Facilitation of Regional Transit Trade in CAREC  Mr. Graham Walker,  Team Leader/Trade Facilitation Specialist

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TA Rationale and Strategic Framework  CAREC 2020 Strategic Framework highlights:  Trade Expansion: to increase trade though transport connectivity,

facilitation of cross-border movement of goods and people, trade openness and energy trade  Improved Competitiveness: to improve industrial competitiveness through transport connectivity, development of economic corridors and energy sector cooperation.

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TA Aims  Overall Aim of the TA  To make recommendations to remove customs-related impediments to transit through the CAREC corridors.

 TA as a part of the Customs Cooperation Committee (CCC) Strategy Simplification and Harmonization of Customs Procedures Joint Customs Control

ADB TA-8586: Facilitation of Regional Transit Trade in CAREC

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Priority Areas of CCC

Regional Transit Development

ICT Introduction and Data Exchange Modernization

Risk Management and Post-Entry Audit

TA Objectives  Specific Objectives of the TA: 

   



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To identify the major CAREC corridors and their transit operation characteristics; To identify major impediments within current transit systems; To recommend solutions to develop a regional guarantee system; To prepare the legislative requirements for a regional transit system; To recommend an ICT system to support a regional transit regime; and To identify a suitable corridor to pilot test the recommended transit regime.

STAKEHOLDER ENGAGMENT

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ICT Solutions for Transit Report

September 2016

Legal and Regulatory Framework Report

April 2016

Single Guarantee Mechanism Report

January 2016

Research on Transit Flows Report

September 2015

Inception Report

March 2015

November 2014

Summary of Deliverables and Program

Draft Final Report

Intra-regional trade amongst CAREC countries

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Value of Intra-regional trade amongst CAREC countries (USD Thousand) 2014†

Source: ITC calculations based on UN COMTRADE statistics NA=No data Available * = Partner provided (Mirror) data † = No data available for Afghanistan and the Kyrgyz Republic, 2014. Therefore 2013 data is used. (In matrix only)

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Value of Intra-regional trade amongst CAREC countries (USD Billions) 2014 – Including the PRC 40.5

13.2

12.7

8

Value of Intra-regional trade amongst CAREC countries (USD Billions) 2014 – Excluding the PRC 13.1

9.8

9.5

5.1

9

Volume of Intra-regional trade amongst CAREC countries† (Tons) 2013

Source: ITC calculations based on UN COMTRADE statistics. † = Representative sample of quantities obtained from top 3-5 most valuable bilaterally exported goods for each country. Equating to at least 66.67% of total bilateral exports. NA=No data Available * = Partner provided (Mirror) data

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Volume of Intra-regional trade amongst CAREC countries (Million Tons) 2013 26.6

19.6 17.7

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CAREC Corridors

12

6 CAREC Corridors

13

New CAREC Corridors 2c

2d

4c

6d

5c

14

5b

CAREC Border Crossing Points 2

26

4

31

18

24

28 27 25 11 1 13

12

3 6

15 19 21 5 14

16 9 29

20

22

17

23 30

32

15

8 10

7

Corridor 1 BCPs 2

4

1

Alashankou (PRC) – Dostyk (KAZ)

2

Kairak (KAZ) – Troitsk (RUS)

3

Khorgos (PRC) – Khorgos (KAZ)

4

Zhaisan (KAZ) – Kos Aral (RUS)

5

Torugart (PRC) – Torugart (KGZ)

6

Merke (KAZ) – Chaldover (KGZ)

1

3

6

5

PAKISTAN

16

Corridor 2 BCP’s 1

Alashankou (PRC) – Dostyk (KAZ)

7

Yierkeshitan (PRC) – Irkeshtam (KGZ)

8

Kara-Suu (KGZ) – Kara Suu (UZB)

9 11

1

10

13

11

12

15

12

16 9

8 10

14

7

17

13 14

15 16 PAKISTAN

17 17

Kanibadam (TAJ) – Kokland (UZB) Nau (TAJ) – Bekabad (UZB) Beyneu (KAZ) – Karakalpakstan (UZB) Baku (AZE) – Aktau (KAZ) Red Bridge (AZE) – Red Bridge (GEO) Alat (UZB) – Farap (TKM) Baku (AZE) – Turkmenbashi (TKM) Karamyk (KGZ) – Karamyk (TAJ) Shirkhan Bandar (AFG) – Panji Poyon (TAJ)

Corridor 3 BCP’s

18

14

Alat (UZB) – Farap (TKM)

16

Karamyk (KGZ) – Karamyk (TAJ)

18

Aul (KAZ) – Veseloyarsk (RUS)

19

Saryagash (KAZ) – Keles (UZB)

20

Sarahs (TKM) – Sarakhs (IRN)

21

Pakthaabad (TAJ) – Saryasia (UZB)

22

Hairatan (AFG) – Termez (UZB)

23

Islam Qala (AFG) – Dogharoun (IRN)

19

14

16 21

20

22

23

PAKISTAN

18

Corridor 4 BCP’s 26

24

Ulaanbaishint (MON) – Tashanta (RUS)

25

Takeshikent (PRC) – Yarant (MON)

26

Sukhbaatar (MON) – Naushki (RUS)

27

Erenhot (PRC) – Zamiin-Uud (MON)

31

Bichigt (MON) – Chifeng (PRC)

31 24

27 25

19

Corridor 5 BCP’s 7

Yierkeshitan (PRC) – Irkeshtam (KGZ)

16

Karamyk (KGZ) – Karamyk (TAJ)

17

Shirkhan Bandar (AFG) – Panji Poyon (TAJ)

30

Torkham (AFG) – Peshawar (PAK)

32

Kandahar (AFG) – Chaman (PAK)

7 16

17

30

32

20

To GWADAR

PAKISTAN

To KARACHI

Corridor 6 BCP’s 4

Zhaisan (KAZ) – Kos Aral (RUS)

28

4

17

Shirkhan Bandar (AFG) – Panji Poyon (TAJ)

19

Saryagash (KAZ) – Keles (UZB)

22

Hairatan (AFG) – Termez (UZB)

23

Islam Qala (AFG) – Dogharoun (IRN)

28

Kurmangazy (KAZ) – Krasnyi Yar (RUS)

29

Istaravshan (TAJ) – Khavast (UZB)

30

Torkham (AFG) – Peshawar (PAK)

32

Kandahar (AFG) – Chaman (PAK)

35

Aktau (KAZ) – Bereket (TKM)

35

19 29

22

17

20 23 30

PAKISTAN

32

21 To GWADAR

To KARACHI

Road and Rail Traffic Densities

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Road traffic density (AADT) for road transport along the CAREC Corridors RUSSIAN FEDERATION

RUSSIAN FEDERATION

ASTANA ULAANBAATAR

KAZAKHSTAN

MONGOLIA

AZERBAIJAN Urumqi

BAKU

UZBEKISTAN BISHKEK

TURKMENISTAN

KYRGYZ REPUBLIC

TASHKENT

PEOPLE'S REPUBLIC OF CHINA

ASHGABAT

XINJIANG UYGUR AUTONOMOUS REGION

DUSHANBE

N

TEHRAN

TAJIKISTAN 0

IRAN

100

200 300

400

Kilometers

Legend (AADT) KABUL

10,000

AFGHANISTAN

5,000 ISLAMABAD

2,000 1,000 500 or less

PAKISTAN

23

INDIA

Traffic densities on the CAREC railways RUSSIAN FEDERATION

RUSSIAN FEDERATION

ASTANA ULAANBAATAR

KAZAKHSTAN

MONGOLIA

Urumqi

BAKU

UZBEKISTAN BISHKEK

TURKMENISTAN

KYRGYZ REPUBLIC

TASHKENT

PEOPLE'S REPUBLIC OF CHINA

ASHGABAT

XINJIANG UYGUR AUTONOMOUS REGION

DUSHANBE

N

TEHRAN

TAJIKISTAN 0

200

300

400

Kilometers

IRAN KABUL

Legend (Tons)

AFGHANISTAN

10,000,000 5,000,000

ISLAMABAD

PAKISTAN

24

100

INDIA

2,000,000 1,000,000 or less Not available

Corridor Priorities

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Corridor 1

KAZ

KGZ

1a • • • • • • • • •

1b

XUAR

1c

Most strategic CAREC corridor connecting with KAZ an KGZ with XUAR Trade between Kazakhstan and XUAR = $22.81 bn in 2013. Accounted for 51% of total trade from XUAR but declined in 2014 to 37% due to contraction in PRC and depreciation of Kazak currency. 1a and 1b fastest but 1c struggles with lack of investment and high terrain 1a critical for rail transit Dostyk – Alashankou Heavy traffic on 1b through Khorgos (PRC – Kazakhstan) and very important because developing in to multi-modal hub with road/rail links converging on Khorgos Also traffic heavy on 1c at Torugart (PRC – Kyrgyz Republic) 1b and 1c pass through largely populated centers. 1b for Astana and Almaty; 1c for Bishkek where thriving textile/garment industry. Major delays at Khorgos BCP (in 28.2 hrs, out 11.2 hrs in 2013) but new ICBC being built. Huge delays on railways at Dostyk ( 60 hours) and Alashankou (42.4 hours) 26

Corridor 2 KAZ

KGZ

XUAR

KGZ

TAJ

XUAR

TKM

UZB

2a • • • • • • • •

2b

2c

2d

Most extensive of corridors stretching from Azerbaijan in west to Hami/Hexi in East and includes 8 CAREC countries Multi-modal corridor with 9900 kms of roads and 9700 kms of rail and maritime crossings to Baku from Altau and Turkmenbashi. Ranked fastest in 2014 in terms of SWOD (49 kph) due to good road surface in UZB and TKM. 2a and 2b extremely important to Uzbekistan because main arteries for transport of fruit and veg from Fergana Valley for export and for import of industrial and consumer goods imported from Iran and Russia. Major delays at Alat-Farap on Uzbekistan/Turkmenistan border (12hours either way) Karasuu-Kulma (PRC-TAJ) increasingly important but 15-20 hour delays. 2c and 2d are new sub corridors added in 2014 with rail focus. 2c links east and west KAZ; and 2d links Afghanistan to PRC through KGZ and TAJ. 27 Heavy traffic from Azerbaijan to Europe

Corridor 3

AFG

KAZ

KGZ

TAJ

TKM

UZB

3a • • • • • • • •

3b

Key role in development of agriculture in Uzbekistan, Kyrgyz Rep and Tajikistan flanking Fergana Valley Corridor has 6900 kms of roads and 4800 kms of railways Problems with transit traffic due to insecurity in AFG, problems at Karamyk, mountainous terrain etc. 2nd fastest corridor in 2014 with SWOD at 49 kph 3a used for exports to Turkmenistan (Alat – Farap) from Uzbekistan and through Keles – Sayagash (rail) to Kazakhstan 3a also used for agricultural exports from Kyrgyz Republic to Kazakhstan through Ak - Tilek – Karasuu Major problems at BCPs at Sarakhs-Sarahs (IRN-UZB) - 14 hours; Alat-Farap (UZB-TKM) -12 hours; Yallama-Konysbaeva (UZB-KAZ)-14 hours; 3b heavily used by Tajikistan and Kyrgyz Republic which exports fruits and veg to Kazakhstan which is a major importer and meets only 30% of its needs being primarily a wheat producer. 28

Corridor 4

IMAR

MON

4a • • • • • •

• • •

XUAR

4b

Trans-Mongolian corridor linking Russian Federation with PRC regions IMAR and XUAR 4b dominates with major rail corridor from Nauski (RUS) – Zamyn-Uud/Erenhot (PRC) 4a is a road corridor from Ulaanbaishint/Tashanta to Takeshikent (PRC) – Yarant (MON) Substantial increases in road traffic forecast on 4a as Western Regional Road Corridor Development project is completed and road on 4b being upgraded 4c new route built from Ulaanbaatar – Bichigt and to Jizhou port in PRC. Should see substantial displacement of rail for road traffic and shift in export destination away from Tianjjin. Major road improvement by ADB on route from Zamyn Udu to Choyr has had significant impact and offers shippers rail-road options . Major problems at Erenhot-Zamyn Uud BCP with crossing time averaging 24 hours or more. Better BCP at Zuun Khatavch-Bichigt (PRC-MON) with crossing in 3 hours. 29 Trains take over 30 hours at Erenhot-Zamyn Uud ( PRC-MON) and 11.5 hours at Nauski-Sukhbaatar.

Corridor 5 AFG

XUAR

TAJ 5a • • • • • • • •

PAK

KGZ

5b

5c

Originally only 5a, but 5b and 5c added in 2013 to provide corridors to Pakistan seaports of Gwadar and Karachi. 5c to Gwadar, 5a and 5b to Karachi Covers 3700 kms of roads and 2000 kms of rail. Potential for major corridor between PRC and Pakistan Very slow corridor with speeds averaging 18 kph because of high terrain and bad winters and is the most challenging of the corridors. Long delays at border crossings at Irkeshtan and Afghanistan/Tajikistan Major bottlenecks at Peshawar-Torkham (PAK-AFG) -34 hours-39.5 hours. Bottlenecks at Chaman-Spin Buldak -36 hours at Chaman and 60 hours at Spin Buldak. 5a and 5c important for trade between Pakistan and Afghanistan 30

Corridor 6 AFG

KAZ

PAK

. TAJ

TKM 6a

• • • • • • • •

•

6b

UZB 6c

6d

Expanded from 3 sub-corridors to 4 in 2013 Covers 10,600 kms of roads and 7200 kms of rail. Railway dominates the Northern Region and road the south. Aim to include ports of Pakistan and provide sea-access to CAREC landlocked countries Rail traffic high on Uzbekistan and Kazakhstan sections Problems at border crossings as Afghanistan government imposes transit fee of $100 on cargo Afghanistan truckers cannot operate in Pakistan BCP problems at Yallama-Konysbaeva (UZB-KAZ)- 6.4 to 7.5 hours; Dautota-Tazhen (UZB-KAZ) -13 hours; Hairatan-Ayraton (AFG-UZB). Impact of China – Pakistan Economic Corridor will bring significant changes 31

Road Inbound (corridors 2,3)

Rail Inbound (corridors 1a,1b))

Outbound (corridors 2,3)

Outbound (corridors 1a, 1b)

Road Inbound (corridors 5,6)

Road Inbound (corridors 1a,1b)

Rail Inbound (corridor 4b)

Outbound (corridors 5,6)

Outbound (corridors 1a,1b)

Outbound (corridor 4b)

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New Infrastructural Projects

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The PRC’s Proposed New Silk Roads

Source: Xinhua News Agency

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A Closer look at the Silk Road Belt

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A Closer Look at the Proposed China – Pakistan Economic Corridor

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Enhancing Existing Trade between CAREC Member Countries

Introducing a Regional Transit System could substantially enhance the existing trade between the CAREC Member Countries by Reducing the Cost of Transporting Goods Between Countries

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Present CAREC Transit System The present CAREC transit system comprises of a combination of:  TIR – Single transaction covering the movement of goods through multiple countries for a flatrate charge  A chain of individual CAREC country transit processes with different customs guarantee mechanisms operating in each country

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Limitations of the Present CAREC Transit System

The present system has the following limitations:  TIR system is only affordable and accessible to the large operators; presently it does not take account of risk; and it only covers single movements of goods  Individual CAREC country systems do not take account of risk and are not connected to create a seamless Customsto-Customs electronic transit information exchange operation

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Possible Future CAREC Transit System A future transit system to support economic growth within CAREC should combine three core elements:  eTIR system  Special Procedures for Approved Economic Operators (AEO) under Mutual Recognition agreements  A region wide system transit system which takes account of risk and allows for multiple movements of goods over a specified period (such as one year)

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Foundations of the Future System

The foundations of the future CAREC Transit System need to include:  An insurance based guarantee mechanism  Mutual Recognition of AEOs  A seamless Customs-to-Customs electronic transit information exchange process

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Improving Trade Facilitation

“The Introduction of a CAREC Regional Transit System supported by a Risk Based Affordable Guarantee Mechanism is central to Improving Trade Facilitation throughout the CAREC Region”

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Thank You Very Much For Your Attention

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