Establishing Well Functioning National Trade Facilitation Bodies (NTFBs)
In the OIC Member States
10
1.2.2.2. The cost of implementing trade facilitation measures
The costs of implementing trade facilitation measures can constitute both upfront costs (capital
expenditure) and recurring costs (continuing operation costs) and can be categorised as follows for
the most part:
 Incorporating new regulations;
 Creating institutional modifications;
 Building capacity; and
 Supplying equipment and infrastructure.
Costs associated with the creation and maintenance of NTFBs can potentially fall within all four of
the above categories.
The extent of the above costs can be described as follows: Regulatory costs are minimal because,
generally, they only correspond to the time spent by specialized staff working on legislation or
amendments of existing laws. Institutional costs arise due to the need to hire additional staff for the
new units (e.g. risk management or enquiry points) and the need to train new staff. Building the
capacities of existing staff, who simultaneously perform their existing duties, is cheaper than hiring
new experts in the field, and is less cumbersome than introducing new experienced hires. The
experiences of countries implementing trade facilitation measures is that training is the most
important element for ensuring the sustained change in border agencies activities.9 Undoubtedly,
equipment and infrastructure are the most costly elements (for example, the introduction and
maintenance of IT and the creation of single window mechanisms). Sometimes equipment and
infrastructure are designed to contribute to the realisation of particular trade facilitation measures
(such as automation). Certain trade facilitation measures (such as risk management and pre-arrival
processing) are difficult to implement without adequate infrastructure. (OECD, 2005)
In 2013, the OECD has collected and analysed data for 24 countries (developing and LDCs) on the
costs incurred by governments in introducing and implementing trade facilitation measures foreseen
by the WTO’s TFA.10 The OECD found that the total capital expenditure to introduce trade facilitation
measures ranged from 3.5 million to 19 million euro. The maximum annual operating costs for these
trade facilitation measures was 2.5 million euro. Moreover, the OECD found that between 2001 and
2011, donor support – i.e., financial and technical assistance for the introduction and implementation
of trade facilitation measures – had increased by 365% to USD 381 million.11 It should be noted that
these figures were intended to be illustrative – particularly of the relative low costs compared to
potential gains – rather than intended to represent any general rules on how should be spent on the
introduction and implementation of trade facilitation measures.12
9 OECD, above n 6, p. 4.
10 OECD, above n 6. Countries examined included: Argentina, Barbados, Cambodia, Chile, Jamaica, Latvia, Mauritius, Morocco,
Mozambique, the Philippines, Senegal, Tanzania, Thailand, Uganda; Zambia; Burkina Faso, Colombia, Costa Rica, the Dominican
Republic, Kenya, Lao PDR, Malaysia, Mongolia and Sierra Leone.
11 Ibid., p. 4.
12 Ibid., p. 6.