Measuring Trade Facilitation
Objectives of measuring trade facilitation
Countries increasingly attempt to measure trade facilitation as part of their strategic policy design. The main objective is to compare own performance and working methods with the performance and working methods of competitors/leaders or best practice and to indicate performance levels as targets to be achieved. Such a benchmarking process requires and makes use of indicators that describe the level and existence of trade facilitation at a country level.
Trade facilitation indicators are also used for a situation assessment to identify and locate problems and bottlenecks, for performance measurement where a situation is continuously controlled, or project evaluation, where indicators allow an assessment of whether the goals and objectives have been achieved.
Trade facilitation indicators
There is a range of trade facilitation indicators and data sets available for a large number of countries. The selection of the indicators depends on the intended use. One can distinguish between indicators used for benchmarking purposes and indicators used for situation analysis, evaluation and performance measurement. The differences between these indicators lie with the level and detail of assessment as well as the data definition and sources.
Owing to the multidimensionality of trade facilitation, a combination of effects need to be considered as relevant for measuring the level and existence of trade facilitation. Trade facilitation may manifest in various effects, such as fewer delays at border crossings, better targeting of risk shipments, higher productivity of staff, or on-line filing of documents. Trade facilitation indicators therefore describe and interpret different aspects of trade facilitation.
The most commonly used indicators tend to focus on the following aspects:
- required time for key procedures or processes, such as release of goods at border stations;
- costs, usually reflected as transport or freight costs;
- number of documents, such as the documents required for clearing goods;
- availability and quality of transport infrastructure and services;
- prevalence of rule of law or level of corruption.
Data sets and collection methods
Different data sources and collection methods are available for these indicators. Below is a summary overview of data sources and methods.
Data sets and reports
Doing Business/ Trading Across Borders
Organization responsible: International Finance Corporation (IFC) of the World Bank. Measures number of documents, time and costs of importing and exporting a 20-foot container shipment.
The trading across borders indicator is a composite indicator drawing on data from surveys conducted worldwide. Countries’ rankings and scores are published annually since 2004 but not all years are comparable due to a change in collection method. Available online www.doingbusiness.org
Logistics Performance Indicator
Organization responsible: World Bank, International Trade Department
Measures the availability and quality of logistics and key transport services, as well as government services.
The Logistics Performance Indicator is a composite indicator drawing on topic relevant data from operators surveys conducted worldwide. The World Bank publishes an annual report of country rankings and scores. Data is available since 2009. Data and ranking is available online from the World Bank.
World Bank Governance Indicators (WGI)
Organization responsible: World Bank Group
The WGI summarizes the views on the quality of governance. It measures six dimension of governance: i) voice and accountability, ii) political stability and absence of violence, iii) government effectiveness, iv) regulatory quality, v) rule of law, vi) control of corruption.
The indicators of the dimensions “rule of law” and control of corruption are sometimes used in the trade facilitation context to assess the prevalence of rule of law.
The indicators are composite indicators drawn from multiple data sources and indicators collected by various institutions. Data is available since 1996. Data and rankings available from the World Bank
OECD Governance at a glance
Organization responsible: OECD, Directorate for Public Governance and Territorial Development
Measures the political and institutional framework of government as well as government revenues and expenditures, employment, and compensation.
The “Governance at a glance” combines over 60 indicators. The indicators “Transparency in Governance” and “Regulatory Governance” reflect trade facilitation relevant aspects of disclosure of information and access to information.
The data for the “Governance at a glance” indicators is collected by OECD surveys. The Data is limited to OECD member countries and observers. Data and rankings available from the OECD
USAID Road Governance Surveys
Organization responsible: WAEMU and West Africa Trade Hub.
The surveys publishes data on checkpoints, bribes and delays on primary transport corridors in Western Africa. The data is drawn from surveys of drivers and transport operators. Data is updated quarterly.
Reports are available at http://www.watradehub.com.
Below are some of the data collection methodologies that countries can use for the purpose of assessing the trade facilitation situation and developing specific trade facilitation indicators for performance measurement.
UNESCAP Time-Cost Distance Methodology
The UNESCAP “Time/Cost - Distance Methodology” is a methodology to ascertain the time and costs involved in the transportation process. The transportation process can be broken down into individual legs and data collect for each of the step (see picture below)
Further information on the Methodology is available at: (http://www.unescap.org/resources/timecost-distance-methodology )
UNESCAP Trade and Transport Facilitation Performance Monitoring System (TTFPM): BPA+
Using a methodology called BPA+ this approach attempts to measure and assess progress in trade facilitation.
Methodology explained in UNESCAP, Towards integrated and sustainable trade facilitation performance monitoring systems: BPA+, ST/ESCAP/2683
UNNExT Business Process Guide
This publication introduces a step by step approach to business process analysis. Business process analysis can be used for the identification of bottlenecks in trade processes and procedures, the prioritization of areas for improvement, and the design of strategies to eliminate these bottlenecks.
WCO Customs International Benchmarking Manual
This publication presents the objectives and methodology for conducting a benchmarking process of Customs.
WCO Time release study
This is a tool and methodology for measuring the actual performance of Customs activities as they directly relate to trade facilitation at the border.