RESTRICTED

WORLD TRADE

S/C/W/324 ** October 2010

ORGANIZATION

10-0000

Council for Trade in Services

ROAD FREIGHT TRANSPORT SERVICES Background Note by the Secretariat1

This Note has been prepared at the request of Members, with a view to stimulating discussions on road freight transport services. It updates and expands on the relevant sections of a previous Note that covered all land transport services (S/C/W/60, dated 28 October 1998). This Note focuses on developments and issues considered to be most relevant to the GATS, and is not intended to provide a comprehensive account of the sector.

_______________

1

This document has been prepared under the Secretariat's own responsibility and without prejudice to the positions of Members and to their rights and obligations under the WTO.

S/C/W/324 Page 2

I.

INTRODUCTION................................................................................................................. 4

II.

DEFINITION OF THE SECTOR ....................................................................................... 5

III.

ECONOMIC CHARACTERISTICS .................................................................................. 7

IV.

TRADE IN ROAD FREIGHT TRANSPORT SERVICES ............................................ 12

V.

REGULATORY ASPECTS ............................................................................................... 15

A.

MARKET ACCESS REGULATIONS

1.

Overview of the market access regulations applicable to domestic transport, including establishment ...................................................................................................... 16

(a) (b)

General trend......................................................................................................................... 16 Historical trends in developed and emerging countries - OECD Road Freight Regulation Database ................................................................................................................................ 17 Conditions of establishment and operation - World Bank Services Policy Restrictiveness Database ................................................................................................................................ 19

(c)

16

2.

Overview of the market access regulations applicable to international transport ....... 21

(a)

The system of bilateral agreements ....................................................................................... 21 (i) (ii) (iii) (iv) (v) (vi)

(b)

Historical background and scope of the bilateral system...............................................21 Standard structure of a bilateral agreement..................................................................22 Operation of bilateral agreements in combination.........................................................26 Variations relative to the ECMT model agreement.........................................................31 Regimes applicable in the absence of a bilateral agreement..........................................32 Economic effects of the bilateral system.........................................................................33

Regional agreements partially liberalizing international road transport ............................... 33 (i) (ii) (iii) (iv) (v)

European Union..............................................................................................................34 "Multilateral" quota of the ECMT..................................................................................35 Andean Community.........................................................................................................37 Black Sea Economic Cooperation Organization............................................................37 ASEAN Framework Agreement on the Facilitation of Inter-State Transport and Cross-Border Transport Agreement of the Great Mekong Sub-Region.........................37 (vi) North American Free Trade Agreement (NAFTA).........................................................38 (vii) Other agreements and cases of preferential treatment...................................................38 (c)

Situations in which international road transport is prohibited or severely restricted ............ 38

B.

OTHER REGULATIONS............................................................................................................39

1.

Regulations at the border ................................................................................................... 39

2.

Regulations behind the border .......................................................................................... 41

(a)

Environmental regulations .................................................................................................... 42

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(b)

Regulation of weights and dimensions ................................................................................. 43

VI.

OVERVIEW OF COMMITMENTS AND MFN EXEMPTIONS ................................. 44

A.

SPECIFIC COMMITMENTS........................................................................................................44

B.

MFN EXEMPTIONS..................................................................................................................45

REFERENCES .................................................................................................................................. 46 ANNEXES

.................................................................................................................................... 50

_______________

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I.

INTRODUCTION

1. Similarly to other infrastructural services, such as telecommunications and energy, road freight transport provides key inputs to a country's production and trade of goods and a number of services (postal, distribution and logistics services, for instance). The sector plays a fundamental role in market integration, and directly determines transaction costs for economic agents. Road freight transport also is a highly cyclical activity. Reflecting changes in the structure and location of manufacturing industries, and the ensuing need for "just in time" deliveries, changes in Gross Domestic Product (GDP) imply proportionally larger changes in the demand for road freight transport services. 2. There is huge variation in the types of services provided in terms of frequency of trips, complexity, distance travelled and vehicles used. For instance, international road freight trips between Belgium and the Netherlands are regular, simple (due to the absence of border controls within the European Union), short-distance and not always reliant on maximum weight articulated vehicles. By comparison, trips between Europe and Asia tend to be occasional, highly complex (because of the numerous border crossings), over very long distances, and generally undertaken using maximum weight, fully laden articulated vehicles that minimise the unit cost of transport.2 3. Road freight transport suppliers compete not only with each other for traffic, but also with operators of other transport modes.3 This inter-modal competition, particularly in land-based transport, has strongly influenced the regulatory regime governing the road freight industry, as will be discussed in Section V.A. 4. Though a services activity, it is useful to recall that road freight transport is also subject to the rules of the GATT. Article III.1 of the GATT stipulates that "rules, regulations and requirements affecting … the internal transportation of products … should not be applied … so as to afford protection to domestic production". Article III.4 establishes a national treatment principle in this respect, specifying that "[these] provisions shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the products". These stipulations have been interpreted in the context of several WTO panels. 5. Article V of the GATT also establishes rules concerning transit. Although this Article has sometimes been invoked during consultations, in particular in connection with pipelines, it had never been subject to a detailed interpretation by a panel until the recent Colombia - Ports of Entry case.4 Road freight transport lies at the heart of the trade facilitation work currently being undertaken as part of the Doha Development Agenda (DDA). Article V itself is under review in the negotiations, in line with the mandate contained in Annex D of the General Council's so-called "July package".5 Pursuant to Annex D, the newly-established Negotiating Group on Trade Facilitation is tasked to "clarify and

2

See, for instance, OECD (2010). Compared with maritime shipping, road and rail are currently transporting relatively small quantities of freight traded internationally, particularly between different continents. Just under one quarter of global trade (measured in value) takes place between countries sharing a land border, where surface modes are assumed to be dominant. However, as land-based transport has a relative advantage in terms of cost per transit-time compared to water and air transport, this is expected to result in increased demand for international movements via this mode (see also OECD (2010)). 4 See "Colombia – Indicative Prices and Restrictions on Ports of Entry", Report by the Panel, document WT/DS366/R, dated 27 April 2009. 5 Document WT/L/579, dated 2 August 2005. 3

S/C/W/324 Page 5 improve relevant aspects of Article V".6 As a result of this mandate, Members have submitted a number of legal proposals, which are contained in a draft consolidated negotiating text.7 II.

DEFINITION OF THE SECTOR

6. In the Services Sectoral Classification List (document MTN.GNS/W/120, hereinafter W/120), road freight transport is one of the sub-sectors listed under category 11.F, "Road Transport Services". The corresponding UN Provisional Central Product Classification (CPC Prov) code is 7123, which is further subdivided, at the five-digit level, into seven sub-categories (see Table 1 and Annex 1). Table 1: Summary of the classification of Road Freight Transportation according to W/120 11

TRANSPORT SERVICES

11.F 11.F.b

Road Transport Services Freight Transportation (7123) This comprises the transportation of: frozen or refrigerated goods (71231), bulk liquids or gases (71232), containerized freight (71233), furniture (71234), mail (71235) and other freight (71239), as well as freight transportation by man- or animal-drawn vehicles (71236).

Note: Codes in parenthesis refer to the UN Provisional Central Product Classification. Source: WTO Secretariat

7. Distinctions between the five-digit categories are mostly based on the type of freight being transported. The only exception concerns sub-category 71236, "freight transportation by man- or animal-drawn vehicles", which is defined on the basis of the means of transport. 8. CPC Prov 71235 covers "transportation of mail by any land mode of transport other than by railway". Though there are meant to be no duplications across the various CPC categories, this item appears to overlap with the way in which postal and courier services are classified under category CPC Prov 75111, 75112 and 75121. (See also paragraphs 8 and 9 of the Background Note on Postal Services, in document S/C/W/319, dated 11 August 2010). 9. Since its publication in 1991, the CPC Prov has been revised three times (versions 1.0, 1.1 and 2). In the second revision (CPC Ver.2), a number of changes have been introduced to the road freight transport category (see Table 2). Notably, the focus on means of transport has been substituted by references to the nature of the good transported in a number of cases, and the residual category (CPC Prov 71239, "transportation of other freight") has been broken down and further elaborated (e.g. transportation of dry bulk, transportation of live animals). This, however, does not substantially alter the scope of the sector, with the exception of the widening of category 71234 "transportation of furniture" which becomes "moving services of household and office furniture and other goods". 8 The only other exception is the redefinition of "mail transportation" into "road transport services of letters and parcels", which has to be explicitly undertaken "on behalf of postal and courier services" [emphasis added].

6

Paragraph 1 of Annex D, document WT/L/579. The latest version is contained in document TN/TF/W/165/Rev.2, dated 4 May 2010. 8 The CPC Prov did not contain any specific item for removals. 7

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Table 2: Treatment of freight road transport services in CPC Prov and CPC Ver.2 Provisional CPC 71231

71232

71233

71234

71235

71236

71239

Transportation of frozen or refrigerated goods Transportation by road of frozen or refrigerated goods, in specially refrigerated trucks and cars. Transportation of bulk liquids or gases Transportation by road of bulk liquids or gases in special tank trucks. These vehicles may also be refrigerated. Transportation of containerized freight Transportation by road of individual articles and packages assembled and shipped in specially constructed shipping containers designed for ease of handling in transport. Transportation of furniture Transportation of furniture by road over any distance. Exclusion: Furniture transportation by transoceanic shipment is classified in subclass 72123 (Transportation of containerized freight). Mail transportation Transportation of mail by any land mode of transport other than railway. Freight transportation by man- or animaldrawn vehicles Transportation of freight by man- or animaldrawn vehicles. Transportation of other freight Transportation by land modes of transport other than railway, of freight, not elsewhere classified.

CPC Ver. 2 65111

65112

65113

65114

65115

65116

65117

65118 65119

Road transport services of freight by refrigerator vehicles Transportation by road of frozen or refrigerated goods, in specially refrigerated trucks and cars Road transport services of freight by tank trucks or semi-trailers Transportation by road of petroleum products (crude oil, natural gas and refined petroleum products) in special tank trucks. Transportation by road of other bulk liquids or gases in special tank trucks. Road transport services of intermodal containers Transportation by road of individual articles and packages assembled and shipped in specially constructed shipping containers designed for ease of handling in transport Road transport services of freight by man- or animal-drawn vehicles Transportation of freight by man- or animaldrawn vehicles. Moving services of household and office furniture and other goods This subclass includes: household goods and furniture removal services; office equipment, machinery and furniture removal services; ancillary services, such as packing and carrying and in-house moving. Road transport services of letters and parcels Transportation of letters and parcels by any mode of land transport, other than railway, on behalf of postal and courier services. This subclass does not include: messenger services of bicycle couriers (cf. 68120); courier delivery services, (cf. 68120); local delivery services (cf. 68130) Road transport services of dry bulk Transportation by road of dry bulk goods such as cereals, flours, cement, sand, coal, etc. Road transport services of live animals Transportation by road of live animals Other road transport services of freight Transportation by road of other freight in other specialized vehicles not elsewhere classified, such as: transport of concrete and tarred macadam; transport of cars; transportation by road of other freight not elsewhere classified, in non-specialized vehicles. This subclass does not include armoured car services (cf. 85240)

Note: Items in italics are those for which the definition has remained unchanged from CPC Prov to CPC Ver.2. Source: WTO Secretariat

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III.

ECONOMIC CHARACTERISTICS

10. Information on the road freight industry is scattered across various sources, with different geographical coverage and reliant on different, and often not fully defined, methodologies. As a result, more often than not, data is not directly comparable internationally.9 Whenever available, this section will present the information with the widest geographical coverage. More detailed or more recent data for selected countries or regions will also be shown, with the caveat that this will not necessarily be directly comparable with the more aggregate information. 11. A very rough calculation10 suggests that road freight transport accounts for over one-third of total inland freight transport (on rail, road, inland waterways and pipelines, measured in tonnekilometres), a slightly lower share than that for rail transport. For the 51 countries that are members of the International Transport Forum (ITF)11, for instance, in 2007 the share of road transport stood at over 36 per cent and that of rail transport at nearly 43 per cent, while pipelines accounted for around 16 per cent and inland waterways for the remaining 5 per cent (measured in tonne-kilometres). 12. This overall pictures, however, hides significant variations. Data collected by the International Road Federation (IRF) provides what would appear to be the most comprehensive and comparable information on the modal split of inland freight transport (on road, rail and inland waterways only) across several countries.12 Accordingly, in 2007 road freight transport accounted for around 95 per cent of total inland freight transport in Pakistan and Turkey, 88 per cent in Mexico and 76 per cent in the EU-27, but only 35 per cent in the United States, 22 per cent in China, 11 per cent in Morocco and 3 per cent in Mongolia.13 (See also Annex 2.) 13. The share of road haulage in total road freight transport is attributable to a variety of factors, such as the relative efficiency of other transport modes, the extension of railway, pipeline or inland waterway networks, the distances involved and the topographic characteristics of a country. Road freight transportation often plays a key role in developing countries, particularly those which did not witness the development of an extensive rail network during the 19th century and at the beginning of the 20th century (i.e. mostly Latin American and African countries). 14. Between 1990 and 2007, the volume of freight transported by road in the ITF member countries almost tripled (measured in tonne kilometres), as compared to just a doubling of the volume of rail freight.14 This reflects to a large extent the increasing complexity of production methods (several plants involved in the manufacture of a single product) and the generalization of "just-intime" production, with the associated demand for door-to-door services, smaller and more frequent freight deliveries and shorter delivery time windows. Available data shows, for instance, that in the EU-27 about two-thirds of freight transported nationally, measured in tonnes moved, travelled a

9

For instance, the definition of "inland freight transport" does not consistently include freight transported by pipelines; figures on "employment in the sector" cover different types of professionals; those for "fleet size" may or may not include own-account fleets. 10 Based on International Transport Forum (2010) and International Road Federation (2009). 11 The International Transport Forum replaced the European Conference of Ministers of Transport (ECMT) in 2006. 12 International Road Federation (2009). 13 Calculations based on International Road Federation (2009) data for 2007 (and for 2005 for Pakistan). Data for the EU-27 is from Eurostat (2010). 14 Calculations based on International Transport Forum (2010). Note that non available data affects the consistency of totals across years.

S/C/W/324 Page 8 distance of less than 50 kilometres in 2007.15 In China, the share of freight volumes travelling less than 100 kilometres in 2008 amounted to around 63 per cent.16 15. The road freight industry accounts for between 1 and 5 per cent of GDP and roughly similar, albeit often smaller, shares of total employment, depending on countries' level of development, geographical characteristics and transport network infrastructure. Table 3 provides information for selected countries, compiled from different information sources. Table 3: Road freight transport Selected indicators, 2005 Road freight employment as a percentage of total employmenta Australia Canada China EU 27 Austria Belgium Czech Republic Denmark Finland France Germany Greece Hungary Italy Luxembourg Netherlands Poland Portugal Slovak Republic Slovenia Spain Sweden United Kingdom ngdom India Japan Mexico Norway United States a b

1.61 1.25 ... 1.30 1.51 1.49 2.12 1.47 1.65 1.37 0.79 0.30 1.75 1.51 3.94 1.42 1.38 1.21 0.45 ... 2.06 1.56 1.08 ... 2.00 2.86 1.17 0.96

Road freight GDP as a percentage of total GDPb 3.06 1.29 2.10 2.37 3.17 ... 4.61 2.68 3.02 2.09 1.21 0.37 4.11 2.90 3.39 3.18 4.14 2.97 1.24 4.86 3.79 2.52 1.88 4.70 2.75 2.86 1.78 0.92

2002 for Australia; 2007 for Japan and Mexico; 2008 for Canada and the United States. 1999 for Australia; 2006 for Canada; 2007 for China, India, Japan, Mexico and the United States.

Sources: Australia: Australian Department of Transport and Regional Services (2003); Australian Bureau of Statistics (2000 and 2003); Canada, Mexico, United States: North American Transportation Statistics Database (2009); China: China Communications Press (2008); India: CYGNUS Business Consulting & Research (2007); Japan: Japanese Ministry of Land, Infrastructure, Transport and Tourism, Statistical Information (2010); Other countries: Eurostat (2008, 2009 and 2010).

15

European Commission (2009). International road freight trips naturally tend to involve longer distances. For example in 2007, slightly less than half of the freight transported internationally for the EU-27, measured in tonnes moved, involved journeys longer than 500 kilometres. 16 China Ministry of Transport (2008).

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16. In terms of absolute levels of employment, figures from Eurostat (2008) indicate that in the EU-27 more than 2.7 million people were employed in the road freight transport sector in 2005.17 According to the International Road Transport Union (IRU), in 2008 almost 2.4 million people worked directly for the trucking industry in the Commonwealth of Independent States (CIS), while the corresponding figure for North America was 4 million.18 In the United States alone, there were nearly 3 million truck drivers in 2008; about 56 percent of these drive heavy/tractor trailer trucks, 31 percent drive light/delivery service trucks, and about 13 percent are driver/sales workers.19 Available figures for China show that, by the end of 2008, there were more than 12 million people directly employed in the national freight road transport industry.20 17. Figures for the contribution of the sector to GDP and employment tend to underestimate the total economic weight of the sector, since they do not generally include own-account transport.21 From a GATS perspective, however, this is not a major concern, as transport on own account would not be covered by commitments on transport services.22 18. In 2006, the share of own-account transport in the EU-27 was around 20 per cent for national transport and about 5 per cent for international transport.23 Own-account transport generally represents a larger share in the CIS, mainly because of the slower onset of small private road haulage enterprises that accompanied the gradual disappearance of the own-account services are traditionally operated by large industrial conglomerates. It is estimated, for instance, that over 80 per cent of domestic road freight in Uzbekistan and over 50 per cent in the other Central Asian economies is carried for own account.24 19. Several factors can explain the generally higher share of own-account transport in the domestic segment of the market. For one, small and medium-sized companies typically find it easier to organise domestic distribution trips by themselves, while they generally prefer to outsource the longer and more administratively complex international freight trips involving border crossings. Also, companies engaged in hire or reward traffic have a greater incentive to engage in international traffic and are more effective at ensuring that vehicles perform fewer empty runs.25 20. In the absence of detailed traffic statistics, the relative importance of the different road freight markets can be roughly gauged from the number of trucks in use. Two major caveats apply, though. First, available figures include also the fleet used for own-account transport, which, as discussed, represents a variable proportion of the total fleet in different countries. Second, these numbers reflect the relative size of the domestic trucking markets in each country, but provide no indication of the role played by the country's operators on the international scene. The top-20 countries by fleet size are presented in Table 4, while the complete data set is accessible in Annex 3.

17

The corresponding figure provided by the European Commission (2009) for EU-27 is 2.1 million in

2005. 18

This includes people working as drivers, logistics experts, dispatchers and operations managers. US Department of Transportation (2009). 20 International Road Transport Union (2009). Altogether, 18 million people held relevant certificates of professional competence in China, including 14 million professional drivers. 21 Freight transport "on own account" is transport operated by companies transporting their own freight with no financial transaction involved, while transport "for hire or reward" is the carriage for remuneration of freight on behalf of third parties. 22 Own-account transport services would still be subject to GATS disciplines to the extent that relevant measures affect trade in other services. 23 European Commission (2009). 24 Asian Development Bank (2006). 25 See Eurostat (2009). According to the IRU, less than 18 per cent of driven kilometres on long distances are empty runs, compared for a share of around 25 per cent on distances of less than 50 kilometres. 19

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Table 4: Top-20 countries by number of vans and lorries Year 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2006 2007 2007 2007 2007 2007 2006 2007 2007

Australia Brazil Canada China a EU 27 France Germany Italy Poland Spain United Kingdom India Indonesia Japan Korea, Republic of Mexico Russian Federation Thailand Turkey United States

Vans and Lorries 2'723'000 5'709'063 7'425'765 10'540'556 34'835'709 6'270'000 4'604'905 4'437'600 2'520'548 5'140'586 3'715'000 4'436'000 5'065'482 34'324'000 4'189'042 7'870'417 4'730'000 4'992'150 2'619'661 110'497'239

a

According to another source, 7.6 million commercial trucks were operating in China in 2008 (International Road Transport Union, 2009).

Source: International Road Federation (2009).

21. The road freight industry is generally divided into two main segments. The first consists of a large number of small firms providing basic, mainly domestic or quasi-domestic (as in the case of the EU) transport services. It is characterized by easy entry (because of low start-up capital needs, no special expertise required apart form basic driving skills), negligible economies of scale and low degrees of market concentration. Indeed, in most countries the vast majority of hauliers are small and medium-sized enterprises with fewer than 5 vehicles (see Chart 1). Chart 1: Distribution of road haulage companies by number of vehicles, 2004 60% 51% 50%

% of total

40%

34%

30% 20%

13%

10% 1% 0% 1 vehicle

2-10 vehicles

Source: International Road Transport Union (2007).

11-50 vehicles

>50 vehicles

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22. A major part of these transport firms is run by a single owner-driver. Available data indicates, for example, that out of the 4'959'000 operators engaged in the road freight transport business in China in 2007, nearly 90 per cent were individual operators.26 According to the European Commission (2009), in 2004 in almost all EU Member States the share of companies with more than 50 employees was around 1 per cent, while the share of micro-companies with less than 10 employees was 80 per cent or more. In Australia, owner/drivers and small freight operators represented nearly two-thirds of the total number of operating businesses at the end of the 1990s, though they only accounted for less than 12 per cent of the industry's operating income.27 23. Firms in this segment compete mainly on price, with labour costs being a key determinant of competitiveness.28 In the EU, for instance, in 2005 the EU-15 Member States had average personnel costs that ranged from EUR 16'000 for Portugal to EUR 43'000 for the Netherlands, while amongst the 12 most recently acceded Member States Hungary ranked highest (EUR 8'000), and Latvia and Romania lowest (EUR 2'000).29 Against this backdrop, the emergence of the new EU Member States as important players in the European road transport market is hardly surprising.30 24. The second segment is made up of a limited number of large, better organised firms that often provide complex logistics services of which the transport sector is just one segment. Firms in this segment compete on price, range and quality of the services offered. Since economies of scale and scope are more important, this segments exhibits higher concentration levels. (For a fuller discussion, see Background Note on Logistics Services, document S/C/W/317.) 25. OECD markets like Spain, Italy and Poland tend to be more fragmented, with many small business units. In contrast, concentration levels in the Netherlands, Japan and the United States, while still low in absolute terms, are relatively more significant , especially since these countries were quicker than others to switch to integrated logistics.31 At the same time, however, large enterprises have shown a tendency towards turning their employees into independent operators ("owneroperators") by lending them the start-up capital necessary to purchase a vehicle. This helps enterprises reduce social security contributions and related charges and provides more flexibility, due to lower fixed costs, over the business cycle. Table 5 provides information on the top-15 US trucking freight carriers by operating revenue. 26. While it is still too early to assess the full impact of the recent economic crisis on the sector, it is not surprising that, given that its highly cyclical nature and strong link to merchandise trade, the whole freight transport industry suffered heavily from the abrupt reversal in world output and trade growth over 2008-2009. According to the IRU, a comparison of the situation between January and June 2009 with the same period in 2008 shows that domestic revenue and tonne-kilometres output were down by around 20 per cent, and international road freight by about 30 per cent. Employment shrunk by approximately 10-15 per cent, coupled with a drastic fall of new Heavy Goods Vehicle (HGV) registrations of more than 30 per cent for a majority of countries.32 ITF figures for the second quarter of 2009 reveal a year-on-year decline of over 12 per cent in tonne-kilometre figures for Spain,

26

China Communication Press (2007). Australian Department of Transport and Regional Services (2003). 28 For EU hauliers, wages are historically the most important cost factor, representing between 40 and 59 per cent of the total cost in EU-15. (European Commission, 2009.) 29 Eurostat (2008). 30 In 2006, for instance, Poland was the largest contributor to cross trade, i.e. international road transport between two different countries performed by a road motor vehicle registered in a third country, with a share of 19 per cent of the EU total. (European Commission, 2009.) 31 In the OECD, the market share of the top-three firms seldom exceeds 5 per cent of total tonnekilometres transported. (OECD, 2001.) 32 Economic Commission for Europe (2009). 27

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16 per cent for France, 22 per cent for Finland and 23 per cent for Russia. By the end of 2009, however, short-terms data indicated that recovery in the sector had started.33 Table 5: Top-15 US trucking freight carriers by operating revenue, 2005 and 2008a (US$ million) Carrier 2005 2008 8742 8940 YRC Worldwide 5741 6204 Ryder System 4116 5037 Con-way 4000 4000 Penske Truck Leasing 3128 3732 J.B. Hunt Transport 3400 3700 Schneider National 3197 3400 Swift Transportation 972 2810 CEVA Logistics 1096 2747 Sirva 2518 2643 Landstar System 1972 2116 Werner 1227 2120 TransForce 1860 2088 Pacer International 209 2000 UniGroup 1860 1833 Arkansas Best a

Ranking in 2008.

Source: US Bureau of Transportation Statistics (2010).

IV.

TRADE IN ROAD FREIGHT TRANSPORT SERVICES

27. Statistical information on trade in road freight transport services is deficient. Data are focused on "international road freight transport services", i.e. road freight transport between a place of loading and a place of unloading that are located in two different countries. This mainly corresponds to a mode 1 notion of trade. No or little attention is paid, for instance, to cabotage or mode 3 trade, i.e. establishment in a foreign country to carry out domestic road transport operations.34 There are no data available on the proportion of domestic traffic conducted by foreign-controlled, locally established operators. 28. Available figures indicate that the majority of cross-border land transport (via road, rail and pipelines), measured in value, takes place within Europe, Asia and North America.35 The main flows occur intra-regions, given that two of the three main inter-regional links (Asia-North America, and Europe-North America) are not possible by land-based routes, and hence maritime transport dominates. For the third (Asia-Europe), road transport is possible, but very limited at present, with the majority of goods again being shipped by sea.36

33

International Transport Forum (2010). The United States is the only country that collects Foreign Affiliates Statistics for the category "truck transportation". Available data can be obtained from: http://www.bea.gov/international/international_ services.htm (see, in particular, sections 9 and 10). 35 OECD (2010). 36 The 'Silk Route' between Europe and Asia is one of the oldest land trade routes in the world. Over time, however, long-distance freight flows on this route were replaced by maritime transport. With the reopening of the border between China and Kazakhstan, land freight transport recommenced, even though volumes are presently still relatively limited. Road freight transport is estimated to account for less than 1 per cent of total containerised flows between Europe and Asia. (US Chamber of Commerce (2006).) 34

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29. Furthermore, as discussed, trucking is essentially short-haul. Indeed, surface modes dominate merchandise trade between neighbouring countries.37 On the basis of US and Latin American data, Hummels (2007) estimates that around 90 per cent of trade between countries sharing a land border is transported by land, with the remaining 10 per cent travelling by air or sea. Fernandez (2008) further calculates that 90 per cent of the US-Mexican freight is transported by truck. The corresponding share for US-Canadian freight is 66 per cent. 30. Not surprisingly, most traffic, particularly in large countries, is domestic in nature. In the United States, for instance, the share of national transport in total road freight transport (measured in value) was over 95 per cent in 2008.38 In general, trucking is used considerably to feed inter-regional maritime services, connecting inland flow origins and destinations.39 31. As far as the EU is concerned, international road freight transport takes place mostly between its Member States. The share of extra-EU road freight transport accounted for only 5 per cent of the total volume of international road freight transport in 2006. However, the picture is different for EU Member States that border non-EU countries, for which this share can amount to between one-quarter and almost one-half of their total international transport performance. This is the case for Bulgaria, Sweden, Estonia, Latvia and Finland, and to a lesser extent Denmark and Lithuania.40 32. In terms of the extra-EU trading partners, Switzerland, Russia and Norway are the most important ones, as Chart 2 illustrates.

37

Just about one quarter of global trade (in value terms) is between neighbouring countries. (OECD

(2010).) 38

US Department of Transportation (2009). Data do not include imports and exports that pass through the United States from a foreign origin to a foreign destination. 39 OECD (2010). 40 European Commission (2009). These data are partial, however, as they only reflect EU-registered operators, but elude road freight transport performed on EU soil by non-EU registered hauliers.

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Chart 2: Extra-EU road freight transport performed by EU-registered hauliers, 2006, destination of outgoing and origin of incoming freight Country of unloading

Country of loading

Ukraine 7%

Other 30%

Other 4%

Croatia 4%

Russia 14% Belarus 1%

FYROM 1% Russia 39%

Turkey 6%

Switzerland 22%

Ukraine 3% Norway 14% Croatia 3% Belarus 2% Switzerland 23%

FYROM 1% Turkey 10%

Norway 16%

Source: European Commission (2009)

33. Available Balance-of-Payments data on major importers and exporters of freight transport services is presented in Table 6. There are several shortcomings with these data. They are attributable mainly to the way in which traded goods are valued in the Balance-of-Payment (free on board for exports and imports) as, for compiling purposes, transport costs are assumed to be paid by, and pertain to, the importer beyond the exporting country's border (and also depend on the residency of the freight operator). Conceptual work to improve measurement of transport trade statistics is nevertheless ongoing, notably in the context of the drafting of the first revised version of the UN Manual on Statistics of International Trade in Services.41

41

For more information, see http://unstats.un.org/unsd/statcom/doc10/BG-MSITS2010.pdf, and paragraphs 3.105 to 3.108 in particular.

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Table 6: Major exporters and importers of road freight transport services, 2008 (US$ million and percentage)

Rank

Exporters

Value

Share of 15

1

EU-27 Extra-EU-27 exports Turkey Belarus Uruguay Russian Fed. Norway Kenya Serbia, Rep. of Croatia Argentina Kazakhstan Ukraine FYROM Brazil Bosnia & Herz. Above 15

60553

91.6

11837 1751 590 376 368 340 320 314 298 285 232 222 187 137 118 66090

17.9 2.6 0.9 0.6 0.6 0.5 0.5 0.5 0.5 0.4 0.4 0.3 0.3 0.2 0.2 100.0

2 3 4 5 6 7 8 9 10 11 12 13 14 15 a

Annual % change 16 39 26 33 16 17 21 50 35 18 17 36 27 44 28 22 -

Rank

Importers

Value

Share of 15

1

EU-27 Extra-EU-27 imports Iraq a Norway Ukraine Kazakhstan Uganda Russian Fed. Botswana Croatia Uruguay El Salvador Argentina Turkey Brazil Guatemala Above 15

71546

88.7

Annual % change 12

13783 2160 1856 752 700 608 536 447 420 342 337 264 261 211 208 80650

17.1 2.7 2.3 0.9 0.9 0.8 0.7 0.6 0.5 0.4 0.4 0.3 0.3 0.3 0.3 100.0

22 0 12 167 15 41 41 30 22 45 37 15 10 44 8 -

2 3 4 5 6 7 8 9 10 11 12 13 14 15

2007

Note:

Based on information available to the WTO Secretariat. As certain economies do not report this item separately, they may not appear in the list. Source: WTO Secretariat.

34. As indicated above, information related to mode 3 trade in road freight transport is virtually non-existent or very sketchy. In 2006, the IRU carried out a survey on capital mobility in the sector focused on Central-Eastern and South-Eastern European countries and the CIS. The IRU estimates that road transport accounts for around 4 per cent of all foreign direct investment undertaken in the region between 1989 and 2005.42 Additional information, provided by the Danish professional association to the IRU, indicates that in 2006 around 16 per cent of the foreign lorries driving into Denmark belonged to Danish road hauliers' foreign subsidiaries, corresponding to around one in every seven lorries crossing the German/Danish border northbound. These lorries were mostly German or Eastern-European flagged. Amongst the reasons given by road transport operators for the decision to "out-flag" were lower taxation, labour (i.e. driver) and other costs and market diversification. V.

REGULATORY ASPECTS

35. The road transport sector is heavily regulated. Regulatory measures cover a broad spectrum of issues, ranging from market access to security, road safety, the taxation of vehicles, fuel and infrastructure, social legislation (driving hours and rest periods, wage norms and social insurance cover), road traffic (prohibitions and restrictions), environmental standards, and technical standards (in particular, weights and dimensions). 36. Road transport is mainly regulated at the national level. However, in States with a federal structure, some regulations, including those relating to market access, are generated at the sub-federal level. This applies, for instance, to the United States, India and Australia.

42

International Road Transport Union (2006).

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37. At the international (mostly regional) level, regulation tends to focus on the harmonization of the operating conditions, such as weight and dimensions, environmental standards, driving hours and rest periods, and fiscal harmonization. 38. This section will first discuss the available information concerning market access regulations. It will then consider, more briefly and mainly in the form of comparative tables, various other regulations that could have an indirect impact on access to markets. A.

MARKET ACCESS REGULATIONS

39.

Two main regimes need to be distinguished: (a)

The internal or domestic transport regime. As mentioned above, internal transport accounts for the overwhelming majority of global traffic, and has been extensively liberalized. Applicable regulations with respect to mode 3 differ only marginally, to account for sectoral specificities, from the general establishment regime contained in the company law of most WTO Members.

(b)

The regime applicable to international traffic. This is, generally, very restrictive. The dominant mode of regulation is a system of bilateral agreements, fairly comparable with that found in the air transport sector.

1.

Overview of the market access regulations applicable to domestic transport, including establishment

(a)

General trend

40. Since the 1930s, road transport has been subjected to tight quantitative regulation, at least in North America and in Europe. A system of licences, quotas and tariffs had been originally introduced to prevent the erosion of the modal split share of rail traffic. By way of partial compensation, established road transport operators were protected from new entrants, with tariffs fixed at a level that enabled the least competitive to survive. Thus, until the arrival of the two waves of deregulation in the 1960s and the 1980s, the profession had operated within a system of mandatory road transport pricing and freight rate bureaus that benefited from anti-trust exemptions. 41. The quota system failed to achieve its initial objectives. It did not succeed in regulating capacity or preventing the erosion of rail transport, and it encouraged fraud and the development of transport on own account. Domestically, these quantitative systems have been progressively dismantled. In the United States, this took place within the framework of a broadly-based deregulation movement43, and in the European Union with the establishment of the Single Market for road transport.44 In the countries of Central and Eastern Europe, liberalization came suddenly and was followed by a period of re-regulation, or rather regulation, since until then regulation of Stateowned operators had not been required. 42. In recent years, domestic quantitative regulatory and mandatory pricing systems, or indeed State haulage enterprises, have been gradually liberalised and, as the case may be, privatised in many 43

In particular, the Motor Carrier Act of 1980, which reduced the rate-setting powers of the Inter-State Commerce Commission and the anti-trust immunity of the rate bureaus and made licences more flexible. 44 Relevant stages included price deregulation in 1990, abolition of intra-Community quotas, the progressive liberalization of cabotage (completed on 1 January 1998), definition of qualitative criteria for access to the profession, harmonization of driving times, weights and dimensions, and a start on the harmonization of the taxation of vehicles, the use of infrastructure and of fuel.

S/C/W/324 Page 17 countries. Examples can be found in countries as diverse as the Czech Republic, Hungary, Poland45, Mexico46, Egypt47, Morocco48, Jordan49, Papua New Guinea50 the sub-Saharan African States51, such as Rwanda52, Zambia and others.53 In many instances, the initial impetus came from the World Bank.54 One of the challenges facing developing country regulators is that of getting hauliers to switch from the informal to the formal sector for fiscal and road safety reasons and to ensure fair competition. Policies of this type have reportedly been successfully implemented in Morocco and Turkey. Access to bank credit for vehicle financing and compulsory insurance are among the policy tools available for this transition to the formal sector. 43. Effects of this domestic liberalization have included a fall in prices, with the ensuing decline in the profitability of the sector, the creation of new enterprises (but also bankruptcies), an acceleration of concentration and specialization, network development, services customisation, job creation and a relative decline in wages. Annex 4 gives a more detailed description of the estimated economic effects of the domestic liberalisation process based on recent econometric studies. 44. The impact on safety and working conditions has been the subject of doctrinal controversy in the specialized literature. There appears to be consensus among economists that liberalization has been successful in meeting short-term policy objectives, such as lower prices and diversification of supply, but less so in pursuing medium-term objectives, namely reduced congestion of the road infrastructure, pollution control and energy conservation. (b)

Historical trends in developed and emerging countries – OECD Road Freight Regulation Database

45. The liberalization of the domestic road transport market has been particularly well documented by the OECD Secretariat for OECD countries, but also some other non-OECD members (Estonia, Israel, Slovenia, Brazil and China). The OECD's road freight regulation database is based on annual surveys, the first of which goes back to 1975.55 Thus, it can be used to trace, over a period of 35 years, the evolution of the seven parameters which the OECD has chosen as indicative of the liberalization of the domestic road transport market, namely, whether: (a)a licence or permit from the government is needed to establish a road freight business; (b) criteria other than financial fitness and compliance with the road safety regulations are considered in decisions authorizing the entry of new operators into the market; (c) the regulator has any power to limit industry capacity; (d) representatives of trade and commercial interests are involved in specifying or enforcing entry regulations; (e) not representatives of trade and commercial interests are involved in specifying or enforcing pricing guidelines or regulations; (f) retail prices of road freight services are regulated by the government; and (g) the government provides pricing guidelines for road freight companies. Annex 5 summarizes the results of this survey.

45

See Raballand and Macchi (2008). See Dutz, Hayri, and Ibarra. (2000). 47 See Gray, Fattah and Cullinane (1998). 48 See World Bank (2007). 49 See Togan (2009). 50 See Heggie (1991). 51 See Carbajo (1993). 52 See Mwase (2003). 53 See Raballand, Kunaka and Giersing. (2008). 54 See World Bank (1995). 55 OECD survey of indicators of regulation in energy, transport and communications, available at http://www.oecd.org/dataoecd/47/29/42480612.xls. 46

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46. The survey paints a picture of an extensively liberalized sector in terms of market entry and pricing.56 There are only four countries (Norway, Slovak Republic, Turkey and China) which use criteria other than financial fitness and compliance with road safety requirements for issuing permits and whose authorities are empowered to regulate capacity through licences or otherwise. Japan may need to be added to these countries since the regulator has the ability to limit capacity through channels other than licences. 47. Professional bodies continue to be involved in the specification and enforcement of market entry regulations in only nine countries (Belgium, France, Hungary, Iceland, Italy, Netherlands, Portugal, Estonia, Slovenia, and China) out of 37, whereas until the mid-1980s this was a classical regulatory feature. Moreover, there are now only three countries (Hungary, Chile, Slovenia) in which the same bodies are still involved in the specification or enforcement of pricing regulations, whereas in the past co-management with the public authorities was the general rule. 48. Retail prices of road freight services are still regulated in only two countries (Turkey and China) out of the OECD sample, and only four countries (Korea, Greece, Chile, and China) issue pricing guidelines. It should be noted, however, that the trend towards liberalization is not unequivocal. On several occasions, States have gone back on the reforms introduced. The most recent case is the simultaneous re-establishment of capacity-regulating powers in four OECD member States (Japan, Turkey, France and Norway) in 2005. 49. Unfortunately, these data do not help clarify the issue of whether the conditions of establishment and operation discriminate against foreign companies and in favour of domestic firms. It is true that a detailed establishment survey recently carried out by the IRU contains a question relating to the conditions imposed on foreign investors in the host country.57 Only some of the companies surveyed replied, in rather non-specific terms, but always indicating that there was no discrimination. However, this sample is too narrow (it only concerns Eastern European countries) and the data are too imprecise to serve as a basis for any general conclusions. 50. The GATS commitments on road transport, described in detail in the third part of this document, contain a significant number of restrictions on establishment and operations, such as economic needs tests, restrictions on foreign participation, obligations to set up a domestic-law corporation, permit systems closed to vehicles registered abroad, emergency safeguard measures with respect to the number of service providers, limitations on the total number of service operations or on the total quantity of service output, limitations on the use of hired vehicles, fulfilment of establishment obligations in order to be authorized to participate in certain types of traffic, restrictions on the types of cargo that can be transported, prior authorization procedures, and obligations to use locally registered vehicles. 51. However, for various reasons, these commitments cannot be regarded as an approximation of the applied regime. First of all, the commitments cover only about one-third of the Members of the WTO. Secondly, it is uncertain whether at the time they were listed the respective entries corresponded to the regime actually applied, as access can be bound at a more restrictive level than the status quo. Finally, these conditions were scheduled almost 17 years ago and may have evolved in 56

Thus, even though a permit/licence specific to the sector has to be obtained in all but four of the countries covered by the survey (i.e. Australia, New Zealand, Poland and Chile), in one-half the countries concerned this permit is issued at "open windows", once the financial fitness and road safety conditions have been met. The "open" formulation of question (b) (there is no need to specify the "other" criteria) carries a bias in favour of restrictiveness. In fact, when the replies to this question are read in conjunction with the replies to question (c), i.e., whether the regulator has any power of quantitative capacity regulation, it turns out that in almost all cases capacity is not taken into consideration among these "other" criteria. 57 International Road Transport Union (2006). This is an internal IRU document accessible from the IRU members' website.

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a more liberal direction, as has been discussed before (see above). Since the WTO's Trade Policy Reviews do not generally cover road transport, this evolution has not been systematically documented. (c)

Conditions of establishment and operation – World Bank's Services Policy Restrictiveness Database

52. The latest and most comprehensive data on the conditions of establishment and operation of foreign road transport service providers come from a World Bank survey.58 This survey systematically collected data on market access (in a broad sense) and on certain aspects of domestic regulation, such as the procedures for awarding licences. The assessment of these data is still in progress, but the World Bank has granted the WTO Secretariat access and, thus, enabled the establishment of a first aggregated typology of the regimes applied. 53. The geographical coverage of the World Bank survey is extremely broad since it includes 93 WTO Members and 9 non-Members. Together, these account for 86 per cent of the world fleet of goods vehicles (vans and lorries).59 The analysis of the data will be confined to the 93 WTO Members included in the World Bank's survey. In terms of level of development these can be broken down as follows: 64 developing countries, including 14 LDCs, 25 developed countries and 4 members of the CIS.60 In terms of geographical distribution, 24 of these 93 WTO Members are located in Africa, 22 in Europe, 17 in Asia, 17 in the Caribbean and Central and South America, 6 in the Middle East, 4 in the CIS, and 3 in North America.61 54. The World Bank questionnaire does not follow precisely the structure of Articles XVI and XVII of the GATS and, therefore, does not include all types of restrictions that can be found in the schedules of commitments. Moreover, the questionnaire covers aspects that go beyond the scope of Articles XVI and XVII of the GATS, in particular as regards licensing procedures. (These aspects will be analysed in subsequent publications by the World Bank.) 55. The results of an initial analysis of the data of the World Bank survey are reproduced in Tables 1 to 8 of Annex 6. They are expressed both in terms of number of Members per continent/region and as percentages of the total fleet of the 93 WTO Members. The first element to emerge is that the fleet is distributed extremely unevenly across continents/regions: around 50 per cent in the three countries of North America, 28 per cent in Asia/Pacific excluding the Middle East, 15 per cent in Europe, 4.5 per cent in the Caribbean and Central and South America, 2 per cent in Africa, 0.8 per cent in the Middle East, and 0.2 per cent in the CIS. 56. The survey distinguishes between four different ways of establishing a commercial presence, namely: (a) establishment of a new branch; (b) establishment of a new subsidiary; (c) acquisition of an existing private company; and (d) acquisition of an existing publicly owned company in the event of privatization. All forms of commercial presence are authorized without any restrictions in 40 Members which, however, account for only 11 per cent of the fleet. It is Africa that turns out to be proportionately the most liberal region (18 countries out of 24). 58

These data were gathered within the context of an ongoing study, which extends beyond the road transport sector alone, by Mattoo, Borchert and Gootiiz (2010). The data, which are preliminary and subject to correction, form part of the World Bank's Services Policy Restrictiveness Database. This database is under construction and will become accessible on line in autumn 2010. Further details can be found at: http://econ.worldbank.org/programs/trade/services and in Mattoo and Gootiiz (2009). 59 These sample representativeness calculations are based on the IRF fleet statistics for 2007 (see also Annex 3). 60 These categories are those used by the Secretariat for the data provided to the Committee on Trade and Development, see for example document WT/COMTD/W/172/Rev.1. 61 These geographical categories are those used by the WTO in its statistical publications.

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57. Commercial presence is partially permitted (i.e. in one, two or three of the four possible forms) in 35 Members representing 72 per cent of the fleet. This high share is attributable to the fact that the three North American Members, which alone account for nearly half the world fleet, find themselves in this category along with eight Asia/Pacific countries whose cumulative fleet represents nearly 18 per cent of the total. 58. Finally, none of the four forms of commercial presence is accepted in 18 Members, which account for 16 per cent of the fleet, including 14 European Members representing 12 per cent of the fleet. 59. The holding of a majority stake in a joint venture is authorized in 54 Members out of 93, accounting for 58 per cent of the fleet. Two-thirds of this fleet are located in a single North American country, but in terms of numbers of countries, half the regions have fairly liberal regimes (13 countries out of 17 in South America, three out of four in the CIS, 21 out of 24 in Africa). 60. In terms of total authorized foreign participation in a joint venture, 44 Members, representing 57 per cent of the fleet, authorize 100 per cent participation. Again, one North American Members accounts for two-thirds of this fleet. Asia and the Caribbean and Central and South America each represent about 4 per cent. In regional terms, the Caribbean and Central and South America (12 Members out of 17) and Africa (15 Members out of 24) appear to be the most liberal. Nine Members, representing 0.2 per cent of the fleet, authorize participation of between 50 and 100 per cent and 33 Members, representing 23 per cent of the fleet, only permit a participation of less than 50 per cent. Europe contributes one-half of the fleet concerned and Asia one-third. 61. Apart from the case of joint ventures already mentioned, the survey pays attention to the participation ceilings imposed on foreign service providers in three cases: (a) the establishment of a subsidiary; (b) the acquisition of existing private companies; (c) and the acquisition of an existing publicly owned company in the event of privatization. However, the data actually exhibits little variation between these three cases, and the differences are more pronounced in terms of numbers of Members than in terms of the volume of the fleet concerned. For instance, a 100 per cent ceiling is allowed by 59 Members in the case of the establishment of a subsidiary, by 61 for the acquisition of a private company and by 45 in the case of a privatization, but in all three cases those Members account for about 75 per cent of the fleet. 62. By region and in terms of Members concerned the results are as follows: The three NAFTA members do not maintain any restrictions; they are followed by the CIS (3 or 4 Members out of 4, depending on the case), Africa (16 to 20 Members out of 24), the Caribbean and Central and South America (9 to 13 Members out of 17) and Asia (9 to 11 Members out of 17). Europe (6 to 8 Members out of 22) and the Middle East (0 to 1 Member out of 6) are trailing behind. The 50 to 100 per cent range has been adopted by only a very small number of Members (2 to 5, depending on the case) and affects only a marginal proportion of the fleet (between 0.2 and 2.6 per cent). Finally, participation limits of less than 50 per cent concern a little over 20 per cent of the fleet concentrated in about one third of the Members concerned. The proportion of non-available replies is very low. 63. It is noteworthy that the existence of a quantitative limitation on licences (whether or not discriminatory) was observed in only one Member, from the African region, and affects only 0.7 per cent of the fleet. The high number of "not applicable" answers (53 Members, representing 33 per cent of the fleet) might be a further indication of the absence of a quantitative limitation on the number of licences available.

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64. Differences in the treatment of domestic and foreign providers when awarding licences are also to be found in only a very small number of Members (4, representing 0.2 per cent of the fleet). In addition, for almost the whole of the sample in terms of the fleet (60 Members representing 97 per cent of the fleet), replies to this question are "not applicable". In terms of jurisdictions concerned, 29 Members, representing 2.5 per cent of the sample, do not apply such differences in treatment and, apart from Africa where such instances are proportionally more numerous (in 12 out of 24 Members), they are fairly evenly distributed among the regions. 65. Nationality conditions for employees (in absolute terms and/or as a percentage of total employment) are imposed in 39 Members, representing nearly 70 per cent of the fleet. Nearly twothirds of this fleet can be ascribed to two North American Members and more than 15 per cent to eight Asian Members. Geographically, this restriction, especially if cumulated with the partial imposition of such nationality conditions, is fairly broadly distributed (11 Members out of 17 in the Caribbean and Central and South America, 7 out of 22 in Europe, 4 out of 4 in the CIS, 9 out of 24 in Africa, 4 out of 6 in the Middle East, and 7 out of 17 in Asia). 66. Nationality or residence conditions (in absolute terms and/or as a percentage) are imposed on the board of directors by 18 Members, representing 8 per cent of the fleet. Most of this fleet comes from three Asian Members and one North American Member. No information is available for one third of the sample in terms of number of Members and two thirds in terms of the fleet (32 Members representing 67.5 per cent of the fleet), which calls for a certain degree of caution in interpreting these results. Nevertheless, 43 Members, representing 24.5 per cent of the fleet, do not apply such restrictions. They are proportionally more numerous in the Caribbean and Central and South America, Africa and Asia. 67. The general picture emerging from this initial analysis of the data is less liberal than that depicted by the OECD database, but still much more open than the current level of GATS commitments (see also section VI.A). This applies fairly evenly to all continents, albeit with appreciable variations for particular restrictions. However, considering the level of aggregation, these results should be interpreted with caution. The Secretariat stands ready to provide Members with the more detailed analyses that the World Bank is preparing to undertake. 2.

Overview of the market access regulations applicable to international transport

68. Bilateral traffic-sharing agreements are the predominant mode of organization of international road transport. There are cases in which international traffic is prohibited and in which cargoes must be transhipped at or near the frontier onto vehicles belonging to the neighbouring country in order to continue their journey. Yet access conditions may be rendered more flexible under regional agreements or governments may decide, as in the case of the European Union, to create a single market. (a)

The system of bilateral agreements

(i)

Historical background and scope of the bilateral system

69. The dominant international regime governing road transport may be compared, mutatis mutandis, with that applicable to air transport, except for the fact that the former is fully covered by the GATS whereas air transport is for the most part excluded. The road transport regime is made up of thousands of bilateral agreements which split the traffic between the two parties to the exclusion of all others (with the marginal exception of "third country" quotas) and provide a quantitative framework by annually establishing quotas for the number of authorized journeys. The ITF estimates

S/C/W/324 Page 22 that for the 43 States participating in the European Conference of Ministers of Transport (ECMT)62 the number of bilateral agreements amounts to about 1,400, that is some 20 agreements per Member State of the European Union and 30 to 35 agreements for the other States. It is not possible to give a precise figure for the number of agreements in other geographical areas, such as Latin America, Asia and Africa for lack of accurate data, but the total for these areas is surely in excess of a thousand agreements. 63 70. The current regime, which arose immediately after the Second World War, was enshrined, as far as Europe is concerned, in a declaration of the 1975 Conference on Security and Cooperation in Europe (CSCE). It stipulates that "the participating States … express their intention to encourage the development of international inland transport of passengers and goods as well as the possibilities of adequate participation in such transport on the basis of reciprocal advantage." Interestingly, this language is quite similar to that traditionally used in the field of aviation. 71. No systematic analysis or mapping is currently available of the bilateral road transport agreements that could be compared with the database prepared by the WTO Secretariat on air transport, the Quantitative Air Services Agreements Review (QUASAR).64 However, on the basis of the model agreement drawn up by the ECMT in 1997 and the agreements collected by the World Bank in other regions, together with the specialized literature, it is possible to outline the provisions most frequently encountered. (ii)

Standard structure of a bilateral agreement

72. The ECMT model agreement65 is regarded by the professionals and road transport negotiators as very broadly representative of the existing road transport agreements, at least in Europe. The standard structure of road transport agreements will therefore be described on the basis of this model agreement.66 A later section will indicate the variations relative to this standard agreement so far identified in the specialized literature. 73. The model agreement comprises three successive levels of obligations applying in different degrees to certain fractions of the traffic. This complex structure is schematically represented in Table 7.

62

The ECMT is an organization administratively linked to the OECD but whose geographical area progressively expanded beyond the OECD to include the countries of Central and Eastern Europe and then the Caucasus. The ECMT was replaced in 2006 by the ITF, an international organization with extended scope and powers. For further details of these organizations visit: http://www.internationaltransportforum.org/about/aboutintrofr.html and http://www.internationaltransport forum.org/europe/indexfr.html 63 The international road transport regime in North America is governed by the rules laid down in the North American Free Trade Agreement and thus unaffected by bilateral agreements. 64 For further information see http://www.wto.org/english/tratop_e/serv_e/transport_e/ transport_air_e.htm and document S/C/W/270/Add.1. However, in order to gain a better understanding of the international road transport regulations, in 2009 the WTO Secretariat, the International Transport Forum, the World Bank and the IRU made a systematic effort to collect bilateral road agreements and have so far collected over 600, contained in the LiBRA (List of Bilateral Road Agreements) database. The text of these agreements can be accessed at: http://www.wto.org/english/tratop_e/serv_e/transport_e/ transport_land_e.htm. 65 European Conference of Ministers of Transport (1997). 66 This agreement also contains provisions relating to passenger transport which will not be described here.

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Table 7: Scope of the various levels of obligations contained in the ECMT model agreement Third level of obligations: - Quotas

Traffic exempted from the third level of obligations - Transport of perishable goods67 (Art. 7.13.2) Traffic covered All traffic covered by the - Removals (Art. 7.13.4) second level of obligations - Any other category except that listed in the next decided on by the column Contracting Parties (Art. 7.13.3) Second level of obligations - Permit requirement

Traffic exempted from the second level of obligations

Traffic covered All traffic except that listed in the next column

-

-

-

-

Transport on own account (Art. 7.10) Transport by vehicles whose total permissible laden weight (TPLW) does not exceed 6 tonnes, or when the permitted payload does not exceed 3.5 tonnes (Art. 7.1) Combined transport providing that the station or river or sea port of loading or unloading is located within 150 km of the point of loading or unloading of the freight (Art. 7.12) Transport between neighbouring countries subject to a depth of 25 km and a maximum journey length of 100 km as the crow flies (Art. 7.13) Transport of livestock (Art. 7.5) Occasional transport to or from airports where services are diverted (Art. 7.2) Breakdown transport (Art. 7.3) Transport by replacement vehicles (Art. 7.4) Transport of spare parts and provisions for ships and aircraft (Art. 7.6) Humanitarian transport (Art. 7.7) Transport for fairs and exhibitions (Art. 7.8) Transport relating to artistic activities (Art. 7.9)

First level of obligations - Prohibition of cabotage - except with special authorization - (Arts. 6.2 and 8.5) - Provisions on taxes and tolls (Art. 9) - Host country technical standards (Art. 10) - International conventions (Art. 11) Traffic covered All, i.e. transport on behalf of third parties (Art. 2.a) and transport on own account (Art. 2.b) Source: Compiled by WTO Secretariat on the basis of the ECMT model agreement.

67

The following three types of transport have been ordered according to their respective economic importance.

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74. The criterion for designating a beneficiary of the agreement is based on the place where the transport company is established and where the vehicle is registered, which is assumed to be always the same country. The actual driver may be of a different nationality. This beneficiary clause appears to be more liberal than air transport's "substantial ownership and effective control" criterion. However, it does happen, as the World Bank survey shows, that national ownership, national participation or joint venture obligations are specified at national level and superimposed on this establishment clause for the purposes of the bilateral agreements concerned. 75. As indicated in Table 7, the first level of obligations covers both transport on own account and transport on behalf of third parties. Even though the model agreement contains a detailed definition of transport on own account68, there are also national and regional definitions, which are sometimes more restrictive. For example, Regulation of the Council of the European Communities No. 881/92 of 26 March 1992 specifies, in its Annex II, that there is transport on own account only if the undertaking owns the vehicle, the goods carried are the property of the undertaking, and the vehicle is driven by its own employees and solely to, from or between its own facilities. In general, the rules of admission to the occupation of road haulage operator do not apply to transport on own account but there are sometimes registration requirements at the national level. These definitions and procedures of an internal nature apply mutatis mutandis to international traffic. 76. The prohibition on cabotage (i.e. traffic between two points in the same country), except with special authorization, also applies to the whole of the traffic. This fundamental prohibition is even mentioned twice in the model agreement (Articles 6.2 and 8.5). However, Article 8.5 stipulates that if the parties were to decide to make an exception to this rule, the Joint Committee would determine the legislative and administrative provisions in the host country applicable to cabotage. 69 Article 8.5 also states that these legislative and administrative provisions are to be applied without discrimination. 77. According to the tax provisions of the model agreement, vehicles of a Contracting Party operating on the territory of the other Contracting Party are exempt from payment of all tax related to the ownership, registration and running of the vehicle as well as special taxes on transport services. Likewise, the fuel contained in the vehicle at the time it enters the territory of the host country is exempt from all import duty. At the same time, these vehicles are subject in the host country to the tolls and duties levied for the use of the road network or bridges, it being understood that these tolls and charges are levied on resident and non-resident transport operators without discrimination. 78. The last part of this level of obligations concerns technical standards. The model agreement stipulates that the weights (permissible maximum weight, axle weight) and dimensions of vehicles may exceed the upper limits in force in the host country only with a special permit applied for in advance. This provision could have a significant impact on trade if these upper limits differ substantially from those of the country of origin, as is sometimes the case (see Annex 11). Moreover, vehicles are required to comply with the provisions of the international conventions of the United Nations Economic Commission for Europe (UNECE)70 and the agreements that govern the carriage of 68

"Transport on own account" means transport using vehicles owned by the operator or hired under a long-term contract or leased; driven by employees of the enterprise or a member of the association; which is only an ancillary activity in the context of all the other activities of the enterprise or association; either of goods which are the property of the enterprise or association or have been sold, bought, let out on hire or hired, produced, extracted, processed or repaired by the undertaking, the purpose of the transport being to carry the goods to or from the enterprise or to move them for its own requirements; or of employees of the enterprise or members of a non-profit-making association for whom the transport is part of its social or welfare activities. 69 The body comprising delegates from each Contracting Party that is responsible for implementing the agreement. 70 UNECE has 56 members: 48 in Europe, 2 in North America (Canada and United States), 5 in Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) and 1 in the Middle East (Israel). See also: http://www.unece.org/oes/nutshell/member_States_representatives.htm.

S/C/W/324 Page 25 dangerous goods and the carriage of perishable goods, respectively71. Finally, the model agreement requires the equipment used to monitor crew driving and rest times to comply with the provisions of the UNECE's European Agreement concerning the Work of Crews of Vehicles engaged in International Road Transport (AETR). 79. Next, concerning the second level of obligations, the requirement of a permit, out of the 12 exemptions, only 6 are commercially significant: transport by light vehicle, transport on own account (which, as indicated before, can sometimes account for more than 50 per cent of total traffic, though probably a lesser proportion of international traffic), transport of perishable goods, transport of livestock, transport between neighbouring countries (in certain cases only) and combined transport. 80. Because of this exception in favour of combined transport, a large proportion of international container traffic falls outside the scope of the permit and quota system. This can be ascribed, on the one hand, to the economic and political weight of port interests and, on the other, to environmental policy objectives. By exempting combined transport from road quota permits, it is hoped to encourage, on part of the journey, recourse to other means of transport and hence partial intermodal transfer. However, the Secretariat is not aware of statistics reflecting the impact of this exception, nor of the other exceptions. This lack of information is understandable, given that the main raison d'être of the permit system is statistical in nature, and that activities not subject to permits cannot by definition be counted. 81.

Geographically, the permits provide for four different possibilities: (a)

Cabotage (in very exceptional cases);

(b)

transport between the territories of the two Contracting Parties;

(c)

transport between a point in the territory of the other Contracting Party and a point in the territory of a third State, provided that the journey includes the country of establishment of the haulier, or what the professionals call triangular or "third country" traffic; and

(d)

transit transport.

82. Finally, the third level of obligations, the quota requirement, forms the core of the bilateral capacity control system. Article 8.4 of the model agreement stipulates that the Joint Committee "determines the quota, categories [journey and time] and any further conditions governing permit use". As this shows, the procedures for negotiating permits and quotas largely overlap, the only difference being the traffic subject to permits but not quotas (perishable goods, removals). Quotas are negotiated within the same geographical framework as permits (see above). 83. Quotas are always specified in terms of either the number of individual journeys or the number of permits valid for a specified period, for example, three months or a year. There are no traffic restrictions in terms of value. The model agreement provides for the possibility of granting additional quotas to vehicles that meet stricter environmental or safety requirements, and several recent agreements have in fact made use of this possibility.

71

These are the European Agreement concerning the International Carriage of Dangerous Goods by Road and the Agreement on the International Carriage of Perishable Foodstuff and on the Special Equipment to be Used for such Carriage.

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84. Bilateral quotas are always fixed at the same level for both parties. Accordingly, it often happens that, when the two flags are not equally competitive, the quota allocated to the more competitive flag is exhausted before the end of the year. In these circumstances, the country that has exhausted its quota tries to obtain an additional quota from its partner. If it is unable to do so or if the additional quota is exhausted in its turn, the goods can still be carried, either by the less competitive flag or outside the framework of the bilaterally established road transport quotas. This is possible either (a)

by other modes of transport, an option which, however, remains marginal on account of the costs and logistical difficulties (lack of flexibility, number of players involved, frequent breaking of bulk) it entails; or

(b)

by road, by carriers of a third country that has not yet exhausted its bilateral quota with the country of destination and its transit quotas with potential transit countries. Again, this implies additional costs and journey times and at least one breaking of bulk.

85. Except in the case of adjacent countries where only a single agreement is involved, road traffic rights always result from a combination of several bilateral agreements, on account of the existence of transit quotas and triangular traffic quotas. (iii)

Operation of bilateral agreements in combination

86. The full utilization of bilateral quotas in the relations between two non-adjacent countries depends, as indicated before, on the availability of transit quotas in the intervening transit countries. 87. The transit quotas are not necessarily the same for the two countries located at the ends of the chain. In other words, as Figure 1 illustrates, on the route A-B-C, country A may have a larger transit quota through country B (in this case 500) than C (in this case 300). In fact, each of the countries at the ends of the chain negotiates its transit quotas individually with each of the intermediate countries.

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Figure 1: Schematic illustration of the operation of transit quotas Agreement A-B Bilateral quota AB: 100 for HA 100 for HB Transit quota "all countries beyond B" for HA: 500 Transit quota "all countries beyond A" for HB: 500

Regulatory Framework for HA

Agreement A-C

+

Bilateral quota AC: 100 for HA 100 for HC Transit quota "all countries beyond C" for HA: 400 Transit quota "all countries beyond A" for HC: 400

HA A

B

C

HC

Regulatory Framework for HC

Legend:

Notes:

Source:

Agreement A-C Bilateral quota AC: 100 for HA 100 for HC Transit quota "all countries beyond C" for HA: 400 Transit quota "all countries beyond A" for HC: 400

Agreement B-C

+

Bilateral quota BC: 100 for HB 100 for HC Transit quota "all countries beyond B" for HC: 300 Transit quota "all countries beyond C" for HB: 300

HA = Haulier of country A HB = Haulier of country B HC = Haulier of country C Text in bold indicates the bilateral/transit quota used by the carrier concerned. The AC agreement is shown twice to simplify the diagram. It should be noted, however, that in each of the cases described on either side of the median line of the diagram, it is a different provision of the agreement that applies. Also for simplification purposes, the situation of the hauliers of country B has not been described in the diagram. WTO Secretariat.

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88.

The situation is further complicated by a number of factors: (a)

For a given transit route, the full utilization of the bilateral quota depends theoretically on the lowest transit quota which, in the end, may be less than the bilateral quota ("a chain is only as strong as its weakest link").

(b)

As transit quotas are global and do not affect the sub-quotas specific to each country "beyond", it is the consumption of the transit quota over all the routes beyond the transit country that determines whether or not at any given moment a given bilateral quota can be fully used.

(c)

There could be several possible transit routes, in particular if there are several transit countries between the country of origin and the country of destination.

(d)

Within one and the same bilateral agreement the transit quotas are not necessarily fixed on the basis of mirror-image reciprocity, as in Figure 1. Other forms of reciprocity, sometimes involving asymmetric trade or additional criteria other than reciprocity, may also play a part. 72 These possible criteria are reproduced in Box 1.

Box 1: Allocation criteria for transit quotas If the number of road transit authorizations is limited, the following factors may be considered to fix annual quotas: i.

Reciprocity This may be: (a) Strict reciprocity (e.g. a quota of 1,000 transit authorizations for each Contracting Party) (b) Equivalent reciprocity This may be: □ Combined with road taxes (e.g. a quota of 1,000 transit authorizations for each Contracting Party exempted from all road taxes - except user charge or toll. Each authorization delivered beyond the quota is fully subject to road taxes) □ Combined with bilateral transport (e.g. a quota of 1,000 transit authorizations for one Contracting Party and 1,000 bilateral transport authorizations of the other Contracting Party if the first Party is not a transit country for any reason, e.g. a peripheral country) □ Combined with transit traffic sharing (e.g. a peripheral Contracting Party (therefore not a transit country) needs 1,000 transit authorizations, the other Contracting Party offers 500 authorizations provided that its operators can also have a share of 500 transit transport authorizations) (c) Formal reciprocity (e.g. delivery of authorizations without quota limitation according to the needs of each Contracting Party)

ii. iii. iv. v.

Vehicles' technical features ("environmental friendliness") General environmental impact of road transit transport State of road network Impact of existing multilateral authorization quotas (e.g. ECMT)

Source: IRU/UNECE

72

Indeed, the new questionnaire on transit that the IRU is preparing to circulate through UNECE identifies numerous possible criteria for allocating transit quotas. The text of the questionnaire is available at: http://www.iru.org/index/iforms-app?form_id=127&lng=en&src=e-mail.

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89. The transport operators of the country of origin end up having to "arbitrage", i.e. constantly choose, not only between transit routes but also countries of destination, depending on the level of prices, prices which tend to increase dramatically when bilateral or transit quotas run out. Thus, service "arbitraging" by the transport operators is not motivated exclusively by commercial factors, as it is, for example, in the vast majority of cases in maritime transport, but by multiple regulatory constraints. In this respect, the road transport sector appears to be subject to an even more restricted regulatory regime than air transport. 90. The "arbitraging" process also suffers from a certain inertia, since in addition to the complex administration of the quotas, there is the need to obtain all a visa for the driver for each of the countries involved a given journey. In fact, except for a few regional agreements, there is no simplified visa regime of the kind available, for example, to seafarers. 91. Furthermore, these regulatory constraints may force hauliers to drive longer and more tortuous journeys than the routes they might otherwise take, entailing significant environmental implications. 92. "Third country" quotas add a further level of complexity to quota management, but also represent an additional commercial opportunity for transport operators, namely, "triangular" or "selftransit" traffic.73 These quotas concern traffic between two parties other than those of the bilateral agreement in question. The underlying concept may be described in the form of a stylized notation that successively identifies the nationality of the transport operator in question, the bilateral agreement concerned and the journey made. Accordingly, the triangular traffic configurations authorized by the ECMT model agreement can be denoted as follows: HA/AGAB/TBAC and HA/AGAB/TCAB, where H stands for haulier, AG for agreement and T for trip. These two configurations are illustrated in Figure 2.

73

Unlike "third party traffic" and "triangular traffic", "self-transit" for transit through the carrier's own territory is not an officially recognized term. However, it clearly captures the operation involved.

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Figure 2: Triangular traffic configurations authorized by the ECMT model agreement

Case 1: HA/AGAB/TBAC

A HA

B

C

Case 2: HA/AGAB/TCAB

A HA

B

C

Legend: HA = Haulier of country A AG = Relevant agreement T = Trip concerned Source: WTO Secretariat.

93. At first glance, the two cases in Figure 2 may appear identical. In the first case, the haulier of A participates in an operation to export goods from B to C, the latter being a "third country" under the agreement A-B. In the second case, the haulier of A transports goods into B from C, the latter representing a "third country" under the agreement A-B. 94. Interestingly, nothing in the ECMT agreement requires the three countries or territories concerned to be neighbours. In other words, one or more transit countries may be involved, provided, of course, that the necessary transit quota(s) is (are) available. Moreover, according to operators, the opportunities or triangular traffic are more numerous when one or more transit countries are intercalated. Finally, it should be noted that triangular traffic quotas, like transit quotas, are global, i.e. they do not specify the countries or territories "beyond" self-transit and do not allocate sub-quotas to the countries or territories concerned. 95. The IRU notes that one of the effects of transit and third country quotas is that "a pair of countries can decide on trade relations between another pair of countries through controlling their transit and third country traffic".74 This type of traffic distortion via "stipulations for others" does not exist in other modes of transport, even in those in which market access is tightly regulated. Thus, in air transport, transit75 and sixth freedom traffic rights (the approximate equivalent of third country 74 75

455-459.)

International Road Transport Union (2004). The special case of trans-Siberian transit excluded. (See also document S/C/W/270/Add.2, pages

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traffic) are unrestricted. In maritime transport, transit is unrestricted (right of innocent passage of the UN Convention on the Law of the Sea) and "cross-trade", i.e. non-bilateral trade, is widely predominant. (iv)

Variations relative to the ECMT model agreement

96. The ECMT model agreement is subject to numerous individual variations even amongst ECMT members.76 In addition, according to the IRU, members have made relatively little use of this relatively recent model agreement (pre-existing agreements were often more restrictive, especially for transport on own account). On the other hand, the model agreement was very widely used in the 1990s by the States of Central and Eastern Europe and Central Asia after the fall of the Berlin Wall and the collapse of the Soviet Union. In fact, the model agreement was drafted in response to a request from these countries, then in transition, which were seeking a template for concluding bilateral agreements which up to then they had not been accustomed to use. 97. Professionals tend to take a favourable view of the ECMT model agreement and especially of its references to the conventions on the carriage of dangerous goods, carriage of perishable foodstuffs and conditions of work (AETR) and to the European Union's environmental standards. They see in these references an embryonic common framework for regulatory harmonization. Also, they consider that ECMT model agreement may foreshadow a possible multilateralization of the bilateral agreements. Thus, in its reference work TRANSLex 2004 the IRU considers that "the ECMT model agreement is already a step beyond a narrowly understood bilateralism, preparing the terrain for and facilitating a possible future ’multi-lateralization’ of still existing bilateral relations and mirroring the prevailing general pattern of trade relations and international division of labour in Europe today". 98. There are cases of bilateral agreements where some provisions are more liberal than those of the ECMT agreement. Thus, the agreements between the United Kingdom and Ukraine, the United Kingdom and the Former Yugoslav Republic of Macedonia, and the United Kingdom and Kazakhstan authorize triangular traffic without imposing the obligation to transit through the transport operator's country of origin. In turn, this allows for pure third country traffic, HA/AGAB/TBC, comparable with seventh freedom air traffic or cross-trade in maritime transport. Again transit countries may be intercalated. This type of traffic is described in Figure 3. Figure 3: Configuration of pure third-country traffic HA/AGAB/TBC

A

B

HA

C

Legend: HA = Haulier of country A AG = Relevant agreement T = Trip concerned Source: WTO Secretariat

76

For further details see document CEMT/CS/TR(2002)18 of 5 September 2002.

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99. Similarly, there are a few agreements outside of the ECMT area, such as those concluded by South Africa77, that authorize cabotage and provide for quotas for that purpose. Judging from the sample already gathered, the variations are even wider among the non-ECTM agreements, generally in the direction of greater protection. Thus, certain African countries impose routes and particular destination points on foreign vehicles (comparable mutatis mutandis to the table of routes in a nonliberalized air transport agreement) and double permit approval procedures. (In the ECMT model agreement, permit is the sole responsibility of the issuing authority.) In addition, World Bank field studies have identified professional practices that tend to reinforce the restrictiveness of the agreements, in particular, the 'tour de rôle' system, which is very common in the landlocked countries of West Africa.78. (v)

Regimes applicable in the absence of a bilateral agreement

100. In the absence of a bilateral agreement, the prevailing regime is that of authorization on a case-by-case basis. No systematic survey has been conducted outside the European continent. A document submitted by the IRU to UNECE in 2009, while originally intended as a compilation of the transit regime of 34 European countries, also throws some light on bilateral regimes in the absence of bilateral agreements.79 Firstly, the regimes are often the same for traffic from, to, and via a given country. Secondly, in a significant number of cases, where it has not proved possible to identify a regime specifically for transit, the IRU has fallen back on the regime from and to the country in question.80 101. The picture that emerges from the analysis of this compilation is that of an a priori rather restrictive regime of discretionary authorizations (except, of course, for the relations between Member States of the European Union and ECMT quotas; see below). These two exceptions do not always appear explicitly in the description of each country's regime. The compilation also brings out a few variations, but only four cases appear to be significantly more liberal than the rest: those of Romania and Slovenia, where an authorization can always be purchased at the border, that of Switzerland, which, in principle, requires an authorization only for transport operators from 11 countries, and that of the United Kingdom, which does not require an authorization, only a simple attestation of professional fitness for road transport (an operator's licence). Other countries studied also waive authorizations for certain partners, although it is not possible to determine whether this waiver is linked to the existence of a bilateral agreement. No figures are available for the number of authorizations granted outside bilateral agreements.81

77

See Raballand, Kunaka and Giersing (2008). The system is described as "an informal practice of a queuing system to allocate freight to transporters … As a result … a fixed price is set by the institution in charge of allocating freight and transport quality and productivity are low. While the above practice is seen as 'fair' as it 'spreads' the profitability of the trucking business among truckers regardless of the quality of the service they deliver, it can be and is bypassed by those with clout or 'business' astuteness, thus bringing some kind of competition. Bypassing the 'tour de rôle' translates into long waiting times for loads at the port, from two weeks up to two months for 'regular' companies, thus jeopardizing their profitability" (Ibid.) 79 See United Nations Economic Commission for Europe (2009). 80 In fact, when the document was examined by the UNECE ad hoc meeting, no member questioned this approach, thereby acknowledging the de facto validity of the from and to regime for the via regime also. The inventory even contains details of the triangular traffic regime in some of the countries concerned. 81 The compilation will shortly be supplemented by a more detailed questionnaire dealing with all transit regimes, whether or not covered by bilateral agreements. The deadline for the receipt of replies from UNECE Member States is 12 July 2010. Members will be able to obtain the results of the survey from the Secretariat as soon as they become available. The text of this questionnaire can be found at: http://www.iru.org/index/iforms-app?form_id=127&lng=en&src=e-mail. 78

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(vi)

Economic effects of the bilateral system

102. Even though the area of application of the bilateral system in Europe has shrunk considerably as a result of the eastward enlargement of the European Union, it still entails significant economic costs, e.g. higher transport costs, inability to run a "seamless supply chain", environmental damage, trade diversion. 103. The bilateral system seems to be out of step with recent trends towards the fragmentation of production and assembly processes and the proliferation of "just in time" manufacturing, which all require a high degree of logistical flexibility and an uninterrupted, stable and predictable transport environment. According to the Association of Turkish Road Hauliers, road transport quotas (bilateral and transit) cost the Turkish economy as a whole US$6 billion in 2008, with 90 per cent of Turkish exports being carried by road. The Association asserts that quotas have discouraged some foreign industrial investment, as investors were not sure of being able to market their products competitively. Turkey has recently submitted to the Working Party on Road Transport of UNECE a draft convention to align bilateral agreements on international road transport with the mandatory rules of multilateral instruments governing international transit.82 104. Other assessments are certainly not more favourable. For instance, the IRU considers that "while significantly contributing to facilitated trade and tourism in a bilateral set-up in particular in the immediate post-Second World War time in general and post-communist period for that newly independent States in particular they [the bilateral agreements] have led to a highly segmented sub-optimal international market of road transport services. In some countries, an additional major source of inefficiencies, distortion of competition and even fraud seems to be exacerbated by the extreme complexity of managing the scarcity of bilateral authorizations at national level … Thus it may be that in regions with highly integrated economies, bilateral agreements are no longer structurally appropriate for creating the optimal conditions necessary for a modern international division of labour and logistics chains or appropriately address the issue of creating a level playing field for competition in international road transport." 83 105. However, the bilateral system is deeply entrenched. One of the first international acts of the newly independent European States that emerged from the former Soviet Union and Yugoslavia was to negotiate such agreements. In practice, the operators seem ready to put up with the administrative burden of the system so long as they are protected by quotas from third-party competition (other than the marginal effects of triangular traffic quotas). The numerous MFN exemptions relating to road transport listed by WTO Members from all regions and levels of development is further evidence of the scope and resilience of the system (see section VI.B). 106. The only exceptions are a few regional agreements that fully or partially liberalize international road transport or, conversely, a few cases in which international road transport is prohibited de jure or de facto and in which transhipment of the load onto vehicles registered in the neighbouring country is compulsory. (b)

Regional agreements partially liberalizing international road transport

107. There are very few regional agreements, possibly no more than seven, relaxing or abolishing the bilateral system of road quotas.

82 83

See United Nations Economic Commission for Europe (2010). International Road Transport Union (2004) pp. 448-449.

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(i)

European Union

108. Given the existence of a single road transport market since the early 1990s, the European Union is a borderline case that could be dealt with in the context of either international or domestic traffic.84 Yet the OECD-ETCR survey reveals significant variations in the domestic regimes of its Member States.85 Nevertheless, the conditions of admission to the occupation of road transport operator were fully harmonized in 199686, and the same is true for a substantial proportion of the regulations on road safety, working and employment conditions and even sectoral taxation.87 109. With regard to access to the market for the carriage of goods, the restrictions on intra-EU international road traffic were first replaced by a large Community quota with rapidly evolving rules and then totally abolished on 1 January 1993 by Council Regulation No. 1841/88 of 21 June 1988. 110. For its part, cabotage was progressively opened up by Regulation No. 3118/93 of 25 October 1993 by means of a quota that has grown rapidly after 1994, before all restrictions were abolished as from 30 June 1998. However, the Regulation only permitted operations conducted on a "temporary basis" by non-resident transport operators, without precisely defining the notion of "temporariness". The application of the Regulation and the interpretation of the notion of the "temporariness" gave rise to difficulties, especially after the enlargement of the European Union to the countries of Central and Eastern Europe, whose flags were particularly competitive and attracted the establishment of Western European enterprises. In fact, some notionally temporary operations thus became quasi-permanent. At the end of a long and difficult debate, this situation was changed by Regulation No. 1072/2009 of 21 October 2009.88 The Regulation clarifies that the notion of "temporary" consists of the provision of a maximum of three cabotage operations following the unloading at the end of an international journey. According to the European Commission89, cabotage transport accounts for only 3 per cent of road transport within the European Union as compared with 15 per cent for third-party traffic and 82 per cent for bilateral traffic. 111. This debate on EU cabotage is one facet of a broader out-flagging/in-flagging question which is quite similar, mutatis mutandis, to the situation encountered in maritime transport. Even before the eastward enlargement of the European Union, certain Western European road transport enterprises had established themselves in such Central and Eastern European countries as Bulgaria, or indeed in countries beyond the current frontiers of the European Union. The German company Willy Betz, for example, bought up the Bulgarian State enterprise SOMAT, which at the time had a fleet of 4,000 vehicles and was considered to be the crown jewel of road transport in the Comecon. These fleets were used for traffic operations in Western Europe by exploiting ECMT quotas, bilateral quotas, opportunities for triangular traffic and cabotage quotas. 112. In the European Union, external road transport policy remains almost exclusively the responsibility of the Member States. The European Commission has negotiated only a few limited agreements with third countries (several of which subsequently joined the Union) on the basis of ad hoc mandates. These include, firstly, the agreement between the European Union and Switzerland, which was signed on 21 June 1999 and entered into force on 1 June 2002. 84

However, this single market is less developed than in maritime and air transport, since cabotage has not been entirely liberalized. 85 For the details of this survey see Annex 5. 86 Council Directive No. 96/26/EC of 29 April 1996, recently revised and replaced by Regulation No. 1071/2009 of 21 October 2009 and Regulation No. 1072/2009 of 21 October 2009, both of which will enter into force on 4 December 2011. 87 For further details of these regulations see: http://europa.eu/legislation_summaries/transport/ road_transport/index_en.htm. 88 The cabotage provisions (Articles 8 and 9) of this Regulation entered into force on 14 May 2010. 89 See European Commission (2009), pages 3 and 16-21.

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113. This agreement provides a good illustration of the link that can exist between technical and fiscal regulations, on the one hand, and market access issues, on the other. Thus, its core provision is the commitment made by Switzerland to raise erga omnes - and not only for the sole benefit of the European Union - the maximum permissible weight of vehicles from 28 to 40 tonnes in exchange for the recognition by the European Union of the legality of a tax on heavy vehicles that is nondiscriminatory, a function of distance and intended to encourage the transfer of traffic (particularly transit traffic) to the railways and to finance the cross-Switzerland rail infrastructure. The agreement also liberalizes road transport between the European Union and Switzerland and opens up the market for transport between EU Member States ("grand cabotage") to Swiss carriers. At the same time, cabotage in the strict sense of the word (i.e. road transport within Switzerland or within a Member State of the European Union) was not liberalized. Finally, the agreement provides for the mutual recognition of the licences needed to gain admission to the occupation, a general harmonization of technical standards, and coordination of transport policies, in particular where combined rail-road transport is concerned. 114. Secondly, on the basis of a proposal made in March 2008 and a Council mandate of October 2009, in February 2010 the Commission entered into negotiations with countries in the Western Balkans (Albania, FYROM, Bosnia and Herzegovina, Croatia, Montenegro, Serbia and Kosovo) with a view to establishing a common road transport market. In parallel with the progressive adoption of the Community acquis, the respective road transport markets are to be progressively opened up by means of a quota additional to those of the bilateral agreements between the Balkan partners and the Member States of the European Union, agreements which are to remain in force. (ii)

"Multilateral" quota of the ECMT

115. The multilateral quota of the European Conference of Ministers of Transport was created in 1973. ECMT licences make it possible to carry load from any ECMT State to any other ECMT State via any ECMT State.90 There are two types of licences, namely, annual (also known as "green licences") and short-term ("yellow") licences. Annual licences can be converted into short-term licences at the rate of 1 for 12, within a ceiling of 20 per cent of annual licences. 116. The mechanism for allocating and increasing the quota is rather complicated and resembles, mutatis mutandis, that governing trade in textiles during the period of transition from the Multifibre Agreement to full liberalization. These evolutionary to promote efficiency and the inclusion in national fleets of vehicles that comply with the latest environmental and safety standards. Given its particular importance, also as a template for others, this mechanism is described below (Box 2) in some detail.

90

More precisely, the text of the ECMT User Guide on the quota stipulates that "ECMT licences are multilateral licences for the international carriage of goods by road for hire or reward by transport undertakings established in an ECMT member country, on the basis of a quota system, the transport operations being performed: between ECMT member countries and in transit through the territory of one or several ECMT member country(ies) by vehicles registered in an ECMT member country".

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Box 2: Allocation mechanism of the ECMT quota The Ministers of Transport of the ECMT member countries first jointly fix the total number of basic licences to be issued for the following year (or sometimes several years). Then, a certain number of "basic" (annual and monthly) licences is allocated to each member country in accordance with ten weighted criteria (freight volume, contribution to the ECMT budget, GDP, population, country area, current use of ECMT licences, use of TIR carnets (see below paragraph 135), the country's overall trade and its trade with ECMT countries). These weighted criteria are used to establish country rankings in terms of licences required. The member countries then indicate how they want to allocate these basic licences by vehicle environmental category (currently Euro III, Euro IV and Euro V). Annex 7 shows the basic licences negotiated in November/December 2009 for the year 2010. At a second stage, these quotas are multiplied by a coefficient that varies with the environmental category (for example, in 2010, the coefficient was 4 for Euro III lorries, but 6 for Euro IV and Euro V lorries). These coefficients vary over the years and form the subject of intense negotiations. The number of licences multiplied by the coefficient is then increased by a bonus expressed as a percentage (for example, 40 per cent). The table below summarizes the trend in these quotas and bonuses over the last four years. Clearly, lorries that comply with older environmental standards see their coefficients decrease until they simply cease to be eligible for the quota. Coefficients and bonuses applicable to basic ECMT licences (2007-2010)

Euro I Euro II Euro III Euro IV Euro V

2007 Coefficient/Bonus 1 2 6 20% 6 40% -

2008 Coefficient/Bonus 0 1 6 10% 6 40% -

2009 Coefficient/Bonus 0 4 6 6

40% 40% 40%

2010 Coefficient/Bonus

6 6 6

40% 40% 40%

Source: International Transport Forum (2010).

The detailed results of applying these coefficients and bonuses to basic licences for the year 2010 are reproduced in Annex 8. Four ECMT member countries (Austria, Italy, Greece, Hungary) restrict the number of licences that can be used on their territory by imposing additional conditions. Each allocated and numbered licence is distributed in the form of a paper document to the eligible carrier. The criteria for adjusting the coefficients and bonuses formed the subject of negotiations in 2006 and were fixed on a multi-annual basis for the period 2007 to 2010. For 2010 they were revised in the course of a marathon round of negotiations conducted in November-December 2009 which froze the 2009 coefficients and bonuses and carried them over to 2010. The financial and economic crisis had depressed freight volumes.

117. The geographical area of application of the quota has evolved considerably since its introduction. Initially, it also applied between Member States of the European Union, but was then replaced by an (intra)-"Community" quota which, in turn, gave way to the full liberalization of the bilateral road transport relations between EU Member States in 1993. Since then, the ECMT quota has no longer been used in the EU other than for relations between Members and non-Members of the European Union and as well as for relations among the latter countries. The eastward enlargement of the European Union further reduced the geographical coverage of the quota system. This is one of the

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reasons why a substantial proportion of the quotas (nearly 40 per cent) remains unused. In fact, the northernmost and westernmost Members of the European Union (Portugal, United Kingdom and Sweden), though entitled to a relatively large ECMT quota under the allocation criteria, have very little opportunity to use it, being situated thousands of kilometres from the first third country, as international road relations generally tend to be short-haul. 118. The size of the multilateral quota relative to the total traffic remains rather marginal. A study commissioned by the ECMT estimates it at between 0.5 and 7 per cent of the traffic of each Member country concerned, with significant variations.91 Unlike the defunct Community quota, the multilateral quota was never designed as a means of eventually abolishing all bilateral agreements. Several attempts to reform the system in favour of the States with the most competitive flags failed, reportedly owing to the reluctance of some larger EU Members with less competitive fleets. Russia recently adopted a similar position. (iii)

Andean Community

119. Decision No. 399 of 17 January 1997, codifies previous decisions that liberalize bilateral road transport between Andean Community members (Bolivia, Colombia, Ecuador and Peru), including transit.92 It establishes the principles of free provision of services, right of establishment, national treatment, MFN and of mutual recognition of two five-year occupational licences (fitness certificate and service provider's licence). (iv)

Black Sea Economic Cooperation Organization

120. The Black Sea Economic Cooperation Organization (BSEC), founded in 1992, is composed of 12 States.93 In 2002, its members signed a memorandum on the facilitation of the transport of goods by road, which entered into force in July 2006.94 In 2009, seven of its members95 set up a pilot BSEC multilateral permit project, whose architecture closely resembles that of the ECMT multilateral quota.96 The permits cover bilateral, transit and triangular traffic between the members concerned. For 2010, 1,400 permits are to be allocated within this framework. (v)

ASEAN Framework Agreement on the Facilitation of Inter-State Transport and Cross-Border Transport Agreement of the Great Mekong Sub-Region

121. In December 2009, the members of ASEAN signed the ASEAN Framework Agreement on the Facilitation of Inter-State Transport (AFAFIST).97 In addition to numerous facilitation provisions, the Agreement provides for the establishment of a quota of 500 vehicles per country for international traffic between members. The quota figure could be revised in the future. According to the ASEAN Secretariat, the quota system, including its size, is closely modelled on the quota established by the Cross-Border Transport Agreement of the Great Mekong Sub-Region (CBTA-GMS) concluded

91

See CEMT (2001). The full text of the decision is available at: http://intranet.comunidadandina.org/IDocumentos/ c_Newdocs.asp?GruDoc=07. 93 Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Turkey, Ukraine and, since 2005, Serbia. 94 The text of this memorandum is available at: http://www.bsec-organization.org/documents/Legal Documents/agreementmous/mous/Download/MoUTranspGoods.pdf. 95 Albania, Armenia, Georgia, Moldavia, Romania, Serbia and Turkey. 96 For further details of this permit see: http://www.bsec-urta.org/modules.php?op=modload&name= IncludePage&file=index&pagename=user_guide.htm. 97 The text of the agreement is available at: http://www.asean.org/documents/Inter-State per cent 20Transport per cent 20Agreement.pdf. 92

S/C/W/324 Page 38 in November 1999 between Laos, Vietnam and Thailand.98 China, Cambodia and Myanmar have since acceded.99 (vi)

North American Free Trade Agreement (NAFTA)

122. In 1982, the Bus Regulatory Reform Act imposed a moratorium - initially for two years - on any new authorization to operate in the United States for foreign road transport (including freight) operators. In the case of Canada, this moratorium was almost immediately lifted, in September 1982, by a presidential memorandum on the grounds that from that the US road transport industry would in future be able to operate fully in Canada. The moratorium was constantly renewed with respect to Mexico. Under the US list of reservations for existing non-conforming measures (Annex 1 of the NAFTA) submitted under NAFTA, Mexican road transport companies were to obtain the right to provide cross-border road transport services to the federated border States three years after the signature of the agreement, i.e. from 18 December 1995, and to the entire territory of the United States six years later, i.e. from 1 January 2000. These clauses also provide for the expiration of a moratorium on investment in enterprises supplying international road transport services between points situated in the United States in December 1995. However, the moratorium was maintained by the United States on the grounds that compliance with its road safety regulations could not be guaranteed. 123. After several consultation stages, the Mexican Government requested the constitution of a NAFTA arbitral panel, which gave its ruling in February 2001.100 The panel unanimously considered that the United States had violated its obligations under the NAFTA (Annex 1 and Articles 1202 and 1203) by imposing an a priori blanket prohibition on cross-border services and investment. The panel recognized that road safety was a legitimate regulatory objective which, under certain conditions, could justify inspection and control procedures different from those applied to US and Canadian carriers, provided that they were applied in good faith and were in conformity with all the provisions of the NAFTA. 124. On this basis, in 2007, the United States authorities set up a renewable three-year pilot programme for the experimental admission of 100 Mexican transport companies with a total fleet of 1,000 units. In March 2009, Congress withdrew the funds allocated to this programme. Making use of the retaliation provisions of the NAFTA, Mexican authorities announced the imposition of retaliatory custom duties against US products amounting to US$2.4 billion. At the time of writing, discussions between the two parties with a view to settling this dispute were still in progress. (vii)

Other agreements and cases of preferential treatment

125. In several instances, the MFN exemptions filed by Members, which are more fully described in section VI.B, refer to preferential treatment with regard to access to cargoes. However, the references to the legislation or agreements concerned are not precise enough for these provisions to be identified and analysed in detail. (c)

Situations in which international road transport is prohibited or severely restricted

126. There is some evidence of cases where international road traffic is completely prohibited or severely restricted. For example, according to a "transport interchange matrix" drawn up in 2008 by 98

See: http://www.affalog.net/pdf-files/tfwg-sep-09/tfwg09final per cent 20report.pdf. The relevant protocol to this agreement is available at: http://www.adb.org/Documents/Others /GMS-Agreement/Protocol-3.pdf; see in particular Article 5. 100 The text of the decision is available at: http://registry.nafta-sec-alena.org/cmdocuments/8f70c18a -7f02-4126-96f6-182a11c90517.pdf. 99

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the Asian Institute of Transport Development (AITD), vehicles between India and Bangladesh are authorized to penetrate only between one and three kilometres into the neighbouring country, depending on the border post, before having to tranship their load. Pending a settlement of the NAFTA dispute between Mexico and the United States, the situation is similar on the Mexican-US border where, however, the compulsory transhipment zone is 20 miles wide. 127. IRU101 and World Bank102 data point to a number of borders where, for various reasons, international road transport is either prohibited, impossible or subject to severe restrictions (see Table 8). The information needs to be interpreted with care. These situations may have a de jure or de facto origin, they are sometimes part of a context that extends beyond road transport alone, they may temporary or permanent. The information in Table 8 is probably non-exhaustive. It is without prejudice to the legal situation at the border in question; it simply notes the existence of operational difficulties, as does, for instance, the IRU's ‘border waiting times observatory’ (see below). Table 8: List of borders at which international traffic is limited or non-existent State of traffic Borders concerned

Absence of traffic

Traffic with compulsory transhipment Israel - Lebanon Afghanistan - Pakistan (for India - Pakistan Afghan vehicles only) Algeria - Morocco Afghanistan - Iran Armenia - Azerbaijan Afghanistan - Uzbekistan China- Kyrgyz Republic Afghanistan - Tajikistan China – Afghanistan Afghanistan - Turkmenistan China - Pakistan China - Kazakhstan Benin - Nigeria (for Benin vehicles only) Angola - Namibia (for Namibian vehicles only)

Transit traffic prohibited Algeria - Tunisia Algeria - Mauritania Algeria - Mali Algeria - Niger

Source: TIR section of the IRU and World Bank

B.

OTHER REGULATIONS

128. A distinction should be made between regulations that apply at the border and regulations that apply behind the border, where the distinction between domestic and international traffic has no real meaning. 1.

Regulations at the border

129. From the operators' perspective, the main obstacle to the international transportation of goods by road is not so much the application of bilateral and transit quotas as problems related to border crossing. According to the IRU and the World Bank, these problems are particularly acute in certain geographical areas such as West Africa or the eastern borders of the European Union.103 There is a substantial amount of information from the World Bank, the various United Nations Regional Economic Commissions, the regional Development Banks and UNCTAD concerning, for example, the costs and delays generated by these problems. For its part, the IRU has set up a ‘border waiting times observatory’. Efforts to alleviate or eliminate these problems are being made in connection 101

The TIR section of the IRU administers the issuance of TIR carnets and therefore maintains a constantly updated list of borders, the crossing of which is temporarily or permanently prohibited or restricted. 102 Data gathered in connection with the World Bank work on transit corridors. 103 See, for instance, ILO (2006); Arvis, Raballand and Marteau (2007).

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with numerous bilateral and multilateral technical assistance projects, which often include regulatory reforms. 130. The road transport industry is following with keen interest the trade facilitation negotiations being conducted by the WTO within the framework of the DDA, in particular where transit issues are concerned. 131. Operators also stress the leading role already being played by the UNECE's harmonization and facilitation conventions, the scope of which extends far beyond the European continent. Out of 57 conventions, at least five are of major importance. 132. The European Agreement on Main International Traffic Arteries (AGR) of 15 November 1975 defines a uniform legal framework for the construction and development of a coherent international road network in all member countries and territories of UNECE, in particular for main arteries (so-called "E-road" network).104 It defines such main arteries and the construction parameters to which they must conform. The agreement, which is regularly updated, underwent a major revision with the integration of the road network of the countries of the Caucasus and Central Asia. It has served as a model for several similar initiatives in Asia (by ASEAN and by the United Nations Economic Commission for Asia and the Pacific) and in the Middle East (by the United Nations Commission for Western Asia). On July 2010 it had 37 Contracting Parties.105 133. The European Agreement Concerning the Work of Crews of Vehicles Engaged in International Road Transport (AETR) of 1 July 1970 establishes uniform working conditions for the drivers of vehicles used in international road transport in accordance with relevant provisions of the International Labour Organization.106 These concern driving and rest periods, rules on the composition of crews and uniform conditions applicable to drivers. The AETR is regularly aligned with the corresponding European Union Directives. The latest development in this respect is a "gentleman's agreement" that postponed the introduction of the digital tachograph intended to monitor compliance with the driving and rest times throughout the vehicle fleet, initially planned for 30 June 2010, to 31 December 2010. The AETR Convention had 49 Contracting Parties on 1 July 2010.107 134. The Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention) of 14 November 1975 allows for international transports of goods via as many transit countries as may be necessary without intermediate customs inspection.108 The affixing of seals and an international guarantee chain to ensure the payment of duties and taxes owed and to prevent fraud complete the system. The IRU is responsible for issuing TIR carnets and administering the guarantee. The application of the TIR Convention now extends beyond Europe to the Middle East (Lebanon, Kuwait, United Arab Emirates, Syria, Iran), North Africa (Algeria, Morocco, Tunisia), West Africa (Liberia), Asia (Indonesia, Mongolia, Republic of Korea), North America (United States) and Latin America (Chile, Uruguay). The TIR Convention had 68

104

For the full text see: http://www.unece.org/trans/conventn/ ECE-TRANS-SC1-384f.pdf. The Agreement’s consolidated version, which is currently in force, dates from 2006, 105 For a complete list of the Contracting Parties see: http://www.unece.org/trans/conventn/ agreem_cp.html#2. 106 The consolidated version of the AETR currently in force dates from 2006. For the full text of this Agreement see: http://www.unece.org/trans/doc/2006/sc1/ ECE-TRANS-SC1-2006-02f.pdf. 107 For a complete list of the Contracting Parties see: http://www.unece.org/trans/ conventn/agreem_cp.html#21. 108 For the full text of this Agreement see: http://www.unece.org/tir/handbook/french/newtirhand/ TIR-6Rev9_Fr.pdf.

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Contracting Parties on 1 July 2010, including 15 Contracting Parties outside the area covered by the UNECE. 109 135. The Agreement concerning the Adoption of Uniform Conditions for Periodical Technical Inspections of Wheeled Vehicles and the Reciprocal Recognition of Such Inspections of 13 November 1997 defines the legal framework and procedures for the adoption of uniform rules for technical inspections and the mutual recognition of the resulting certificates. 110 This Agreement had 12 Contracting Parties on 1 July 2010. 111 136. Finally, the aim of the International Convention on the Harmonization of Frontier Controls of Goods of 21 October 1982 is to reduce the formalities and the number and duration of all types of controls (medico-sanitary, veterinary, phytosanitary, etc.) relating to compliance with technical standards or quality control.112 This Convention applies to imports, exports and goods in transit. On July 2010 it had 54 Contracting Parties, including 8 Contracting Parties from outside the area covered by the UNECE. 113 137. Numerous other specialised and general regional organizations have developed conventions and other instruments intended to promote harmonization of the conditions of competition in the international road transport industry and the facilitation of trade in the sector.114 2.

Regulations behind the border

138. Many regulations governing domestic traffic apply also to "visiting" foreign trucks through the principle of territoriality. A foreign-registered vehicle is subject to the whole of its host country’s legislation in terms of weights and dimensions, rules of the road, payment of tolls, etc. The main exceptions to this principle of territoriality are the taxation of the transport company (in the absence of a double taxation agreement), the taxation of the vehicle in relation to its registration, and the driver's wage and social insurance contributions, which remain those of vehicle's country of origin. 139. National regimes tend to be fairly similar in content, at least between countries at the same level of development. Nevertheless, there are exceptions. A case in point are Switzerland and the EU prior to their bilateral agreement with regard to maximum permissible weights (24 and 40 tons, respectively). 140. International and regional conventions often seek to establish the lowest common denominator of the national regimes within their sphere of application. Such conventions may have been developed by international organizations with very broad geographical coverage (typically, the above-mentioned UNECE conventions) or by regional organizations with specific or general mandates (for example, ASEAN).

109

For a complete list of the Contracting Parties see: http://www.unece.org/trans/ conventn/agreem_cp.html#42. 110 For the full text of this Agreement see: http://www.unece.org/trans/conventn/conf4f.pdf. 111 For a complete list of the Contracting Parties see: http://www.unece.org/trans/conventn/ agreem_cp.html#19. 112 For the full text of this Agreement see: http://www.unece.org/trans/conventn/harmonf.pdf. 113 For a complete list of the Contracting Parties see: http://www.unece.org/trans/ conventn/agreem_cp.html#51. The latter eight countries are Cuba, Jordan, Mongolia, Laos, Tunisia, Liberia, South Africa and Lesotho. 114 For a complete overview of these activities, see the IRU (2004), pages 12-20 for Europe, 21-38 for Africa, 40-70 for Asia and the Pacific, 71-81 for the Middle East and 82-102 for Latin America. This work also contains the Internet addresses to obtain updated information.

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141. A general description of the regulatory regime for road transport lies beyond the scope of this document. Moreover, it would be an impossible task due to lack of relevant data, particularly with respect to taxation and social policy.115 Thus, only two types of technical rules which could have an indirect impact on market access, namely, environmental standards and weights and dimensions, will be considered. (a)

Environmental regulations

142. Unlike in maritime and air transport, there is no universal standard for emissions in the road freight transport sector. Yet, there are national and regional standards with emission thresholds that are regularly lowered. Thus, between the EU 'Euro 0' standard of 1990 and the 'Euro VI' standard, which will enter into force in 2013, the maximum permissible emissions for vehicles have been reduced by 88 per cent for carbon monoxide (CO), 95 per cent for hydrocarbons (HC), 97 per cent for oxides of nitrogen (NOx) and 98 per cent for particulate matter (PM).116 Annex 9 shows the thresholds and their evolution for the major national and regional standards. 143. This multiplicity of standards is attributable not only to the regional, or at most continental, nature of road freight transport, but also to the physical and fiscal characteristics of each market. Thus, in the United States, the preference is for vehicles with powerful engines delivering high torque and, hence, displaying a particular emission profile, whereas in Europe, mainly for fiscal reasons, the range of vehicles is more varied in terms of engine capacity. Vehicles produced and used in emerging countries are often geared to more difficult road conditions, requiring mechanical characteristics that may generate proportionally more emissions. However, probably because of the relatively small number of manufacturers of heavy vehicles, there are ultimately only very few competing emission standards: three altogether, of which two are often accepted simultaneously. Annex 10 illustrates the geographical coverage. 144. Also, the time lag between the introduction of stricter emission standards in developed countries and their adoption in developing countries tends to be short (Table 9). Table 9: Entry into force of 'Euro' standards in selected countries

European Union China India Russia Brazil

Euro 0 1990 -

Euro I 1992 2000 2000 1999 1996

Euro II 1995 2003 2003 2006 2000

Euro III 2000 2005 2005 2008 2006

Euro IV 2005 2008 2010 2010 2011

Euro V 2007 2012 2014 2014

Euro VI 2013 -

Source: IRU/UNECE (document ECE/TRANS/WP25/GRPE/2010/14 of 20 April 2010)

145. Environmental emission standards relate only to polluting emissions and for the time being do not concern carbon dioxide (CO2).

115

The IRU Information Centre (http://www.iru.org/index/en_services_infocentre) collects a large amount of regulatory information concerning road transport. However, it is designed to provide professionals with specific operational information and, as its authors themselves acknowledge, is far from being exhaustive, particularly in terms of geographical coverage. 116 Source: European Commission (2008).

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146. According to the data of the Intergovernmental Panel on Climate Change (IPCC), the transport sector as a whole (including the transport of persons by sea, air, bus and private car and freight transport) accounts for 23 per cent of CO2 emissions.117 Freight transport by road accounts for 25 per cent of the transport sector's energy consumption (16 per cent for heavy lorries, 9 per cent medium-sized lorries), a figure directly proportional to the emission of carbon dioxide. 118 147. The volume of carbon dioxide emitted by the sector is clearly destined to increase in the coming decades. However, there is no consensus amongst forecasters. Historically, the demand for road transport runs more or less parallel to growth in GDP, but its energy intensity (energy consumption per tonne-km) is expected to decrease by about one-third by 2030 thanks to technical progress (notion of "environmental decoupling"). Nevertheless, this progress will probably not suffice to stabilise the overall volume of emissions at its present level but will merely help to slow down its growth. 148. Road transport operators are now in favour of the regulation of CO2 emission standards because a reduction in these emissions would lead ipso facto to a reduction in the consumption of fuel, which is one of their main running costs.119 In 2009, the IRU undertook to reduce its members' carbon dioxide emissions measured in tonne-km and in passenger-km by 30 per cent until 2030 relative to the base year 2007.120 Technical innovations should contribute 10 per cent to this effort, the training of drivers in economical driving another 10 per cent, and innovative logistical concepts, such as Intelligent Transport Systems (ITS) and "optimized" (i.e. increased) weights and dimensions the remaining 10 per cent. The suggestion that weights and dimensions be increased has been met opposed by environmental groups because of the additional damage that heavier lorries could inflict on road networks and the infrastructure in general. 149. The greenhouse gas emissions generated by road transport (a notion which encompasses both polluting and carbon dioxide emissions) are included in the reduction targets of the Kyoto Convention. So far, however, the sector is not subject to emission trading rights programmes. Notwithstanding, at least in the northern hemisphere, there has been a proliferation of environmental taxes levied on Heavy Goods Vehicle traffic, also with the aim of internalising external costs, including those associated with congestion and the deterioration of road networks and infrastructure in general. (b)

Regulation of weights and dimensions

150. Standards governing weights and dimensions tend to differ significantly. This is the case even between countries that are neighbours and/or at comparable levels of development. Thus, the maximum permissible weight for a ‘road train’ varies from 16.5 to 74 tonnes, the maximum permissible height from 4 to 4.6 metres (except for four countries in which there is no limit), the maximum width from 2.5 to 2.65 metres, and the maximum length from 14.4 to 25.25 metres (see

117

IPCC, Working Group III Fourth Assessment Report "Mitigation of Climate Change" 2007, Cambridge University Press: http://www.ipcc-wg3.de/publications/assessment-reports/ar4/workinggroup-iii-fourth-assessment-report. (See also International Transport Forum, 2008, "Forum highlights, transport and energy, the challenge of climate change".) 118 These figures are however disputed by road transport professionals. 119 On the other hand, the latest toxic emissions standards led to a slight increase in fuel consumption per ton-kilometre. 120 See: http://www.iru.org/index/cms-filesystem-action?file=en_Resolutions_General per cent 20transport per cent 20policy/09_30-30.E.pdf.

S/C/W/324 Page 44 Annex 11).121 Such differences can have major consequences for actual market access which, in some cases, may go so far as to eliminate or seriously restrict competition from neighbouring countries. The World Bank's freight corridor studies contain several pertinent examples.122 The ensuing (protective) effects may be one of the reasons why, despite the relatively small number of HGV manufacturers, sector representatives, at least at national level, do not seem to be calling for harmonization. 151. The debate over weights and dimensions seems to have shifted, at least in developed countries, towards the domestic front. It pits the providers and users of road transport, who favour heavier and longer rigs which are more economically efficient and proportionally less polluting, in terms of greenhouse gas emissions, against environmentalists who are concerned about road congestion and its infrastructural implications (construction and maintenance). VI.

OVERVIEW OF COMMITMENTS AND MFN EXEMPTIONS

A.

SPECIFIC COMMITMENTS

123

152. Commitments in road freight transport services have been undertaken by 44 Members.124 Of those, 17 are recently acceded Members (Annex 12). 153. At the sub-sectoral level, the lowest number of commitments has been inscribed for "mail transportation" (probably because of the overlap with the classification of transport of mail in the postal and courier service CPC categories)125, followed by the category "freight transportation by man- or animal-drawn vehicles", the residual category "transportation of other freight" and "transportation of bulk liquids and gases". The comparatively low number of commitments on the latter services may be due to the fact that, in the oil sector, monopolies on oil production and refining are frequently associated with monopolies on transport. 154. Symmetrically, the most economically significant segments of the sector, in terms of freight rates, such as transportation of frozen and refrigerated goods, containerized goods and furniture, have attracted relatively numerous commitments. Twenty-five Members have bound the entire road freight transport sector. 155. One of the most notable limitation in the sector is of a cross-cutting nature and concerns the exclusion of cabotage from the scope of commitments. Eleven Members have inscribed such restrictions in the sector column of their commitments, thereby conditioning access in all modes of supply. Two Members have excluded cabotage services only for a particular mode of supply (mode 1, market access in one case, and mode 3, both market access and national treatment in the other).126

121

These data, covering 77 countries and territories, were obtained from the IRU Information Centre. They indicate the maximum dimensions for the "road train", i.e. the largest and heaviest rig permitted in a given country or territory. However, actual regulations tend to be far more complex, specifying, for example, the dimensions for each type of rig and the maximum permissible axle loads. 122 Arvis, Raballand and Marteau (2007). 123 EU-12 has been counted as one Member. 124 One of the 44 Members has scheduled commitments on "Passenger and freight transportation" but included as corresponding CPC categories only CPC 7121 and 7122 (i.e. scheduled and non-scheduled passenger services), rather than also CPC 7123 (Freight transportation). 125 On the difficulties of classification raised by the transport of mail see also Section II. 126 Another Member has excluded cabotage both from the sectoral scope of its road freight commitments and repeated this exclusion again under its mode 3 commitments for the sector.

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156. As far as market access is concerned, commitments in modes 1 and 2 have been either fully bound or fully unbound.127 The most liberal commitments have been undertaken with respect to mode 2, where "none" has been inscribed by four-fifths of Members. Mode 1 commitments are at the other end of the spectrum, having been left unbound in 31 out of 44 schedules.128 Mode 4 commitments exhibit the typical "unbound except as indicated in the horizontal commitments" inscription in all but one case, where access has been fully bound. 157. Mode 3 has drawn the most varied pattern of commitments. Access conditions have been fully bound by 27 Members and left unbound by one. The limitations inscribed in other schedules concern economic needs tests, incorporation requirements, foreign equity limitations, joint-venture requirements, restrictions on cabotage, requirements that vehicles be nationally flagged, that the board of directors be composed of a majority of nationals, citizenship requirements for drivers, authorization requirements, emergency safeguards on the number of services suppliers, of services operations and of services output, and limitations on the use of leased vehicles. 158. As far as national treatment is concerned, mode 1 is unbound in all but two cases, mode 2 is bound in all but one and mode 4 is always unbound except for what is contained in the horizontal mode 4 section. As concerns mode 3, 36 Members have inscribed 'none'. The remaining eight Members scheduled restrictions on the provision of cabotage services, prior approval requirements, requirements on established entities to use vehicles with national registration and a foreign equity limitation. B.

MFN EXEMPTIONS

159. Fifty-eight MFN exemptions covering road freight transport services have been listed by 46 Members, slightly less than half of which are developed countries. Twenty-two Members out of the 46 with exemptions have also undertaken commitments in the sector. 160. The vast majority of exemptions (40 measures) have been listed to preserve preferences, mostly related to cargo-sharing arrangements, arising from bilateral arrangements. In one-third of cases, they cover both present and any future bilateral agreement that may be concluded, although sometimes the latter entries are accompanied by a detailed list of beneficiaries. An additional seven measures cover instances of plurilateral/regional preferences, and a further four refer to reciprocitybased preferential treatment. In seven cases, Members have felt it necessary to list exemptions for preferential fiscal treatment on VAT, vehicle tax and income tax. 161. Nearly all exemptions have been listed for an indefinite or non-specified duration. Three are supposed to last until the underlying preferential agreement remains in force, one is limited to a tenyear duration and a further one is supposed to be reviewed after 12 years. 162. The characteristics and high incidence of Article II exemptions deserve attention. Not only do the underlying measures appear to have been conceived to last for an unlimited period, but the exemptions also remove a significant portion of mode 1 trade from the application of an open, MFNbased regime. Nevertheless, exemptions for preferences amongst regional partners are unlikely to generate significant trade-diversion. Furthermore, most MFN exemptions only cover modes 1 and 2 and tend to leave mode 3 (and mode 4) unaffected.

127

In only one instance has a specific limitation been attached the commitments in these two modes, and specifically in the case of mode 1. 128 In six instances, 'unbound' has been attributed to lack of technical feasibility.

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European Commission (2009), "Road Freight Transport Vademecum", Directorate General Energy and Transport, Directorate E – Inland Transport, Unit E.1 – Land Transport Policy, March, Brussels, available at: http://ec.europa.eu/transport/road/doc/2009_road_freight_vademecum.pdf European Conference of Ministers of Transport (1997), "Framework for Bilateral Agreements in Road Transport - Recommendation", Document CEMT/CM(97)21 - CM(97)21/ADD1, available at: http://www.internationaltransportforum.org/europe/acquis/road1997e.pdf#search="model agreement". European Conference of Ministers of Transport (2001), "Review of the Impact of the Multilateral Quota", document CEMT/CM(2001)10, available at: http://www.internationaltransportforum.org/ europe/ecmt/cm/pdf/CM200110e.pdf European Conference of Ministers of Transport (2004), "Removal of Obstacles at Border Crossings – Policy Note and Recommendations", document CEMT/CM(2004)7, available at: http://www.internationaltransportforum.org/Proceedings/Border2009/CM200407e.pdf Fernandez, Linda (2008), "Transportation Services, Air Quality and Trade", Report for the Environment and Trade Programme, Commission on Environmental Co-operation, Montreal. Gray, R., Fattah, N.A. and S. Cullinane (1998), "Road freight privatization in Egypt: Is big beautiful?", Journal of Transport Geography, No. 6. Heggie, H.G. (1991), "Designing major policy reform, lessons from the transport sector", World Bank Discussion Paper No. 115. Hummels, David (2007), "Transportation Costs and International Trade in the Second Era of Globalization", Journal of Economic Perspectives, 21(3). International Labour Organisation (2006), "Labour and social issues arising from problems of crossborder mobility of international drivers in the road transport sector – Report for discussion at the Tripartite Meeting on Labour and Social Issues arising from Problems of Cross-border Mobility of International Drivers in the Road Transport Sector", Geneva. International Road Federation (2009), "World Road Statistics, 2002-2007", Geneva. International Road Transport Union (2004), "TRANSLex – IRU Handbook on Road Transport Facilitation, Legislation and Practices", Geneva. International Road Transport Union (2006), "Out-flagging - In-flagging", Working Paper CTM/G7167/PKR, June, Geneva. International Road Transport Union (2007), "Role and Position of Road Transport Operators and Forwarders in the Logistics Chain", Working Paper CTM/G7691/PKR, February, Geneva. International Road Transport Union (2009), "Road Transport in the People's Republic of China", December, Geneva. International Transport Forum (2009), "Trends in the Transport Sector, 1970-2007", OECD Publishing, Paris. International Transport Forum (2010), "Trends in the Transport Sector, 1970-2008", OECD Publishing, Paris.

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Japanese Ministry of Land, Infrastructure, Transport and Tourism (2010), "Statistical Information", available at: http://www.mlit.go.jp/statistics/details/jidosha_list.html Mattoo, A., Borchert, I. and B. Gootiiz (2010) "Global patterns of service trade barriers - New empirical evidence", World Bank, roneo. Mattoo, A. and B. Gootiiz (2009), "Services in Doha: What's on the Table?", Journal of World Trade No. 43(5). Mwase, N. (2003), "The liberalization, de-regulation and privatization of the transport sector in sub-Saharan Africa: experiences, challenges and opportunities", Journal of African Economies, No. 12, available at: http://jae.oxfordjournals.org/cgi/content/abstract/12/suppl_2/ii153 North American Transportation Statistics Database (2009), "Gross Domestic Product by Industry", available at: http://aplicaciones1.sct.gob.mx/nats/sys/tables.jsp?i=3&id=33 North American Transportation Statistics Database (2009), "Employment in Transportation and Related Industries", available at: http://aplicaciones1.sct.gob.mx/nats/sys/tables.jsp?i=3&id=34 Organisation for Economic Co-operation and Development (2001), "Regulatory Reform in Road Freight", OECD Economic Studies, No. 32, Paris. Organisation for Economic Co-operation and Development (2010), "Globalisation, Transport and the Environment", Paris. Raballand, G., Kunaka, C. and B. Giersing (2008), "The impact of regional liberalization and harmonization in road transport services: a focus on Zambia and lessons for landlocked countries". World Bank Policy Research Paper No. 4482, World Bank, Washington, D.C., available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1086861 Raballand, G. and P. Macchi (2008), "Transport prices and costs: the need to revisit donors' policies in transport in Africa", World Bank, Washington, D.C., available at: http://ipl.econ.duke.edu/bread/papers/0809conf/Raballand.pdf Togan, S. (2009), "Liberalization of transport services in Egypt, Jordan and Morocco", Economic Research Forum Policy Research Paper No. 31, ERF, Cairo, available at: http://www.erf.org.eg/cms.php?id=NEW_publication_details_reports&publication_id=1117. United Nations Economic Commission for Africa (2004), "Economic Report on Africa 2004 – Unlocking Africa's Trade Potential", Addis Ababa. United Nations Economic Commission for Europe (2009), "Quantitative restrictions imposed on international road transport of goods – Submission by the IRU", ECE/TRANS/SC.1/2009/5, 29 July, available at: http://www.unece.org/trans/doc/2009/sc1/ECE-TRANS-SC1-2009-05e.pdf United Nations Economic Commission for Europe (2010), "Quantitative Restrictions imposed on international road transport of goods – Submission by the Government of the Republic of Turkey", ECE/TRANS/SC.1/2010/5, 16 July, available at: http://www.unece.org/trans/doc/2010/sc1/ECETRANS-SC.1-2010-5e.pdf United Nations Statistical Commission (2010), "Manual on Statistics of International Trade in Services 2010, Draft, Unedited Version", Geneva, Luxembourg, New York, Paris, Washington, D.C, available at:

S/C/W/324 Page 49

http://unstats.un.org/unsd/tradeserv/TFSITS/MSITS/MSITS2010%20%20for%20the%20SC%202010 %20at%202.22.2010.pdf US Bureau of Transportation Statistics (2007), "National Transportation Statistics 2007", available at: http://www.bts.gov/publications/national_transportation_statistics/ US Bureau of Transportation Statistics (2010), "Freight Transportation: Global Highlights", available at: http://www.bts.gov/publications/freight_transportation/html US Chamber of Commerce (2006), "Land Transport Options between Europe and Asia: Commercial Feasibility Study". US Department of Transportation (2009), "Freight Facts and Figures 2009", Federal Highway Administration, Office of the Freight Management Operations, available at: http://ops.fhwa.dot.gov/freight/freight_analysis/nat_freight_stats/docs/09factsfigures World Bank (1995), "Sustainable transport priorities for policy sector reform", Washington, D.C. World Bank (2007), "Reforming transport: maximizing synergy between public and private sectors", Background Paper for Evaluation of World Bank Assistance to the Transport Sector 1995-2005, Washington, D.C., available at: http://web.worldbank.org/WBSITE/EXTERNAL/EXTOED/ EXTTRANSPORTATION/0,,contentMDK:21285911~menuPK:5006024~pagePK:64829573~piPK:6 4829550~theSitePK:4434733,00.html

S/C/W/324 Page 50

ANNEX 1 MTN.GNS/W/120 and CPC provisional Definition of road freight transport services

11.

TRANSPORT SERVICES

F.

Road Transport Services

b.

Freight transportation (CPC 7123) 71231 Transportation of frozen or refrigerated goods Transportation by road of frozen or refrigerated goods, in specially refrigerated trucks and cars. 71232 Transportation of bulk liquids or gases Transportation by road of bulk liquids or gases in special tank trucks. These vehicles may also be refrigerated. 71233 Transportation of containerized freight Transportation by road of individual articles and packages assembled and shipped in specially constructed shipping containers designed for ease of handling in transport. 71234 Transportation of furniture Transportation of furniture by road over any distance. Exclusion: Furniture transportation by transoceanic shipment is classified in subclass 72123 (Transportation of containerized freight). 71235 Mail transportation Transportation of mail by any land mode of transport other than railway. 71236 Freight transportation by man- or animal-drawn vehicles Transportation of freight by man- or animal-drawn vehicles. 71239 Transportation of other freight Transportation by land modes of transport other than railway, of freight, not elsewhere classified.

S/C/W/324 Page 51

ANNEX 2 Modal split of inland freight surface transport, million tonne-kilometres

Total

Road freight as a percentage of total inland freight

7996.80

58.88%

430.10

1100.00

39.10%

182500.00

507100.00

35.99%

18.60

42.60

43.66%

2006

8222.00

19281.00

42.64%

Belarus

2007

19200.00

67292.00

28.53%

Belgium

2006

51572.00

69117.00

74.62%

Bosnia and Herzegovina

2003

300.00

Bulgaria

2004

9015.00

87529.00

10.30%

Cambodia

1999

3.21

3.48

92.24%

Canada

2007

0.00

311000.00

0.00%

China

2007

1135470.00

5075050.00

22.37%

Colombia

2005

38199.00

49689.00

76.88%

Costa Rica

2007

1.06

14.89

7.12%

Croatia

2007

10502.00

14382.00

73.02%

Cyprus

2007

1183.80

1183.80

100.00%

Czech Republic

2002

45100.00

Denmark

2005

11058.00

11066.00

99.93%

Ecuador

2007

1193.14

1193.14

100.00%

Estonia

2005

7641.00

18280.00

41.80%

Finland

2007

26900.00

40400.00

66.58%

France

2007

323000.00

373500.00

86.48%

Georgia

2006

586.10

7979.30

7.35%

Germany

2007

466200.00

645532.00

72.22%

Greece

2000

18360.00

18786.00

97.73%

Hungary

2005

9090.00

36338.00

25.02%

Iceland

2003

800.00

Ireland

2003

15900.00

33948.00

46.84%

Italy

2001

186510.00

209527.00

89.01%

Japan

2004

327632.00

568941.00

57.59%

Kazakhstan

2007

61444.00

262577.00

23.40%

Kenya

2000

21.50

27.46

78.32%

Korea

2006

12545.00

23807.00

52.69%

Kyrgyz Republic

2007

902.50

1756.20

51.39%

Country

Year

Road

Albania

2001

2200.00

Angola

2001

4708.60

Armenia

2007

Australia

2007

Austria

2007

Azerbaijan

S/C/W/324 Page 52

Country

Year

Road

Total

Road freight as a percentage of total inland freight

Latvia

2006

12545.00

23807.00

52.69%

Lithuania

2007

20278.00

34661.00

58.50%

Luxembourg

2003

9493.00

10070.70

94.26%

FYROM

2007

5938.00

6717.00

88.40%

Mexico

2007

222391.00

252408.00

88.11%

Moldova

2003

1577.00

4596.40

34.31%

Mongolia

2003

242.40

7495.70

3.23%

Morocco

2007

697.00

6532.00

10.67%

Namibia

2001

555.00

2314.20

23.98%

Netherlands

2000

45700.00

90790.00

50.34%

Norway

2007

16313.00

35031.00

46.57%

Pakistan

2005

129249.00

135080.00

95.68%

Poland

2007

159527.00

215118.00

74.16%

Portugal

2007

46406.00

48992.00

94.72%

Puerto Rico

2001

9.70

Romania

2005

51531.00

73260.00

70.34%

Russian Federation

2007

206000.00

2382000.00

8.65%

Saudi Arabia

2005

108.35

108.35

100.00%

Serbia

2004

452.00

3877.00

11.66%

Slovak Republic

2006

22114.00

33038.00

66.94%

Slovenia

2007

13737.00

17340.00

79.22%

South Africa

2000

434.00

613.00

70.80%

Spain

2003

132868.00

145279.00

91.46%

Sweden

2007

42300.00

104200.00

40.60%

Switzerland

2007

16900.00

29318.00

57.64%

Chinese Taipei

2006

31218.00

Tunisia

2002

16611.00

18862.00

88.07%

Turkey

2007

181330.00

191084.00

94.90%

Ukraine

2007

31052.90

136232.60

22.79%

United Kingdom

2007

173077.00

196083.00

88.27%

United States

2006

1885576.00

5414969.00

34.82%

Uzbekistan

2000

1200.00

Source: International Road Federation (2009)

S/C/W/324 Page 53

ANNEX 3 Vans and lorries in use, by country, 2007

Country United States

Vans and lorries

Country

Vans and lorries

110,497,239

Syrian Arab Republic

528,330

EU-27

34,835,709

Dominican Republic

525,391

Japan

34,324,000

Morocco

525,334

China

10,540,556

Sweden

515,335

Mexico

7,870,417

Norway

513,021

Canada

7,425,765

Denmark

508,774

France

6,270,000

Romania*

493,821

Brazil

5,709,063

Peru

480,876

Spain

5,140,586

Bolivia

468,763

Indonesia

5,065,482

New Zealand

465,803

Thailand**

4,992,150

Ireland

426,113

Russian Federation

4,730,000

Ukraine

406,441

Germany

4,604,905

Finland

390,806

Italy

4,437,600

Belarus

377,715

India**

4,436,000

Austria

372,645

Korea, Rep. of

4,189,042

Tanzania

369,887

United Kingdom

3,715,000

Israel

362,164

Australia

2,723,000

Kazakhstan

359,194

Turkey

2,619,661

Switzerland

324,153

Poland

2,520,548

Ecuador

323,480

South Africa

2,125,784

Tunisia

300,508

Philippines

1,875,296

El Salvador

283,787

Greece

1,255,945

Bulgaria

262,868

Algeria**

1,166,231

Paraguay

248,086

Saudi Arabia*

1,127,900

Slovak Republic

244,769

Colombia

1,064,513

Jordan

230,822

Venezuela, Bolivarian Rep.

1,051,443

Kenya

210,891

Chinese Taipei

1,028,078

Pakistan

187,054

Netherlands

995,733

Zimbabwe

186,790

Chile

849,282

Nicaragua

179,872

Malaysia**

836,579

Iran

179,726

Hungary

829,817

Croatia

176,703

Sri Lanka

718,338

Panama

174,482

Egypt**

711,686

Bangladesh

168,649

Belgium

696,732

Honduras

165,203

Kuwait

573,212

Serbia

162,942

Czech Republic

555,223

Ghana

158,379

S/C/W/324 Page 54

Country

Vans and lorries

Country

Vans and lorries

Netherlands Antilles

155,769

Benin

35,656

Afghanistan***

153,637

Chad**

35,424

Singapore

150,979

Cambodia*

33,578

Ethiopia

148,997

Burundi

32,717

Costa Rica

139,588

Luxembourg

32,520

Latvia

129,614

Iceland

31,095

Portugal**

118,965

Guyana***

28,122

Cyprus

117,498

Mali

26,759

Namibia***

117,410

FYROM

26,558

Oman

113,341

Suriname

25,745

Hong Kong, China

110,746

Malta

23,606

Lao PDR

108,984

Brunei Darussalam

16,744

Botswana

98,570

Rwanda***

15,860

Moldova

94,828

Niger*

15,716

Uruguay**

83,958

Barbados

15,151

Slovenia

81,518

Lithuania

14,488

Estonia

80,280

Sierra Leone

14,054

Uganda

79,273

St Vincent & Grenadines***

12,897

Albania

69,929

Papua New Guinea

11,333

Tajikistan

58,964

Azerbaijan**

9,916

Cameroon*

56,207

Guinea-Bissau***

9,323

Burkina Faso

55,655

Seychelles

5,803

Myanmar***

52,255

Bhutan

5,355

Bahrain***

51,702

Macao, China

4,637

Georgia

51,500

Samoa*

4,596

Senegal

50,507

Maldives

2,867

Fiji

48,005

Liberia

2,772

Nepal

43,211

Gambia

2,601

Swaziland

41,778

Togo

2,219

Mauritius

40,947

Comoros

1,790

United Arab Emirates

39,424

Anguilla**

92

Mongolia

37,257

Central African Republic

58

Congo, Dem. Rep.

36,000

Notes:

* 2005 data ** 2006 data *** 2008 data Source: International Road Federation (2009).

S/C/W/324 Page 55

ANNEX 4 Estimated effects of liberalizing the domestic road transport market

Author Ying, 1990

Ying and Keeler, 1991

Country or territory/period 61 firms in the United States 1975-84

Winston, 1993

56 firms in the United States 1975-83 United States

Hoj et al, 1995

Australia

Canada France

New Zealand

Norway

Sweden United Kingdom

Explanatory variable Deregulation

Liberalization of entry and prices Liberalization of entry and prices Liberalization of entry and prices (1950s and 1960s) Liberalization of entry and prices Liberalization of entry and prices (1979 and 1989) Liberalization of entry, services and prices (1983) Liberalization of entry, services and prices (1987) Liberalization of entry (1964) Liberalization of entry, services and prices (1983) Liberalization

Yamauchi, 1995

Japan

Burnewicz, 1996

Poland

Privatization and liberalization

McKinnon, 1996

United Kingdom (1987-1990) United States (1970-1978) New Zealand (1984-1987) France (1987-1990) Hungary

Deregulation

Molnar, 1996

Performance variable Technological progress Cost Productivity Prices

Effects found Increases Declines Increases Decline by 25% to 35%

Consumer welfare Gain of 16 billion of 1990 US$ Prices Decline Quality Improves Prices Quality Prices

Decline Improves Decline

Quality

Improves

Entry

Positive

Entry

Positive

Quality

Improves

Consumer welfare Gains of between 2.5 billion and 8.2 billion of US$ Traffic Increases Productivity Increases Efficiency Increases Prices Decline by 25% Decline by 12 to 25% Decline by 25% Decline by15%

Privatization and liberalization

Traffic Productivity Efficiency

Increases Increases Increases

S/C/W/324 Page 56

Author Opletal-Ryba, 1996

Country or territory/period Czech Republic

Haffner and van Bergeijk, 1997

Netherlands

Rose, 1997

United States

Winston, 1998

United States

OECD, 1999a

United States Mexico (1989-1997) United States

Explanatory variable Privatization and liberalization

Liberalization of cabotage, driving periods Labour rent sharing and Rent sharing regulation Deregulation less than Prices truckload trucking Efficiency Quality Deregulation truckload Prices trucking Efficiency Quality Liberalization of entry Prices and prices Deregulation Efficiency Deregulation

OECD, 1999b

Mexico

Liberalization of entry and prices

OECD, 1999c

Japan

Liberalization of entry and prices

Profillidis, 2004

United Kingdom

Liberalization

Australia Zambia

Liberalization Regional liberalization

Raballand, Kuraka and Giersing, 2008

Performance variable Traffic Productivity Efficiency Prices

Source: OECD, updated by the WTO Secretariat.

Quality Employment Prices Quality Employment Efficiency Entry Profit Prices Quality Productivity Efficiency Prices Prices Prices Quality

Effects found Increases Increases Increases Decline by 1%

Declines Decline Increases Increases Decline Increases Increases Decline by 75% (TL) and 35% (LTL) Increases Improves Increases by 16% Decline by 37% Improves Increases by 5% Increases Increases Increases Decline Improves Increases Increases Decline Decline Decline Improves

ANNEX 5 OECD Road Freight Regulation Database – Summary of results Country

Australia Austria

Belgium Canada Czech Republic Denmark Finland France Germany

Greece Hungary

Iceland Ireland

Korea

S/C/W/324 Page 57

Italy Japan

Questions asked in the OECD survey on the assessment of the liberalization of the domestic road transport market In order to establish a Are criteria other Does the Are professional Are professional Are retail prices of Does the government national road freight than technical and regulator, bodies or bodies or road freight services provide pricing business (other than for financial fitness through licenses representatives of representatives of in any way guidelines to road transporting dangerous and compliance or otherwise, trade and trade and commercial regulated by the freight companies? goods or goods for with public safety have any power commercial interests involved in government? which sanitary requirements to limit industry interests involved in specifying or assurances are required) considered in capacity? specifying or enforcing pricing do operators need to decisions on entry enforcing entry guidelines or obtain a license (other of new operators? regulations? regulations? than a driving license) or permit from the government? No No No No No No No Yes Yes No (since 1987) No (since 1990) No (since 2005) No (since 1990) No Yes (1975-1980) N/A 1981-1989 Yes No (since 2005) No (since 1987) Yes No (since 1991) No (since 1998) No (since 1998) N/A 1975-1997 N/A up to 1998 Yes No (since 1998) No (since 1998) No (since 1998) No (since 1998) No (since 1998) No Yes Yes No (since 2005) No (since 2005) No (since 2005) No (since 1991) No (since 1991) Yes No (since 1989) No (since 1989) No (since 1989) No (since 1989) No (since 1989) No (since 1989) Yes No (since 1991) No (since 1991) No (since 1985) No (since 1992) No (since 1986) No (since 1986) Yes Yes Yes (since 2005) Yes No (since 1989) No (since 1989) No (since 1989) Yes Yes No (since 1999) No (since 2005) No (since 1983) No (since 1998) No (since 1998) Yes (1975-1990) Yes (1997-1990) N/A 1990-1997 N/A 1991-1997 Yes No (since 2005) No (since 2005) No (since 2005) No (since 2005) Yes Yes Yes No (since 1998) – No (since 2005) Yes Yes No (since 1998) No (since 1998) N/A 1991-1998 Yes (1957-1990) Yes (1975-1990) N/A 1991-1997 N/A 1991-1997 Yes Yes No (since 1998) - Yes No (since 1998) No (since 1998) No (since 1998) N/A up to 1998 N/A up to 1998 N/A 1975-1997 N/A up to 1998 Yes Yes (1975-1987 No (since 1998) No (since 1986) No (since 1988) No (since 1998) No (since 1998) and since 2007) N/A 1975-1997 N/A up to 1998 No (1998-2006) Yes Yes No (since 2001) Yes No (since 2005) No (since 2005) No (since 2005) Yes No (since 2001) Yes (1975-1996 No (since 1990) No (since 1990) No (since 2003) No (since 1990) and 2005-2007) No (1998-2003) Yes Yes No (since 2001) No (since 1998) No (since 1998) No (since 1998) Yes N/A up to 1998 N/A up to 1999 N/A 1975-1997

Country

Mexico Netherlands

New Zealand Norway

Poland

Portugal Slovak Republic

Spain

Sweden Switzerland Turkey

United Kingdom United States Chile (data available only for 2007) Estonia (data available only for 2007) Israel (data available only for 2007)

S/C/ W/32 4 Page 58

Luxembourg

Questions asked in the OECD survey on the assessment of the liberalization of the domestic road transport market In order to establish a Are criteria other Does the Are professional Are professional Are retail prices of Does the government national road freight than technical and regulator, bodies or bodies or road freight services provide pricing business (other than for financial fitness through licenses representatives of representatives of in any way guidelines to road transporting dangerous and compliance or otherwise, trade and trade and commercial regulated by the freight companies? goods or goods for with public safety have any power commercial interests involved in government? which sanitary requirements to limit industry interests involved in specifying or assurances are required) considered in capacity? specifying or enforcing pricing do operators need to decisions on entry enforcing entry guidelines or obtain a license (other of new operators? regulations? regulations? than a driving license) or permit from the government? Yes (since 1998) - (N/A No (since 1998) - No (since 1998) - No (since 1998) No (since 1998) No (since 1998) No (since 1998) up to 1998) (N/A up to 1998) N/A up to 1998 N/A up to 1999 N/A up to 2000 N/A 1975-1997 N/A 1975-1997 Yes No (since 2001) No (since 1998) - No (since 2000) No (since 2001) No (since 1998) No (since 1998) N/A up to 1998 N/A up to 1998 N/A 1975-1997 N/A 1975-1997 Yes Yes (1957-1991 No (since 1992) Yes No (since 1992) No (since 1992) No (since 1992) and 2005-2007) No (1992-2004) No (since 1995) No (since 1993) No (since 1993) No (since 1989) No (since 1983) No (since 1983) No (since 1983) Yes Yes Yes (1975-1986 No (since 1987) No (since 1987) No (since 1984) No (since 1984) and 2005-2007) No (1987-2004) No (since 2005) Yes No (since 2001) No (since 2005) No (since 1998) No (since 1998) No (since 1998) Yes (1975-1990) Yes (1975-1990) Yes (1975-1990) N/A 1991-1997 N/A 1991-1997 N/A 1991-1997 Yes No (since 1996) No (since 1996) Yes No (since 1986) No (since 1987) No (since 1987) Yes Yes Yes No (since 2003) No (since 2003) No (since 2003) No (since 2003) Yes (1975-1990) Yes(1975-1990) Yes (1975-1990) Yes (1975-1990) N/A 1991-2002 N/A 1991-2002 N/A 1991-2003 N/A 1991-2004 Yes No (since 2000) No (since 2000) No (since 2005) No (since 2002) No (since 1998) No (since 2002) Yes (1975-1987) N/A 1987-1998 Yes Yes No (since 1987) No No No No Yes (since 2001) No No No No No No Yes (since 2003) Yes Yes (since 2005) Yes (since 2001) No (since 1998) Yes (since 2005) Yes (since 2005) No (1998-2000) N/A 1975-1998 N/A up to 2005 No (1998-2004) N/A 1975-1998 N/A 1975-2003 Yes No No No No No No Yes No (since 1995) No (since 1995) No (since 1980) No (since 1984) No (since 1980) No (since 1995) No Yes No Yes No Yes Yes Yes No Yes No No No Yes No No No No No No

Country

Questions asked in the OECD survey on the assessment of the liberalization of the domestic road transport market In order to establish a Are criteria other Does the Are professional Are professional Are retail prices of Does the government national road freight than technical and regulator, bodies or bodies or road freight services provide pricing business (other than for financial fitness through licenses representatives of representatives of in any way guidelines to road transporting dangerous and compliance or otherwise, trade and trade and commercial regulated by the freight companies? goods or goods for with public safety have any power commercial interests involved in government? which sanitary requirements to limit industry interests involved in specifying or assurances are required) considered in capacity? specifying or enforcing pricing do operators need to decisions on entry enforcing entry guidelines or obtain a license (other of new operators? regulations? regulations? than a driving license) or permit from the government? Russia Slovenia (data available only for 2007) Yes Yes No Yes Yes No No Brazil (data available only for 2007) Yes No No No No No No China (data available only for 2007) Yes Yes Yes Yes No Yes Yes Notes: - "No" indicates the existence of a liberalized market. The date indicates the time of liberalization. - An isolated "Yes" or "No" indicates that the reply has not changed since the survey began for the country in question (1975 in most cases). - Where a reply has varied with time or was not available, the corresponding periods are indicated in the table. - N/A indicates the non-availability of the answer. Source: OECD Survey of Indicators of Regulation in Energy, Transport and Communications. See: http://www.oecd.org/dataoecd/47/29/42480612.xls (data on road freight are available only in English)

S/C/W/324 Page 59

ANNEX 6 S/C/ W/32 4 Page 60

Aggregated results of the World Bank survey of road transport regimes in 93 WTO Members Table 1: Authorization of commercial presence in the form of the establishment of a branch or subsidiary or the acquisition of a domestic private or public entity North America Caribbean and Europe Commonwealth Africa Middle East Asia Central and of Independent South America States C/T % C/T % C/T % C/T % C/T % C/T % C/T % fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. Yes 0 0.00% 8 1.54% 4 1.39% 2 0.02% 18 1.61% 1 0.00% 7 6.55% Partially 3 49.84% 9 3.00% 4 1.33% 2 0.16% 6 0.42% 3 0.29% 8 17.67% No 0 0.00% 0 0.00% 14 11.86% 0 0.00% 0 0.00% 2 0.54% 2 3.76% n/a 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0 Total number of 3 17 22 4 24 6 17 countries/territ. Total HGV (%) 49.84% 4.54% 14.59% 0.18% 2.03% 0.83% 27.99% Total number of HGV 125,793 11,464 36,815 457,941 5,110 2,096 70,635 (millions) Notes:

- "C/T": Countries or Territories - "per cent fl. surv".: percentage of the HGV fleet of the 93 WTO Members covered by the survey. - n/a: not applicable

Total

C/T 40 35 18 0 93

% fl. surv. 11.12% 72.72% 16.16% 0.00%

100% 252,374

Table 2: Maximum foreign ownership allowed for the following forms of commercial presence: establishment of a subsidiary, acquisition of a domestic private entity, acquisition of a domestic public entity North America Caribbean and Europe Commonwealth of Africa Middle East Asia Total Central and Independent States South America C/T % C/T % C/T % C/T % C/T % C/T % C/T % C/T % fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. 100% establ. 2 46.73% 13 2.02% 8 2.73% 4 0.18% 20 1.65% 1 0.02% 11 21.27% 59 74.49% subsidiary 100% existing private 2 46.73% 15 4.41% 8 2.73% 4 0.18% 21 1.79% 0 0.00% 11 21.17% 61 77.01% entity 100% existing public 2 46.73% 9 3.54% 6 1.66% 3 0.18% 16 1.70% 0 0.00% 9 21.09% 45 74.90% entity From 50 to 100% 0 0.00% 2 2.39% 0 0.00% 0 0.00% 2 0.19% 1 0.04% 0 0.00% 5 2.62% establ. subsidiary From 50 to 100% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 1 0.04% 1 0.00% 2 0.04% existing private entity From 50 to 100% 0 0.00% 1 0.19% 0 0.00% 0 0.00% 2 0.01% 0 0.00% 0 0.00% 3 0.20% existing public entity Less than 50% establ. 1 3.12% 2 0.14% 14 11.86% 0 0.00% 2 0.19% 4 0.77% 6 6.82% 29 22.89% subsidiary Less than 50% 1 6.26% 2 3.01% 14 81.29% 0 0.00% 3 11.46% 5 94.46% 5 24.36% 30 22.95% existing private entity Less than 50% 1 3.12% 2 0.14% 14 11.86% 0 0.00% 3 0.23% 5 0.79% 5 6.82% 30 22.95% existing public entity n/a establ. subsidiary 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% n/a existing private 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% entity n/a existing public 0 0.00% 1 0.07% 1 1.04% 0 0.00% 0 0.00% 0 0.00% 1 0.07% 3 1.17% entity Total number of 3 17 22 4 24 6 17 93 countries/territ. Total HGV (%) 49.84% 4.54% 14.59% 0.18% 2.03% 0.83% 27.99% 100% Total number of HGV 125,793 11,464 36,815 457,941 5,110 2,096 70,635 252,374 (millions) Notes:

S/C/W/324 Page 61

- "C/T": Countries or Territories - "per cent fl. surv".: percentage of the HGV fleet of the 93 WTO Members covered by the survey. - n/a: not applicable

Notes:

Europe

C/T 8 0 14 0 22

% fl. surv. 2.73% 0.00% 11.86% 0.00%

14.59% 36,815

Commonwealth of Independent States C/T 3 0 0 1 4

% fl. surv. 0.16% 0.00% 0.00% 0.02%

0.18% 457,941

Africa

C/T 21 0 3 0 24

% fl. surv. 1.91% 0.00% 0.11% 0.00%

2.03% 5,110

Middle East

C/T 1 0 5 0 6

% fl. surv. 0.04% 0.00% 0.79% 0.00%

C/T 7 0 6 4 17

0.83% 2,096

% fl. surv. 4.65% 0.00% 6.82% 16.52%

Total

C/T 54 0 32 7 93

27.99% 70,635

% fl. surv. 57.53% 0.00% 22.91% 19.56%

100% 252,374

- "C/T": Countries or Territories - "per cent fl. surv".: percentage of the HGV fleet of the 93 WTO Members covered by the survey. - n/a: not applicable

Table 4: Maximum authorized participation for a group of foreign entities in a joint venture North America Caribbean and Europe Commonwealth of Africa Middle East Central and Independent States South America C/T % C/T % C/T % C/T % C/T % C/T % fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. Yes 1 43.78% 12 4.22% 8 2.73% 2 0.16% 15 1.75% 0 0.00% Partially 0 0.00% 1 0.03% 0 0.00% 1 0.00% 5 0.04% 1 0.04% No 1 3.12% 3 0.22% 14 11.86% 0 0.00% 4 0.23% 5 0.79% n/a 1 2.94% 1 0.07% 0 0.00% 1 0.02% 0 0.00% 0 0.00% Total number of 3 17 22 4 24 6 countries/territ. Total HGV (%) 49.84% 4.54% 14.59% 0.18% 2.03% 0.83% Total number of HGV 125,793 11,464 36,815 457,941 5,110 2,096 (millions) Notes:

Asia

- "C/T": Countries or Territories - "per cent fl. surv".: percentage of the HGV fleet of the 93 WTO Members covered by the survey. - n/a: not applicable

Asia

C/T 6 1 6 4 17

% fl. surv. 4.58% 0.07% 6.82% 16.52%

27.99% 70,635

Total

C/T 44 9 33 7 93

% fl. surv. 57.22% 0.19% 23.03% 19.56%

100% 252,374

S/C/ W/32 4 Page 62

Table 3: Authorization of a controlling stake in a joint venture North America Caribbean and Central and South America C/T % C/T % fl. surv. fl. surv. Yes 1 43.78% 13 4.25% Partially 0 0.00% 0 0.00% No 1 3.12% 3 0.22% n/a 1 2.94% 1 0.07% Total number of 3 17 countries/territ. Total HGV (%) 49.84% 4.54% Total number of HGV 125,793 11,464 (millions)

Table 5: Limit on number of licences available North America Caribbean and Europe Commonwealth of Africa Middle East Central and Independent States South America C/T % C/T % C/T % C/T % C/T % C/T % fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. Yes 0 0.00% 0 0.00% 0 0.00% 0 0.00% 1 0.07% 0 0.00% Partially 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% No 2 46.73% 6 0.65% 8 2.73% 3 0.02% 10 0.19% 4 0.29% n/a 1 3.12% 11 3.90% 14 11.86% 1 0.16% 13 1.76% 2 0.54% Total number of 3 17 22 4 24 6 countries/territ. Total HGV (%) 49.84% 4.54% 14.59% 0.18% 2.03% 0.83% Total number of HGV 125,793 11,464 36,815 457,941 5,110 2,096 (millions) Notes:

C/T 0 0 6 11 17

% fl. surv. 0.00% 0.00% 16.61% 11.38%

Total

C/T 1 0 39 53 93

27.99% 70,635

% fl. surv. 0.07% 0.00% 67.21% 32.72%

100% 252,374

- "C/T": Countries or Territories - "per cent fl. surv".: percentage of the HGV fleet of the 93 WTO Members covered by the survey. - n/a: not applicable

Table 6: Difference in licensing criteria for foreign and domestic applicants North America Caribbean and Europe Commonwealth of Africa Middle East Central and Independent States South America C/T % C/T % C/T % C/T % C/T % C/T % fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. Yes 0 0.00% 2 0.10% 0 0.00% 0 0.00% 2 0.09% 0 0.00% Partially 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00% No 0 0.00% 4 0.55% 4 1.37% 3 0.02% 12 0.17% 4 0.29% n/a 3 49.84% 11 3.90% 18 13.22% 1 0.16% 10 1.76% 2 0.54% Total number of 3 17 22 4 24 6 countries/territ. Total HGV (%) 49.84% 4.54% 14.59% 0.18% 2.03% 0.83% Total number of HGV 125,793 11,464 36,815 457,941 5,110 2,096 (millions) Notes:

Asia

C/T 0 0 2 15 17

% fl. surv. 0.00% 0.00% 0.08% 27.90%

27.99% 70,635

Total

C/T 4 0 29 60 93

% fl. surv. 0.19% 0.00% 2.48% 97.33%

100% 252,374

S/C/W/324 Page 63

- "C/T": Countries or Territories - "per cent fl. surv".: percentage of the HGV fleet of the 93 WTO Members covered by the survey. - n/a: not applicable

Asia

Notes:

C/T 8 0 3 6 17

Total

% fl. surv. 16.62% 0.00% 6.90% 4.47%

C/T 39 6 21 27 93

27.99% 70,635

% fl. surv. 69.74% 1.52% 7.36% 21.38%

100% 252,374

- "C/T": Countries or Territories - "per cent fl. surv".: percentage of the HGV fleet of the 93 WTO Members covered by the survey. - n/a: not applicable

Table 8: Nationality or residency requirements for board of directors North America Caribbean and Europe Commonwealth of Africa Middle East Central and Independent States South America C/T % C/T % C/T % C/T % C/T % C/T % fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. Yes 0 0.00% 0 0.00% 2 0.36% 0 0.00% 1 0.12% 0 0.00% Partially 1 2.94% 3 0.17% 0 0.00% 0 0.00% 5 0.25% 2 0.25% No 0 0.00% 12 1.77% 6 2.37% 4 0.18% 14 0.56% 1 0.00% n/a 2 46.90% 2 2.60% 14 11.86% 0 0.00% 4 1.10% 3 0.58% Total number of 3 17 22 4 24 6 countries/territ. Total HGV (%) 49.84% 4.54% 14.59% 0.18% 2.03% 0.83% Total number of HGV 125,793 11,464 36,815 457,941 5,110 2,096 (millions) Notes:

Asia

- "C/T": Countries or Territories - "per cent fl. surv".: percentage of the HGV fleet of the 93 WTO Members covered by the survey. - n/a: not applicable Source: WTO Secretariat on the basis of the World Bank's Services Policy Restrictiveness Database.

Asia

C/T 1 3 6 7 17

Total

% C/T fl. surv. 0.02% 4 3.80% 14 19.69% 43 4.48% 32 93 27.99% 70,635

% fl. surv. 0.50% 7.41% 24.57% 67.52%

100% 252,374

S/C/ W/32 4 Page 64

Table 7: Nationality requirements for employees North America Caribbean and Europe Commonwealth of Africa Middle East Central and Independent States South America C/T % C/T % C/T % C/T % C/T % C/T % fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. fl. surv. Yes 2 46.73% 11 4.02% 4 1.39% 1 0.00% 9 0.70% 4 0.29% Partially 0 0.00% 0 0.00% 3 1.34% 3 0.18% 0 0.00% 0 0.00% No 0 0.00% 5 0.19% 0 0.00% 0 0.00% 13 0.28% 0 0.00% n/a 1 3.12% 1 0.34% 15 11.86% 0 0.00% 2 1.05% 2 0.54% Total number of 3 17 22 4 24 6 countries/territ. Total HGV (%) 49.84% 4.54% 14.59% 0.18% 2.03% 0.83% Total number of HGV 125,793 11,464 36,815 457,941 5,110 2,096 (millions)

S/C/W/324 Page 65

ANNEX 7 Breakdown of ECMT basic licences for 2010, by vehicle environmental category Participants

Albania Armenia Austria Azerbaijan Belarus Belgium Bosnia Herzegovina Bulgaria Croatia Czech Republic Denmark Estonia Finland France FYROM Georgia Germany Greece Hungary Ireland Italy Latvia Liechtenstein Lithuania Luxembourg Malta Moldova Montenegro Netherlands Norway Poland Portugal Romania Russian Federation Serbia Slovak Republic Slovenia Spain Sweden Switzerland Turkey Ukraine United Kingdom Total Number of countries

Base 2010

128 120 16 120 183 171 120

EURO III safe lorries Licences Total Annual Short EURO III term 80 20 100 30 30 80 44 60 73

10

90 44 60 73

157 157 141 132 128 149 252 128 120 286 149 141 132 67 128 30 128 55 30 128 30 208 132 153 132 208 299

76 91 124 76 77 25 130 63 80 264 110 79 10 67

15

91 91 141 76 78 25 130 64 90 274 110 100 10 67 21 2 63 19 20

132 128 128 149 153 135 250 208 149 6090 43

60 85 102 74 73 35 200 125 33 3105 40

17 1

1 10 10 21

21 2 60 18 20 13 40 30 51 50 156 239

3 1

10

13 40 30 51 51 156 249

141 16

60 85 102 74 73 35 200 125 33 3246 -

1

Source: International Transport Forum (2010)

EURO IV safe lorries EURO V safe lorries Licences Total Licences Total EURO Annual Short EURO IV Annual Short V term term 15 5 20 5 3 8 5 5 5 5 16 16 30 30 139 139 51 51 60 60 47 47 50 66 38 49 25 82 63 6 12 25 41 6 97 1 65 12 8 128 17 80 50 102 15 52 45

16

1

1 7

10

38 50 25 82 64 13 12 25 41 6 107 1 65 12 8 128

5

80 50 102 15 52 50

9

72 43 26 75 50 50 50 83 33 1948 -

72 43 26 75 50 50 50 83 33 41

66 66 18

18

20 40

20 40

10

7

17

14

14

5

5

1

1

24 2

24 2

88 52

88 52

66

66

30 50

30 50

33 523 19

10 2

33 533 -

S/C/W/324 Page 66

ANNEX 8 Application of coefficients and bonuses to ECMT basic licences for the year 2010 Participants

Albania Armenia Austria Azerbaijan Belarus Belgium Bosnia Herzegovina Bulgaria Croatia Czech Rep. Denmark Estonia Finland France FYROM Georgia Germany Greece Hungary Ireland Italy Latvia Liechtenstein Lithuania Luxembourg Malta Moldova Montenegro Netherlands Norway Poland Portugal Romania Russian Fed. Serbia Slovak Republic Slovenia Spain Sweden Switzerland Turkey Ukraine United Kingdom Total Number of countries

EURO III safe lorries Licences (x4) Bonus 40% Annual Shortterm 480 960 160 168 48 464 246 336 409

480

426 510 722 426 433 140 728 354 464 1494 110 476 56 375

1008 816 48

48 480 480 1008

1411 11 341 102 80 73 224 168 286 282 874 1338 336 476 571 414 409 196 1120 700 185 17003 40

144 48

48 672

144 70 96 117 146 146 226 122 125 40 208 102 144 438 160 16 107 34 3 101 30

21 64 48 82 82 250 398 96 136 163 118 117 56 320 200 53

7651 14

Source: International Transport Forum (2010).

EURO IV safe lorries Licences (x6) Bonus Annual Short 40% -term 138 360 48 42 12 96 252 72 1168 334 428 122 395 113 420 554 319 414 210 689 532 67 101 25 344 50

1613

72

72 504

EURO V safe lorries Licences (x6) Bonus Annual Short 40% -term 49 216 19 42 12

504

144

158 158 91 120 60 197 154 31 29

151

43

168 336

48 96

101

504

41

14 98 14

815 8 546 101 48 1075 143 672 420 857 126 437 378 605 361 218 630 420 420 420 697 277

1008

15918 41

4133 7

504

257 2 156 29 307 41 192 120 245 36 125 120 173 103 62 180 120 120 120 199 79

42

12

8

2

202 12

58

739 437

211 125

554

158

252 420

72 120

277

79

4308 18

720 2

Total licences Annual 667 252 96 716 1414 1268 804

Shortterm 1536

480

846 1064 722 896 847 518 1753 886 632 1595 149 820 148 375 815 27 887 405 140 1075 216 1635 1025 1143 962 1311 1716 941 837 789 1044 1081 1036 1540 1397 739

2621

37229

12504

816 120

120 1488 480 1008

2419 144 48

48 1176

ANNEX 9 Summary table of emission standards for Heavy Goods Vehicle (expressed in grams/kilowatt-hour)

United States Europe South America Japan Korea China Chinese Taipei Developing countries

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 NOx: 5.4 g/kWh (4.0) NOx+HC: 3.35 g/kWh (2.5) NOx: 1.48 g/kWh (1.1) NOx: 0.27 g/kWh (0.2) PM: 0.13 g/kWh (0.10) PM: 0.13 g/kWh (0.10) PM: 0.013 g/kWh (0.01) PM: 0.013 g/kWh (0.01) NOx: 2.0 g/kWh (1.5) NOx: 5.0 g/kWh (3.7) NOx: 3.5 g/kWh (2.6) Similar to PM: 0.02/0.03 g/kWh (0.015/0.022) PM: 0.10 g/kWh (0.07) PM: 0.02/0.03 g/kWh (0.015/0.022) US 2010? NOx: 7.0 g/kWh (5.2) NOx: 5.0 g/kWh (3.7) NOx: 3.5 g/kWh (2.6) ?? PM: 0.15 g/kWh (0.11) PM: 0.10 g/kWh (0.07) PM: 0.02 g/kWh (0.015) NOx: 4.5 g/kWh (3.4) NOx: 3.38 g/kWh (2.5) NOx: 1.7 g/kWh (1.3) ?? PM: 0.25 g/kWh (0.19) PM: 0.18 g/kWh (0.13) PM: 0.05 g/kWh (0.4) NOx: 6.0 g/kWh (4.5) ?? PM: 0.15 g/kWh (0.27) NOx: 8.0 g/kWh (6.0) NOx: 7.0 g/kWh (5.2) ?? PM: 0.36 g/kWh (0.27) PM: 0.15 g/kWh (0.11) NOx: 6.7 g/kWh (5.0) ?? PM: 0.13 g/kWh (0.1) NOx: No limits or relaxed standards ?? PM: No limits or relaxed standards 2003 2004 2005 2006 2007 2008 2009 201 2011 2012 0

Source: Daimler Chrysler/IRU

S/C/W/324 Page 67

ANNEX 10

European standards and countries or territories applying them American standards and countries or territories applying them Countries or territories accepting both European and American standards Japanese standards No standard Source: IRU/UNECE

S/C/ W/32 4 Page 68

Areas of application of various emission standards for Heavy Goods Vehicles

S/C/W/324 Page 69

ANNEX 11 Maximum permissible weights and dimensions

Afghanistan Albania Algeria Argentina Armenia Austria Azerbaijan Belarus Belgium Bosnia-Herzegovina Brazil Bulgaria Cameroon Central African Republic Chad Chile China Congo Croatia Cyprus Czech Rep. Denmark Egypt Estonia European Union Finland France FYROM Georgia Germany Greece Hungary Iran Iraq Ireland Israel Italy Japan Jordan Kazakhstan Kuwait Kyrgyz Republic Latvia Lithuania

Maximum permissible weight for road trains (tonnes) 36.0 44.0 35.0 45.0 36.0 38.0 38.0 38.0 44.0 40.0 74.0 40.0 50.0 50.0 50.0 45.0 16.5 50.0 40.0 31.0 48.0 48.0 48.0 44.0 40.0 60.0 40.0 40.0 44.0 44.0 40.0 44.0 40.0 54.0 40.0 59.0 44.0 36.0 60.0 44.0 45.0 30.0 40.0 40.0

Maximum Maximum permissible permissible height (metres) width (metres)

4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00

2.50 2.60 2.50 2.50 2.50 2.60 2.60 2.60 2.60 2.50 2.60 2.60 2.50 2.50

Maximum permissible length for a road train (metres) 24.00 18.35 18.00 20.50 20.00 18.75 20.00 20.00 18.75 18.00 19.80 18.75 18.00 18.00

4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 no restriction 4.00 4.00 4.00 4.00 4.00 4.50 4.10 4.25 4.00 4.30 4.10 4.20 4.00 4.50 4.00 4.00 4.00

2.50 2.50 2.50 2.50 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.50 2.60 2.60 2.60 2.60 2.50 2.60 2.60 2.60 2.60 2.50 2.60 2.60 2.60 2.55 2.60 2.60

18.00 20.00 16.50 18.00 18.75 18.35 22.00 18.75 20.00 18.75 18.75 25.25 20.35 18.00 24.00 18.75 18.75 24.00 18.00 20.00 18.35 18.75 21.00 18.00 18.35 20.00 20.00 18.75 18.75

Maximum permissible dimensions (m³ = h x l x L)

180.00 200.00 165.00 180.00 195.00 190.84 228.80 195.00 208.00 195.00 195.00 262.60 180.00 249.60 195.00 195.00 249.60 202.50 213.20 202.77 195.00 234.78 184.50 200.38 208.00 234.00 195.00 195.00

240.00 190.84 180.00 200.00 195.00 208.00 208.00 195.00 180.00 205.92 195.00 180.00 180.00

S/C/W/324 Page 70

Luxembourg Malta Mexico Moldova Morocco Netherlands New Zealand Norway Poland Portugal Rep. of Korea Romania Russia Saudi Arabia Serbia Slovak Rep. Slovenia Spain Sweden Switzerland Tunisia Turkey Turkmenistan Ukraine United Kingdom United States Uruguay Uzbekistan

Maximum permissible weight for road trains (tonnes) 44.0 40.0 45.5 40.0 40.0 50.0 44.0 50.0 40.0 44.0 35.0 40.0 38.0 40.0 40.0 40.0 40.0 40.0 60.0 44.0 40.0 40.0 36.0 38.0 44.0 36.3 36.0 40.0

Maximum Maximum permissible permissible height (metres) width (metres)

4.00 4.50 4.20 4.00 4.00 4.00 4.25 no restriction 4.00 4.60 3.50 4.00 4.00 4.00 4.00 4.00 4.00 4.00 no restriction 4.00 4.00 4.00 4.00 4.00 no restriction 4.00 4.00

2.60 2.60 2.50 2.50 2.60 2.60 2.50 2.60 2.60 2.60 2.50 2.60 2.60 2.50 2.50 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.50 2.65 2.60 2.59 2.50 2.50

Maximum permissible length for a road train (metres) 18.75 18.75 22.00 20.00 18.00 18.75 20.00 19.00 18.75 18.75 16.70 18.75 20.00 18.00 18.00 22.00 18.75 18.75 24.00 18.75 18.75 22.00 20.00 22.00 18.75 14.40 20.00 24.00

Maximum permissible dimensions (m³ = h x l x L) 195.00 219.38 231.00 200.00 187.20 195.00 212.50 195.00 224.25 146.13 195.00 208.00 180.00 180.00 228.80 195.00 195.00 195.00 195.00 228.80 200.00 233.20 200.00 240.00

Note: China: Maximum weight for tractor, maximum length for tractor and trailer. Source: IRU Information Centre, Authorizations, Goods Transport, http://www.iru.org/Indiax/infocentre-find-form (http://www.iru.org/index/infocentre-find-form) APEC Electronic Individual Action Plan (e-IAP), http://www.apec-iap.org/

S/C/W/324 Page 71

ANNEX 12

X

X

X

X

7

Armenia

X

X

X

X

X

X

X

7

Aruba

X

X

3

Australia

X

Brazil

X

Cambodia

X

Canada Cape Verde

X X

Total

X

Freight transportation by man- or animal- drawn vehicle CPC 71236 Transportation of other freight CPC 71239

Mail transportation CPC 71235

X

Transportation of containerized freight CPC 71233

X

Transportation of bulk liquids and gases CPC 71232

Albania

Transportation of frozen or refrigerated goods CPC 71231

Transportation of furniture CPC 71234

Commitments in road freight transport services (11.F.b)

X

X

4

X

X

3

X

X

X

X

X

X

X

X

X

X

China

X

X

Cote d'Ivoire

X

Croatia

X

X

X

X

X

X

X

7

X

X

X

X

X

7

X

X

X

X

X

X

7

X

X

X

X

X

X

X

7

Ecuador

X

X

X

X

X

X

X

7

Estonia

X

X

X

X

X

X

X

7

EU-12

X

X

X

X

X

X

X

7

Finland

X

X

X

X

X

X

X

7

FYROM

X

X

X

X

X

X

X

7

Gambia

X

X

X

X

X

X

X

7

Georgia

X

X

X

X

X

X

X

7

Guinea

X

X

X

X

X

X

X

7

Guyana

X

X

X

X

X

X

X

7

Iceland

X

X

X

X

X

X

X

7

Japan

X

X

X

X

X

X

X

7

Kenya

X

X

X

X

X

X

X

7

Korea

7 4

X

1

Kyrgyz Republic

X

X

X

X

X

X

X

7

Latvia

X

X

X

X

X

X

X

7

Lesotho

X

X

X

X

X

X

X

7

Lithuania

X

X

X

X

X

X

X

7

Moldova

X

X

X

X

X

X

X

7

Morocco

X

X

X

X

X

X

X

7

* Counting EU-12 as one.

__________

Netherlands Antilles X

New Zealand X X X X

Niger X X X X X

Norway X X X X

Philippines X X X

Romania X X

South Africa X

Sweden X 3

X X 6

X X 7

X X X 7

X X X X 7

X X X X X 7

X X X X X X 7

X X X X X X X 7

Chinese Taipei X X X X X X X 7

Thailand X X X

Turkey X X X X X X X 7

Ukraine X X X X X X X 7

USA X X X X X X X 7

Vietnam X X X X X X X 7

Total * 43 39 42 42 36 37 39 278

X

Total

Freight transportation by man- or animal- drawn vehicle CPC 71236 Transportation of other freight CPC 71239

Mail transportation CPC 71235

Transportation of furniture CPC 71234

Transportation of containerized freight CPC 71233

Transportation of bulk liquids and gases CPC 71232

Transportation of frozen or refrigerated goods CPC 71231

S/C/W/324 Page 72

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