ITC Reports on Trade Impediments for Logistic Services in the Global Market

The following are selected highlights of the ITC's report:

Border clearance procedures represent greatest impediment to logistic services. The ITC reports that although logistic service providers are subject to a broad range of impediments in foreign markets, border clearance procedures represent the greatest impediment to the supply of global logistic services.

In its report, the ITC lists specific impediments that relate to border clearance procedures in certain countries (partial list of countries):

Australia - inability to use certain packing materials; 100% screening of all freight, which reduces processing speed; no coordination between Customs and Quarantine departments; no automation procedures for Quarantine-cleared items; no post-clearance process for Australian exports; no central processing facility for government agencies; and immediate reassessment of under-valued shipments not available.

Brazil- high fees associated with both airport and private bonded warehouses.

China - lack of flexible work hours for Customs Administration; and inability to use certain packing materials.

Indonesia - no pre-clearance process in place; complex customs rules; low de minimis value and ambiguous application of de minimis; original documentation required (photocopy not permitted); surcharges for exports and imports; shipments with unclear description are subject to a fee and require 100% inspection; and lack of electronic data interchange (EDI).

India - burdensome clearance procedures.

Malaysia - slow inspection processes as a result of limited hours of operation for inspection agencies and off-site location of inspection facilities; no post-clearance procedures in place for port of Johore; EDI transaction fee applied to all electronically submitted customs forms; burdensome inspection requirement for goods entering free trade zone; additional forms required for imported goods valued higher than MYR 10,000 ($2,631); lack of fully automated system for imports and exports of goods and expedited shipments require manual submission of documents; and original signed commercial invoice required (photocopy not permitted).

(See ITC's report for discussion on other impediments to logistic services, as follows: investment regulations, licensing requirements, transparency, labor restrictions, and modal-specific trade impediments.)

Impact of post-9/11 border security initiatives. According to the ITC, industry representatives have stated that increased U.S. border security measures implemented after September 11, 2001 (9/11) have reduced their efficiency and increased their operating costs. Furthermore, one industry representative noted that similar measures either planned or implemented by countries such as the EU, Korea, and Japan may also adversely affect the ability of logistic services firms to operate in foreign markets.

However, the ITC states that others have expressed the view that some of the post 9/11 measures may have a trade-enhancing effect in some countries. For example, they state that the establishment of uniform, electronically-based cargo security systems, as recently recommended by the World Customs Organization (WCO), will make it easier for logistics services providers to meet necessary documentation requirements, and allow the goods that they ship to be processed more efficiently through customs.

China's logistics trade environment. The ITC reports that despite recent improvements, the logistics industry in China remains fragmented as a result of a regulatory system that is not harmonized across provinces. Firms report that regulatory inconsistency is particularly problematic at customs, as each customs station adheres to different rules, causing delays for shippers.

(See ITT's Online Archives or 09/03/04 news, 04090315, for BP summary of the ITC's institution of this investigation, at the request of the USTR.)

ITC press release (No. 05-054, dated 05/16/05) available at http://www.usitc.gov/ext_relations/news_release/2005/er0516cc2.HTM

ITC report (Inv. No. 332-463, ITC Publication 3770, dated May 2005) available at http://hotdocs.usitc.gov/docs/pubs/332/pub3770.pdf