Vision of an Integrated Asia: The Enabling Environment

Unlocking Asia's trade potential is a daunting task. Costs for not having uninterrupted road or railway connectivity across the region or facilitation of border trade can offset gains appearing from trade preferences as proposed under several free trade agreements and other arrangements. Therefore, the need for a better enabling environment for trade that offers lower trade costs has gained momentum in Asia. However, a favorable regional climate to create a modern day Silk Road to operate in its full potential is missing in Asia. Because of this, the agenda of the Asian Regional Cooperation has to go beyond "policy" barriers and include "non-policy" barriers like regional connectivity both in its hardware (pan-Asian transport corridors) and software (facilitation of movements of goods and vehicles across borders). A scrutiny of subregional programs clearly shows that most of them have now undertaken exclusive projects to improve subregional connectivity. To realise the potentials of these subregional networks, we may have to integrate them with the pan-Asian arteries such as the AH and TAR. Therefore, in order to promote seamless connectivity in Asia, the primary challenging task is twofold: first, to integrate the different subregional transport corridors and modes (railways, roads, air, and maritime shipping) which will facilitate the movement of goods and services in Asia and beyond; and second, to overcome institutional constraints and bottlenecks that are deteriorating the regional competitiveness by making trade expensive.

4.1 Accession to the International Conventions

As goods begin to move along international transport corridors, the need for harmonization of laws and processes amongst a larger group of countries becomes clear. International conventions related to transport are essential in facilitating the movement of goods, especially at border crossings, by reducing procedures and formalities and, consequently, time required. Pan-Asian transport networks require appropriate legal frameworks to define the following: rights of passage for goods, people, and vehicles; permits, licenses, and other measures to facilitate transit rights; and consultation and dispute settlement mechanisms.

In recognition of the fact that harmonized transport facilitation measures at the national and international levels are a prerequisite for enhancing international trade and transport along road and rail routes of international importance, Asian countries must accede to the international conventions on road and rail transport. Asian countries, if they have not already done so, must consider the possibility of acceding to seven international conventions in the field of land transport facilitation which were originally developed under the auspices of the ECE¹⁴: Convention on Road Traffic, 1968; Convention on Road Signs and Signals, 1968; Customs Convention on the International Transport of Goods under Cover of Transit International Routier (TIR) Carnets (TIR Convention), 1975; Customs Convention on the Temporary Importation of Commercial Road Vehicles, 1956; Customs Convention on Containers, 1972; International Convention on the Harmonization of Frontier Controls of Goods, 1982; and Convention on the Contract for the International Carriage of Goods by Road (CMR), 1956.¹⁵

The accession of Asian countries to the international conventions is rather mixed. While some progress has been made, it has been uneven. Progress can be seen particularly in the countries of Central Asia and the Caucasus. For example, Kyrgyzstan and Uzbekistan have acceded to all seven conventions listed in the resolution, while Azerbaijan, Georgia, and Kazakhstan each became party to six conventions and Tajikistan and Turkmenistan to four. Armenia and Mongolia each acceded to five conventions. With its accession to an additional convention, the Islamic Republic of Iran is now a party to four conventions. Accession to different versions of conventions also undermines facilitation objectives.

4.2 Intermodal Transport and Transit

The initiatives for building supply capabilities and trade liberalization in Asian countries need to be complemented by a new approach to intermodal transport and transit with the goal of making the entire continent interconnected, as it was during the time of the Silk Road. Integrated overland connectivity would provide substantial benefits to landlocked countries like Afghanistan, Bhutan, Lao PDR, Mongolia, and Nepal by giving them access to Asian markets at lower costs. An integrated intermodal transport network would yield much larger economic benefits, while minimising risks. Integration of Asian transport networks is especially crucial to landlocked areas within countries as this could serve to end their landlocked or semi-isolated status and provide shorter transport and transit links. There is an urgent need for prioritization of Asian corridor projects and enhancement of regional integration through regional transit in a time-bound manner. In some subregions such as South Asia, the lack of transit is one of the major constraints for the low level of economic exchanges (RIS 2008; De, Chaturvedi, and Khan 2009). In general, the task ahead is to revive, renovate, and re-establish Asia's transportation networks which played a pivotal role in integrating the region in ancient times and to establish Asia-wide intermodal transport and transit in order to reduce the trade transportation costs across borders. Asia should have either its own regional transit arrangement or all Asian countries should accede to existing international conventions.

4.3 Strengthening and Harmonizing Rules, Regulations, and Standards

In order for the infrastructure hardware of an Asia-wide transport network to function effectively, necessary soft infrastructure, such as relevant rules, regulations, and standards, needs to be in place. Rules, regulations, and standards must meet at least a common regional structure, but preferably an international design. Participating countries need to formulate and agree on a harmonized set of rules, regulations, and standards, similar to the CBTA adopted by the GMS countries. A CBTA is a very important step towards harmonizing the software relating to cross-border infrastructure use and could provide a template for other Asian subregions.

Furthermore, to make such an agreement effective, Asian countries need to incorporate the agreement provisions into their respective national laws, regulations, and standards. There is a need for higher level coordination among many concerned stakeholders and agencies, such as transport, customs, immigration, and quarantine authorities. At the same time, capacity of concerned national institutions, particularly for less developed countries, needs to be enhanced for effective implementation of these agreements. There is also a need for a uniform or compatible standard (preferably an international standard) for development of cross-border transport networks to make the networks effective and beneficial for all stakeholders. Establishment of an efficient management system and associated capacity building to look after the harmonization of standards relating to cross-border transportation would pave the way to achieving regional connectivity. This would ultimately help achieve single-stop and single-window customs across pan-Asian corridors.

4.4 Financing Cross-border Transport Projects

Connecting Asia through the restoration of the Silk Route requires a large investment. It will be a difficult challenge to mobilize such a large investment particularly due to ongoing financial and economic crisis. This calls for an appropriate financing mechanism to mobilize Asia's huge savings for infrastructure development. This financing scheme should aim to raise resources from public sectors, multilateral development banks, and private sectors on a public-private partnership model. Bigger economies like Japan, Korea, the PRC, and India have leading roles in filling the financing gap. They should unilaterally come forward to fill-up resources gaps in the AH and TAR, particularly financing and managing missing links and bridges.

4.5 Strengthening Coordination among Countries and Stakeholders

Weak coordination, like high tariffs, prohibits trade among countries. The poor coordination between planning, implementing, and financing agencies causes high-level inefficiency in infrastructure development. Coordination among various concerned agencies or institutions within a country is also required because each may have different objectives. In order to have timely implementation of vast pan-Asian transport corridors, effective coordination between countries and other stakeholders is vital. Without such coordination, it is unlikely that an optimal cross-border infrastructure will come into existence. Thus, an effective coordinating institution will be necessary to generate willingness of countries to participate in the projects. It can also resolve conflicting interests, if any arise, between the governments and stakeholders.

4.6 Closer Cooperation on Security

Secure trade is as important as free trade and security-driven improvements can benefit trade. While implementing pan-Asian transport corridors, security concerns should not go unnoticed. Security issues must be addressed adequately before Asian countries adopt regional transport and transit arrangements. Using modern technology, governments in Asia could address security measures that, if not managed properly, might drive up trade costs, hamper trade, and close down the corridors. Therefore, our focused attention should be on the following: searching for greater efficiency in international transportation, the need for cooperation in adopting collective measures to promote transport security, and the imperative of improving customs regimes, port facilities, and logistics management.

Asian countries have to commit themselves to increasing security for all transport modes and to promoting policy coherence and coordination among international organizations. New programs to combat terrorism clearly will involve investment in new technology and infrastructure, possibly raising the costs of trade in the short to medium term. At the same time, the prospect of reducing future threats through technology-intensive security and customs inspections should be viewed as an investment in greater trade efficiency. Automated technology, such as bar codes, wireless communications, radio frequency identity tags, tamper-proof seals for containers with global positioning technology, and other electronic measures, could accelerate global trade while improving security. Sharing information among security agencies, port and airport authorities, shippers, and customs can help expedite the movement of freight through terminals without any new physical investment.

4.7 Formulating Asian Common Transport Policy

Seizing Asia's vast economic opportunities requires enabling policies and institutions. First, going beyond national commitments, an active and inclusive approach towards regional infrastructure development is of the utmost importance. Second, the enabling policies and institutions should generate adequate willingness of countries to participate. Without inclusive and common transport policies that provide broad access to all participating countries, smaller economies and landlocked countries have to rely on their own resources to take part in regional transport or take advantage of promising growth opportunities, which is far from reality. An Asian common transport policy (ACTP) would fill this gap for optimum utilization of existing utilities as well as expansion of new regional transport facilities by involving countries in the region. The possible elements of ACTP could be harmonization of technical standards such as truck size and weight regulations, standardization of railway gauges and rolling stocks across the region, simplification of documentation and customs clearance procedures, standardization of cabotage rules, regulations on the movement of certain goods, and facilitation of movement of container trains and goods vehicles within the region subject to fulfilment of individual country road transportation rules and regulations. This policy should help facilitate capacity building in smaller countries, as well as facilitating studies which include generating common transport statistics, consensus building among participating countries, prioritizing the development of regional transport networks, and coordination, cooperation, and partnership among concerned stakeholders.

4.8 Strengthening Regional Cooperation

The experiences of Europe and Latin America, where the presence of cross-border infrastructure is comparatively high, and to a lesser extent, Africa, where the development of cross-border infrastructure has taken a new shape, suggest that regional cooperation promotes greater prosperity and stability for participating countries. A major success factor is their ability to build regional initiatives that are based on shared strategic vision, as captured in the Initiative for the Integration of Regional Infrastructure in South America.¹⁶ Asian subregional cooperation programs have to be much stronger to address the regional infrastructure needs and enabling institutions and policies.¹⁷

Given Asia's diversity and geographical contrasts, an integrated regional transport network would yield much larger economic benefits, while minimizing risks. Asia-wide connectivity projects like the AH and TAR should be complemented by subregional cross-border transport projects. In other words, multiple effective subregional transport projects mean stronger Asian connectivity. There are several ongoing subregional initiatives to enhance physical connectivity in Asia. However, the progress of the implementation, in general, has been slow. Therefore, what is important for Asian countries is to enhance the facilitation of trade and transport across borders. Integrated regional connectivity would provide substantial benefits to landlocked and small island countries as well as poor, small countries by giving them access to world market at lower costs.

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