by Joaquim Tres
Training and reducing trade costs improve regional integration and competitiveness in Latin America and the Caribbean.
Truck driver Eduardo Escobar regularly drives his containers across the border between El Salvador and Honduras at the El Amatillo crossing. Just like him, 200 truck drivers cross the border each day. But while carrying out the required customs procedures used to take them five hours of waiting under sweltering heat, now it takes them just five minutes. Central American truckers now don’t even have to get out of their vehicles at the border: They just wait for the computerized system to give them the green light, and continue on their way.
The waiting time at the borders has been drastically reduced thanks to a new International Transit of Goods system (known as TIM, for its Spanish acronym). Now, Escobar and his fellow drivers can make more trips, earn considerably more money and reduce their fuel costs, the emissions of their trucks and the losses of cargo due to heat and humidity.
Why should cargo be inspected at the borders of a country if it’s only in transit to another country? That’s the question the countries of Mesoamerica asked the Inter-American Development Bank (IDB). The reply was the introduction of the TIM, which allows transporters to spend just a few minutes filling out an electronic Single Customs Declaration, and permits government agencies at the borders, especially customs, to focus on imports and exports to and from their own countries.
This sophisticated and paperless transit system has significantly reduced the costs of trade in the region. Adoption of the TIM by Mesoamerican countries signaled a major change that customs officials in several countries had to endorse through mutual agreement, with the support of the IDB.
Part of the success was the result of investments in the purchase of computer equipment, redesign of procedures and upgrading of border inspection posts. Another key factor in the improvements has been the training of customs employees and transportation company workers in the use of the new IMT system.
The latter was achieved through the specialized training offered by the IDB with the assistance of funds for integration provided by Canada, Colombia, Chile, Spain, United States, Japan, Mexico, the United Kingdom and Switzerland, as well as multilateral organizations like the World Customs Organization, the World Trade Organization and sub-regional institutions in Latin America and the Caribbean, especially the Central American Economic Integration System, which is already administering the training.
The IDB has trained more than 130 users of the TIM system in Mesoamerica and offers a broad range of related training through massive open online courses available at www.connectamericas.com.
Say goodbye to the “crazy paperwork”
Like the waiting times at the borders, the high costs of the multiple procedures required to cross them also were reduced by the Single Window of Foreign Trade introduced by several countries in the region. The Single Window requires coordination among several government agencies to reduce the number of permits needed for imports and exports and allow the use of electronic forms.
The costs of customs procedures in Chile, where the system has been in effect since 2013, have fallen by 50 percent. With more than 1.4 million trade transactions each year, the country’s savings are substantial. Chilean companies such as AGROSUPER, which exports 800 containers of frozen chicken per month, cut their costs considerably through the Internet access to the Single Window.
Aside from the trade in finished merchandise, countries also trade intermediate goods – which account for half the world’s trade – that are later assembled into finished merchandise, something that’s possible only through the existence of synchronized factories spread around the region and the world. To facilitate this type of trade, the IDB’s Integration and Trade Capacity Building Program offers very specific technical materials for adopting changes that promote the regional and global integration of Latin American and Caribbean Countries.
Since 2012, the program has offered more than 145 courses and trained, by the end of 2015, about 5,300 specialists from public and private entities involved in foreign trade in the region. Eighty-six percent of the participants finish the courses successfully, and almost half are women.
In Peru alone, the IDB “trained 100 percent of the officialsof the Single Window of Foreign Trade, which contributed to a savings of $70 per transaction and saved $9 million in 2013 and $11 million in 2014,” said Abel Chaupis, the program’s coordinator at the Ministry of Trade and Tourism in Lima.
The program also has established Communities of Practice, so that participants can continue to learn how to implement the new procedures from each other after they successfully complete the courses.
The IDB’s Integration and Trade Capacity Building Program is bringing together the countries of the region. Thanks to streamlined procedures and reduced costs, transporters like Eduardo and enterprises like AGROSUPER can benefit from a globalized world.
This is one of a series of articles in this blog on effective development that highlights the lessons and experiences of IDB projects and evaluations.
These are some of the posts of the series:
Learn more about this project and others in the Bank’s 2014 Sustainability Report.
Joaquim Tres coordinates the Regional Integration Instruments Group in the IDB’s Integration & Trade Sector. He leads the Integration & Trade Capacity Building Program featured in this blog. He is pioneering the establishment of Communities of Practice to engage implementers of integration and trade programs in the region. He also leads South-South Cooperation (SSC) Initiatives, including the Regional Public Goods Program and SSC with Asia through the Asian Development Bank. Joaquim has over 20 years of experience as an economic development practitioner in Latin America & the Caribbean and graduated from the Institute of Development Studies-Sussex, England. @JoaquimTres
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