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Name Last name. Position. Department. Trading across Borders. Why does it matter? What does it measure – and what does it not? Good practices Trading across Borders in Azerbaijan. Why does trade facilitation matter ?. What is the impact of time delays on trading across borders?.

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  1. Name Last name Position Department • Trading across Borders

  2. Why does it matter? What does it measure – and what does it not? Good practices Trading across Borders in Azerbaijan

  3. Why does trade facilitation matter?

  4. What is the impact of time delays on trading across borders? In Sub-Saharan Africa… An increase of 1 day in transit time… …leads to a decline of 7% in export values Source: Freund and Rocha (2010). Source: Djankov, Freund and Pham (2010).

  5. Why does it matter? What does it measure – and what does it not? Good practices Trading across Borders in Azerbaijan

  6. What are the case study assumptions? Two case studies with particular assumptions

  7. Export case study assumptions The shipment travels from a warehouse in the main business city of the exporting economy to a warehouse in the main business city of the importing economy. Export shipments do not necessarily need to be containerized. SHIPMENT EXPORT PRODUCT • Export product differs by economy. • Export product is the economy’s main export product (as determined by data on trade value)and weights 15 tons. EXPORT PARTNER • Export partner is determined by who is the largest trading partner based on data on trading value of the main export product. • UNCOMTRADE data used to identify product and partner. • Trade over land and/or sea or any combination is considered • The most widely used mode of transportation, as well as the most widely used seaport/land border crossing is assumed. ROUTE AND MODE OF TRANSPORT

  8. Import case study assumptions The shipment travels from a warehouse in the main business city of the exporting economy to a warehouse in the main business city of the importing economy. Import shipments of auto parts are assumed to becontainerized. IMPORT PRODUCT SHIPMENT • Import product for all 190 economies is auto parts. • Import product is a shipment of containerized auto parts and weights 15 tons. IMPORT PARTNER • Import partner is determined by who is the largest trading partner based on data on trading value of auto parts. • UNCOMTRADE data used to identify main import partner. • Trade over land and/or sea or any combination is considered. • The most widely used mode of transportation, as well as the most widely used seaport/land border crossing is assumed. ROUTE AND MODE OF TRANSPORT

  9. What goes into the Trading across Borders ranking? Rankings are based on the scores for eight indicators Exporting the product of comparative advantage Importing auto parts Note: The time and cost for domestic transport and the number of documents to export and import are measured but do not count for the rankings.

  10. What goes into Border Compliance?

  11. What goes into Documentary Compliance? • Obtaining, preparing and submitting documents during transport, clearance, inspections and port/border handling in the origin economy. • Obtaining, preparing and submitting documents required by the destination economy and/or any transit economy. • Covers all documents required by law and in practice, including electronic submission. • The exact number of documents is not used to compute the ranking.

  12. What goes into Domestic Transport? The indicator measures the timeand cost associated with domestic transport. However, this dimension is not used to compute the ranking. For exports: • From a warehouse in the main business city of the economy to the most widely used border for traders located in the main business city of the economy • Loading the shipment at the warehouse • Road congestion and traffic • Police stops and tolls For imports: • From the most widely used border for traders located in the main business city of the economy, to a warehouse in the main business city of the economy. • Unloading the shipment at the warehouse • Road congestion and traffic • Police stops and tolls

  13. Additional notes TIME • Time is measured in hours and 1 day is 24 hours. For example, 22 days should be recorded as 22 X 24 = 528 hours. COST • Cost are reported in U.S. dollars SIMULTANEITY OF PROCESSES • The calculation of time within indicators takes into account simultaneity of processes DOCUMENTS • Number of documents not included in the ranking. • All electronic submissions of information are considered. • Documents required once in a lifetime are not counted.

  14. What does the indicator not measure? • Tariffs and duties • International transportation • Precious metals and gems, mineral fuels, oil products, live animals, residues and waste of food, and pharmaceuticals • Informal payments

  15. Who are the Trading across Borders contributors?

  16. Why does it matter? What does it measure – and what does it not? Good practices Trading across Borders in Azerbaijan

  17. Good practices Global good practices • Electronic submission and processing • Linking agencies through Single Windows • Upgrading trade logistics infrastructure • Risk-based inspections • Regional cooperation • Sparking competition • Education and communication

  18. What are the global good practices? Electronic systems for exchanging customs information (e.g. ASYCUDA). Saves time and money. Electronically linkingall trade actors. Both at the national (e.g. Korea)and regional level(e.g. ASEAN). Improve efficiency of processes. Increase trade flows.

  19. What are the global good practices? Inspections are often necessary. However, riskprofilesallows inspections to correspond to the potentialriskof consignments. Border cooperation agreements. Customs Unions (e.g. European Union). Greater competition can lead to lowerfeesand higherqualityof service. • The ability of trade professionals to benefit from electronic systems largely depends on training and communication.

  20. What makes a reform? Depending on the impact on the Trading across Borders’ data, certain changes are classified as reforms. The aggregate gap on the overall score of the indicator set is used to assess the impact of data changes. Any data update that leads to a change of 2% or more on the score gap is classified as a reform. For example, if the implementa­tion of a single window system reduces time or cost in a way that the overall gap decreases by 2% or more, such change is classified as a reform. Reforms should: • Impact the time or cost of border compliance or documentary compliance. • Be a government-relatedinitiative. • Be confirmed by the private sector. • Be applicable under the indicator’s case study assumptions. • Occur within the cut-off date.

  21. Common types of reforms

  22. Why does it matter? What does it measure – and what does it not? Good practices Trading across Borders in Azerbaijan

  23. Trading across Borders in Azerbaijan Best regulatory practice Azerbaijan scored 77.04 points in ease of trading across borders, giving it a ranking of 84thin this area. • Source: Doing Business 2019

  24. Azerbaijan: Export Case Study & Results Warehouse in Baku Astara border crossing Domestic transport: 7 hours, $64 Warehouse in Baghdad Documentary compliance: 33 hours, $250 Border compliance: 17 hours, $214

  25. Azerbaijan: Import Case Study & Results Warehouse in Moscow Samur border crossing Warehouse inBaku Domestic transport: 6.2 hours, $400 Documentary compliance: 33 hours, $200 Border compliance: 14 hours, $300

  26. Azerbaijan: Components of Border Compliance

  27. Trading across Borders 2019 reform in Azerbaijan • Azerbaijan made trading across borders faster by streamlining electronic customs procedures and fully implementing the “green corridor” gating system. Score change: 1.92 -12 hours -5 hours -16 hours

  28. THANK YOU!

  29. Annex I: Methodology changes in Doing Business 2016

  30. Trading across Borders: previous methodology • Trading Across Borders measured the time (days), thecost(USD) and the number of documentsrequired throughout 4 predefined stages of the import/export process: document preparation, customs clearance and inspections, inland transport and handling, port and terminal handling. • DB 2015 Assumptions: • Exporting and importing from the largest business city in the economy to/from the economy’s largest overseas trade partner via maritime transport using the primary seaport for that city. • Product is one of the country’s leading export and import products, and do • not require refrigeration or any other special environment • not require special phytosanitary or environmental safety standards • Payment is through a Letter of Credit

  31. Trading across Borders: updated methodology (Doing Business 2016) Trading across Borders measures: • The TIME (hours)and COST (USD) associated with the process of importing and exporting for two sets of procedures: documentary compliance and border compliance. • The number of documents and inland transportation are not included in the calculation of the ranking. Updated the case study assumptions: • Export and import case studies assume different products and partners based on UNCOMTRADE data • Export: shipment ofcomparative advantage • Import: shipment of containerized auto parts for all economies • Route and mode of transport are based on trade pattern of the selected product (maritime, land) • Simultaneity of processes is taken into account while measuring time for the time spent on document preparation; customs and inspections and port/border handling

  32. Strengths of the updated methodology • Focuses on increasing relevance (economic and policy) of results • Chooses products that are economically relevant • Focuses on what happens inside the economy’s border • Focuses on increasing replicability of data • Clarity about case study assumptions and variables • Focuses on increasing precision • Time measures account for simultaneity • Hours are used as the unit of time

  33. The trading across borders methodology accounts for the diversity of international trade processes

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