Improving Customs Transit Systems
In the Islamic Countries
16
Figure 2: Customs transit as a part of the global supply chain
Source: Author’s own compilation
As presented in Figure 2, CTR procedures cover a significant part of the supply chain network,
and they need to be simple so as not to generate unreasonable delays and costs that create
variations inside the chain. Because of this, many international organizations have identified
inefficient transit procedures as a high cost-increasing factor, especially for landlocked
developing countries.
Trade costs are defined as “all costs incurred in getting a good to a final user other than the
marginal cost of producing the good itself: transportation costs (both freight costs and time
costs), policy barriers (tariffs and non-tariff barriers), information costs, contract enforcement
costs, costs associated with the use of different currencies, legal and regulatory costs, and local
distribution costs (wholesale and retail)8 .” Also, the authors make a rough estimate that the tax-
equivalent of “representative” trade costs for industrialized countries is 170% where 21% of
them are transportation costs, 44% border-related trade barriers and 55% retail and wholesale
distribution costs. Non-tariff barriers contribute to a large share of trade restrictiveness across
8 Anderson, James, E., and Eric van Wincoop. 2004. "Trade Costs." Journal of Economic Literature, 42 (3): 691-751.