Challenges & Opportunities
Current and future transport capacities
Almost all goods traded between China and Europe use relatively secure and costeffective maritime shipping services, with an average duration of a voyage between Shanghai and Rotterdam of 34 days. Only 1% of the 1 trillion $ Euro–Asian trade uses land based European Asian transport Links, although alternative land based routes—either the Trans–Siberian railroad or a renewal of multimodal transport links crossing Kazakhstan, Turkmenistan and Georgia to the Black Sea and beyond—are expected to reduce transport time to between 10 and 14 days.
Assuming time related transport costs of 0.3 % of a good’s value per day1, time savings alone would reduce transport cost by two thirds or 6 percentage points. Trans-European Networks (TEN) will have to consider traffi c links and infrastructures beyond the current EU borders, in particular the transport corridor Europe–Caucasus–Asia. However, to render these services economically feasible will not only require investments in infrastructure, but supporting measures as well.
Cross border trade & transport
trade facilitation One set of measures will have to be targeted towards reducing
trade barriers, harmonization of cross border procedures and the adoption of internationally negotiated transit rules. An essential condition for improved transit times is the speed at which customs and other border crossing formalities can be completed. Long and cumbersome border procedures and controls, different procedural requirements, depending on the border crossed, incur time delays that cannot be adequately considered in advance, as well as added cost. To address these issues, it is tantamount to encourage public administrations and political bodies in these countries, to participate in UN/ECE, UN/CEFACT‘s and WCO trade facilitation initiatives.
Supply Chain Security improvements
Supply chain security concerns have moved center stage to address the increasing number and the potentially devastating impact of international terror. IMO, WCO, US and European customs organizations and others have been implementing standards and measures to ensure the safety and security of these trade lanes as much as possible. Whereas these measures like the 24hour rule, the ISPS code, the authorized trader concept and similar initiatives are able to contain these risks, they cannot eliminate them altogether. Pilferage, theft of cargo, trailers and even trains lost en route between East and West still continue
to increase the risk and the costs of trade with Eastern countries. Political instabilities in the Caucasus and South Asia regions add to these risks for the safety of people and cargo.
Joint projects with local authorities, sharing experiences made in Europe and elsewhere, addressing these security issues in a regional setting could mitigate these issues. Simplification of administrative processes
Encouraging the polity of Caucasus and CIS countries to engage in projects to simplify administrative processes is expected to bear fruit in many aspects. Transparent, fast and cost-effective administrative features are distinctive features determining the ease of doing business in a country and to attract foreign direct investment, promising an improvement of the economic situation and consequently an improvement the political stability in the region. Simplified, transparent and equitable procedures will turn the region into an attractive marketplace for European companies. The World Bank’s annual Doing Business 2009 survey and eponymous publication, acknowledges
efforts of many countries in Asia, particularly those of Azerbaijan, Georgia and Kazakhstan. These efforts will have to
be maintained and expanded to improve these countries ranking in the area of trade, where some of them are still to be found at the bottom of the list.
Regional economic development
Whereas the above referred to efforts to improve administrative procedures will have an effect on the economies, financial and operational business risks still remain and will have to be factored into every business decision. Among the risks most often referred to conversations with business managers are an unusually high level of corruption, a dominant role of politics in economic and business affairs as well as long and time consuming decision making processes. To integrate businesses in the local economy however, requires a workforce sufficiently trained in technology and Western business practices. Although human and intellectual potential insufficient in numbers, additional investments and efforts in the education system are required, to ensure that young people entering the labor market have the required skills employers demand. European programs such as TEMPUS, which contribute to education and training efforts of countries on Europe‘s borders, will consequently also
benefit European companies and traders doing business in this region.