Amer Durrani
The World Bank
This morning everyone kept saying that this is the end of the project. Let’s put it this way, as a great man once said, this is neither the beginning, nor the end, but the end of a rather inauspicious beginning. I’m saying inauspicious because this project has experienced a lot of hiccups. The project as we see it today was conceived in the early ‘90s. It was actually discussed and negotiated in early 1998. After that, because of the political situation, the project could not really start with the impetus that it was supposed to. Then there was 9/11. Today we see that the project now has to grapple with issues that were probably not even thought about when the project design was actually done.

Having said that, we feel that what it has done to date, it has done well. We think that overall the objective of the project was to establish a public-private framework so as to being about a set of parameters or a vision on how trade facilitation is going to be launched in Pakistan and continued henceforth. While we have started to achieve an informal public-private framework there is a group of activists that has been emerging over the last one and a half years who are actually following-up on trade facilitation issues.

One of the reasons that we have been grappling with trade facilitation, not just here but in about 100+ countries around the world, is because it is very multifaceted. Every behind the border and non-tariff is trade facilitation. Even within the Bank we have a problem knowing where should trade facilitation be “housed,” because we have bureaucracies just like the Government of Pakistan or any other Government, and we like to work in silos: there is an economic management silo, there is a trade silo, there is an engineering silo, there is a road silo. Who actually owns this project? The answer is not any single person, but the entire country owns the trade facilitation project.

Trade facilitation is about harmonizing legislation, simplifying administration and improving the means of trade and transit. Customs, finance, and transit: no matter which way you cut the pie, it is a very broad subject. Hence we need to have not just a facilitation committee, but many facilitation committees or subcommittees that deal with these issues and carry the torch of trade facilitation forward in Pakistan.

What has the Bank’s role been so far? As it is emerging internationally the Bank’s role in trade facilitation is very simple. Because of our history in this field for the last fifteen years, we consider ourselves to have a comparative advantage in two areas. First, we like to be considered as a “knowledge bank” on any issue. That is one of the tools that the Bank has available: we have databases of knowledge on issues related to trade facilitation and hence would like to be a change agent or facilitator that can be called upon to present themselves and mostly use this knowledge for regional and national facilitation.

The second thing is infrastructure. When we say “infrastructure” it does not mean the physical infrastructure, because remember a bad road can be an impediment to trade. We feel that rather too large to bring under the umbrella of trade facilitation. So we talk of the points with most interchange, the points where transhipment takes place, the points where the flow breaks. We want to be there are
look at the modalities to make sure that this truck keeps moving, without have to change drivers, without having to change trucks, without having to tranship cargo. That is the kind of infrastructure we are interested in. One example is security scanning equipment. If that is an area where the Government requests assistance, that is an area where we would be interested to engage in a dialogue.

Where do we want to go? We need to have two things: first and foremost, we need to have a donor framework. We are trying to this in every country and in every area. Every donor has a comparative advantage in ways to assist the Government. That has to be decided. Once the framework is established, we would like to support the “fair trade model” and would like to work focused in the areas of Customs improvement and logistics improvement, whether that is at the ports or border crossings.

Mireille Perrin-Descorzant
European Commission
The European Commission does not fund trade facilitation directly. We made a decision to focus more on trade capacity building, that is building the capacity of Government stakeholders, private sector actors and civil society organizations in the broad field of multilateral and regional trade negations. However, I think there are some relationships between trade facilitation strictly and the broader framework of trade capacity building.

Between 1996 and 2000 the European Union spent globally EUR 700 million on projects in developing countries on trade-related capacity building. EUR 1.5 billion were spent in early 2003 for more than 200 projects in both developing and least developed countries and we foresee that in the next three to five years, we will spend an additional EUR 1 billion. At the time of the formation of the WTO Global Trust Fund the European Union also contributed EUR 19 million.

The increase in the level of our financing in the area of trade-related technical assistance stems from the commitment of the developed countries at the Doha Ministerial Meeting of the WTO where the developed countries said that they would play their part in helping developing countries reap the benefits of more liberal trade. It was at Doha that a number of developed countries put to the fore the importance of trade-related technical assistance.

In Pakistan we have had a number of consultants, both in February and June of this year. We decided to fund a three year project entitled, "Trade-Related Technical Assistance for Pakistan." Overall we are committed to spending EUR 5 million on three main components. One is WTO capacity building, where one of our key target audiences will be Government representatives, notably the WTO Wing
of the Ministry of Commerce, but also other Ministries that are involved in the WTO negotiations. We will also be working with the Export Promotion Bureau and try to enhance its capacity to service some of the private actors directly involved in international trade.

The second emphasis will be on standards and quality control (including SPS). One of the problems that we see when products enter European markets is that they do not meet the standards that the European importers require, whether it be fisheries or other products. We want to help build an enhanced capacity within Pakistan to meet the requirements of the EU and other developed economies. There again we will be working with some of the Government agencies but also private actors, with a focus on fisheries, textiles and leather and agro-products.

Finally, and this is an issue of importance to us, the field of intellectual property rights. We will be cooperating with the World Intellectual Property Organization in trying to address rights that are of importance here in Pakistan.

From the donor’s side, what do we think is important when we make a decision about funding a project on trade. This may also be relevant to this particular project, especially as we are looking forward. Ownership is key, and from what I understand, the current project may have suffered from not enough ownership. Trade-related technical assistance, or for that matter any project, has to be "demand driven."
You have to ensure that you respond to the needs of the people in the country. That requires a lot of conversation, right from the beginning, on the project design and throughout its implementation.

A second important point is sustainability. Donors have limited funds; they come in for a certain period of time. We need to ensure that the actors and the achievements that are foreseen by the project will last for a much longer period. The European Commission will finance a project for three years, but we hope that the success or progress that we manage to achieve will be for far longer. For that we need the assistance of a network in place in Pakistan.

Finally, coordination. This session is a good example, as we also need donor coordination to ensure complementarities between the donors and also to avoid duplication. In that regard, I would like to stress that we had a first trade donor coordination meeting in Islamabad on the 15th of October,
which was also an initiative of the Ministry of Commerce and was very useful. Maybe other donors meetings would address specific issues, such as trade facilitation.

Werner Liepach
Asian Development Bank
The Asian Development Bank has four basic instruments: loans from ADF, which are on concessionary terms and OCR, ordinary capital resources, which are at markets terms. Those loans normally go through the Government, but they can also be given to the private sector as direct loans. We have a second tool, which are guarantees. Those are political risk guarantees or partial credit guarantees.
This is a very flexible instrument that is relatively new and potentially very powerful to see improved public-private partnerships. The third instrument that we have are grants, which are well known to everyone. And the fourth instrument is equity investment.

The application of these tools are essentially in four areas. One is policy reform, which is basically done through loans. There is investment, consisting of loans for financing physical infrastructure as well as financing the exchange of goods and services. A third area relates to institution strengthening and capacity building, which we do through loans or preferably grants, but our grant resources are limited, so sometimes we have to tap our loan resources. And the fourth area is advisory services and other services that are generally financed through grants. Let me briefly illustrate how this translates into practice.

In the area of policy reforms we had a major initiative, the Trade, Export Promotion and Industry Programme (TEPI), which was launched in 1999 and completed in 2002. It was a US$ 300 million programme that looked at six areas:

• trade liberalization and tariff reform
• modernization of Customs and free-trade policies
• export finance
• institutional reforms for trade & export
• investment policy, and
• privatization

This is a very comprehensive area. The programme is currently being evaluated on its impact and we are preparing a project completion report on that.

A second area relates to investment financing and here financing of physical infrastructure. Currently we have programmes in place or under presentation such as the Balochistan Road Sector Project and the Northwest Frontier Province Road Sector Project. These roads are financed with a sub-regional dimension. There is a lot of discussion about trade and integration between Central Asia, Pakistan
and Afghanistan. These roads try to link with Afghanistan, with Gwadar Port and so forth. We take into account here the transit aspect.

Another area that related to investment financing deals the financial support for trade finance. Trade finance is an important aspect that really hasn’t been touched upon today. We have launched an initiatice in 2000 called SME Trade Finance Enhancement Facility that was specifically targeted at small and medium size enterprises to better participate in the trade environment. There is a great potential in
Pakistan for SMEs to better support and access to finance in one of the areas where we feel a lot can be done. What this project did was to provide a foreign currency export financing facility which is a dollar alternative to the EFS, the export financing scheme offered by the State Bank. We provided political risk guarantee to facilitate the import of letters of credit because if you export very often you need
imports and if you imports are very expensive, then your exports are hampered in their competitiveness.

Thirdly, we did an equity investment in the Pakistan Export Finance Guarantee Agency (PEFG), which will facilitate credit access for SME exporters by issuing pre-shipment guarantees. Again, this is a very important aspect because it will help SMEs to get better access to finance and we are particularly proud that this has been established in the private sector. This institution is up and running today. It is still small and faces all the challenges of a start-up. It is a good example of if one puts the will in from behind
you can actually get achievement on the ground.

A fourth area that we deal with is capacity building and institution strengthening. There we target certain agencies that are related to our programme. And the final area is advisory and other services. This is very often for studies that provide high quality inputs into the policy and decision making process, taking into account of best international practices. A second area we could classify as our support for regional cooperation.. This is an area that is very dear to ADB and ADB is actively supporting this through the Central and South Asia Trade and Transport Forum (CSATTF). This is a new initiative and a ministerial level meeting was held in Manila in August 2003 and a memorandum of understanding has been signed there. The purpose of this is to identify and prioritise projects in the south and central Asia subregion that would yield mutual returns.

Looking ahead, what are the challenges and focus areas that we have? Certainly we would like to deepen the reforms that have been initiated under TEPI. Those have been far reaching, but as we all know the agenda is far from complete. We probably would need to support further export
competitiveness and the WTP regime. A lot of partners are working on this; we have to look at who is doing what, but certainly a lot needs to be done in this area. Capacity building of key agencies certainly is something that needs to continue. Subregional cooperation is an area that we feel needs increased attention and export development within the subregion.

In conclusion, I would like to leave the message that ADB aims to offer a flexible approach that combines a variety of instruments and a variety of facilitation initiatives with a programmatic view.

Manako Sawa
Japan Bank for Intenational Cooperation
All in all, Japanese assistance has not been focused on the trade facilitation theme that we have discussed today. But the transport sector has been a top priority of the Japanese Government for a long time. Related to that, speaking first about my institution, you may have heard that JBIC has funding heavily on the National Highway 55, the Indus Highway, plus the recently inaugurated Kohat Tunnel, which has been named the Pak-Japan Friendship Tunnel. There is also another ongoing rural project, which includes the strengthening of the farm to market roads plus the provincial highways.

When most of the projects were formulated with the Government of Pakistan, the main focus was to strengthen the transport infrastructure which would ultimately lead to economic growth of the country. Nevertheless, this strengthening of the transport infrastructure is the essential component of what we now call supply chain management, which will contribute to facilitating trade in the long run. In that sense, I said "indirectly" at the beginning, but I think we are also in the circle of trade facilitation.

We also have our sister agency, Japan International Cooperation Agency (JICA), which conducts technical cooperation on behalf of the Japanese Government. At this moment there are experts who have been dispatched as advisers to Government agencies, such as the National Highway Authority, SMEDA and BOI. They are also not directly involved in trade facilitation, but to a certain extent they are involved, through trade promotion, strengthening transport and planning.

Lastly, there is not only Governmental assistance, but as a private window in Karachi, there is the PJBF, the Pakistan-Japan Business Forum. Additionally there is the Japanese Chamber of Commerce in Karachi and Islamabad. This is an open window for dialogue private-to-private.

Unfortunately for the past five to six years, following the nuclear testing, which was conducted in 1998, plus the debt rescheduling between the Governments of Japan and Pakistan which was taking place in 2002, we were not authorised to start discussions of the potential pipeline. But we are open to discuss on these issues. We are based in Islamabad, please drop by, send an e-mail, get in touch with us. If it is not directly related with a loan project, we are happy to facilitate the issue among the Japanese
donor community.

Many people have raised the importance of trade facilitation from the export point of view. From the foreign investment perspective, trade facilitation is critical. As you can easily imagine, many of the Japanese, European or American investors, who are seeking to set up another plant, or have some foreign direct investment, trade facilitation will be a critical factor in their decision where to locate the investment. If you can keep that in mind, that will only emphasize the importance of trade facilitation
that we are talking about today.

Lena Lindberg
United Nations Development Programme
At this conference we have been talking about efficiency in the flow of goods. At UNDP we try to shift attention from the narrow focus on the flow of goods in the world to the overall development focus. There is a clear need everywhere to assess what do these trade regimes do to development in a country. How does it affect employment? How does it affect agriculture? We know there are some rich countries
that are over protecting their agricultural sector, whereas poor countries, through different global help measures, are more or less forced to give up their subsidies. There is a need of first looking at what is the impact of the trade regimes, as they exist in the world, on human development, on overall development. Also, the global regime itself. Pakistan is a founding member of WTO and has to strengthen its voice there and get together with like minded countries and get these core issues on the table.

There is a need also to keep reforming those institutional institutions, including WTO itself, so that they serve better all the countries in an equitable manner. Because we all know now, this is why it erupts in Seattle, it erupts in Cancun, because so many people and countries in the world feel that this is an unfair process. Everybody has to work towards reforming the process.

From UNDP’s side in Pakistan, we have just developed  first brief concept of assistance. We developed this with the Ministry of Commerce, to provide assistance to Pakistan, partly to undertake studies in key sectors. We have already done one first study on environmental aspects. Another one is just complete on textiles. We will respond to Government needs as to which sector studies or strategies studies need to be done. And not only do the studies, but disseminate the studies very widely in society and facilitate and finance mechanisms for a wide debate of those studies and what Pakistan needs to do to improve the situation.

We can also assist in what we call cross-fertilization between countries, enabling countries of similar interests to help expand bilateral and regional trade agreements.

Capacity building: we are all here talking about capacity building. My colleague from the European Union mentioned the coordination meetings that we know have, chaired by the Ministry for Commerce. In UNDP we have a global trade and human development programme that can help debate the issues of regulatory policies in some sensitive sectors for human development purposes, namely energy, water, sanitation, food and agriculture. Of course, as a UN agency we are all promoting the Millenium Development Goals. We try to see how does trade help or otherwise in achieving those Millenium Goals. We are happy that the Pakistan Government has now aligned the Poverty Reduction Strategy Paper with those Millenium Goals and we hope that the PRSP can also say something about trade. Because trade is very essential but my suggestion is that we take the discussion a bit wider into the overall development issues and coordination we will hopefully put together a joint framework led by the
Minister for Commerce.

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