one measure the progress of trade
facilitation? How does one comprehensively
quantify trade facilitation?
Several methods and international databases
have been created or are in the process of being
The World Bank's Doing Business indica-
tors provide a fitting starting point to gain a
snapshot of basic overall business procedures
across the world.
Specifically relating to trade facilitation, the
Trading Across Borders indicator records the
time and cost (excluding tariffs) associated
with the logistical process of exporting and
importing goods. It covers three sets of pro-
cedures---documentary compliance, border
compliance and domestic transport---within
the overall process of exporting or importing
a shipment of goods.
For 2016, El Salvador was the best performer
not only in the Greater Caribbean but the wider
Latin America and Caribbean group.
Strong performers also included Panama
(2nd), the Dominican Republic (3rd) and Mexi-
co (4th). In global ranking out of 190 countries
however, El Salvador was 44th, Panama--- 53rd,
Dominican Republic---58th and Mexico---61st.
In addition to the time and costs associat-
ed with the process of trading, customs and
border procedures also add to the final value
of goods traded.
The United Nations Economic and Social
Commission for Asia and the Pacific (ES-
CAP)-World Bank database evaluates these
This database is a comprehensive all-inclu-
sive measure based on micro-theory and cal-
culated using macro-economic data, providing
an alternative measure of trade facilitation per-
formance. It provides the ad valorem equiva-
lent trade cost of trade between two countries.
For example in 2014, trading of manufacturing
goods between Colombia/Dominican Republic
has a trade cost of 146 per cent.
This means trading manufacturing goods be-
tween Colombia and the Dominican Republic
involves (on average for all tradeable manu-
facturing goods) additional costs amounting
to approximately 146 per cent of the value of
goods versus when the two countries trade
these goods within their borders. This can
be compared with trading of the same goods
between Mexico and Colombia which is only
98 per cent.
One notable finding, using the figures from
the ESCAP-World Bank database found that
it is cheaper, in ad valorem terms, for the ACS
region to trade with the USA than it is to trade
internally. A five-year average from 2010-2014,
the ad valorem cost to trade intra-regionally
was 204 per cent versus the five-year average
for the ACS -USA trade where the ad valorem
cost was 114 per cent.
Data on trade facilitation implementation is
also being collected and offers another dimen-
sion to analysing the costs to trade facilitation.
The United Nations' recent Trade Facilitation
and Paperless Trade Implementation Survey
2015 is the most recent and applicable data for
the greater Caribbean region. This survey is a
direct response from countries themselves on
trade facilitation progress in key areas. While
there are significant limitations to the survey,
the general outline of the region provided is
Twelve ACS member states participated in
the survey. Much like the uneven growth and
development across the diverse Member States,
trade facilitation implementation has unevenly
dotted the Greater Caribbean trading environ-
ment. The Caribbean, particularly Caricom,
is lagging behind and performing well below
the regional average.
Conversely, the region's second customs
union (CACM) is displaying high levels of
performance, demonstrating their regulatory
and legal cohesion.
Central America's success is likely linked
to the International Goods in Transit project.
In 2008, the Integration and Trade Sector
(INT) of the Inter-American Development
Bank (IDB) designed the International Goods in
Transit project (or TIM, its Spanish acronym)
in Central America.
The TIM project is an electronic system for
managing and controlling the movement of
goods in transit that harmonises previously
cumbersome procedures into a single elec-
tronic document, consolidating information
and certifications from various authorities
including migration, customs, and health/
The project is based on three main com-
ponents: (1) process re-engineering (2) in-
formation technology and (3) cooperation.
During the 19th Intercessional Meeting of
the Ministerial Council of the Association of
Caribbean States (ACS) and the 6th ACS Sum-
mit of Heads of State and Government, the
International Transit of Goods (TIM) Project
was approved as part of the two projects aimed
at strengthening the Trade Facilitation process
in the Greater Caribbean.
The goal was to develop joint actions geared
toward exploring the implementation of the
International Transit of Goods (TIM) Proce-
dure in the Member States of the Association of
Caribbean States (ACS). It is within this project
that the Single Window for Trade initiative
has been birthed.
The TIM project is currently under way and
extensive research on the region's various cus-
toms procedures is set to commence within
the coming months.
The directorate of Trade and External Eco-
nomic Relations continues with this project in
its 2017-2018 work programme via financing
from the Mexican Agency for International
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