Improving Transnational Transport Corridors

In the OIC Member Countries: Concepts and Cases

Ultimately, the most successful corridors promote freedom of movement and a completely

seamless supply chain. While investment in better roads and railways certainly help trade, it is

mostly facilitated by the removal of non-physical barriers. Common NTBs include government

aids, subsidies, tax benefits, state trading, government monopolies in corridor countries, non-

harmonized rules of origin of imports in corridor countries and consistent customs formalities

in corridor countries. Other NTBs include import licensing in corridor countries, pre-shipment

inspection formalities and non-harmonized technical regulations. Such regulations include

sanitary and phytosanitary controls and specified product treatment in corridor countries

(Das, 2005). Please refer to Appendix 1 for a comprehensive list of NTBs that OIC member

states should be mindful of when aiming to facilitate trade.

While the removal of NTB is conventional wisdom, Haveman et al. (2003) showed that they

were not always particularly effective in meeting their objectives. This is because in parallel

with efficiency improving initiatives, many countries impose various specific limitations such

as quantitative restrictions, export taxes etc. which will need to be harmonized in corridor

countries as will import and export declaration fees (Das, 2005). Several corridor experts who

took part in the Fimotions’ online survey indicated that removing NTB is still a challenge even

for TEN-T, especially when it comes to sharing responsibilities among Member States.

With regard to tariffs, the WTO notes that the trend for Governments to use trade tariffs as a

means to raise government revenue has mostly reversed and also as an instrument to protect

domestic economic activity. Much of world’s trade takes place between countries that are part

of a free trade agreements (FTA). The meaning of free trade agreement is that its multiple

protagonists all agree to trade on the same terms and, where possible, reduce or eliminate

import and export tariffs … so that trade can flow freely between them. Ultimately, the WTO

aim for a tariff free trading world, because tariffs on trade are acknowledged to depress

economic development and growth. The implications for OIC members desiring to improve

trade efficiency through corridors, is for them to focus on the removal of NTBs, because tariff

barriers to trade are slowly being reduced, if not eliminated altogether. A fine example of this

is the EU where tariffs on merchandisable trade average only 2.6%.

3.5. Social Factors

The TEN T has not only mobilized trade, but also materially affected the quality of people’s

lives.

clearly charts how distance from the economic heart of Europe and per capita

incomes closely correlate. In other words, accessibility to markets for both good and labor are

critical determinants of individual wealth, such as Portugal and Greece and the Baltic States.