RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/230
17 October 2000
(00-4293)
Council for Trade in Goods Original:  English
TRADE FACILITATION
Transit problems for landlocked developing countries –
an experience from UNCTAD
The following communication, dated 13 October 2000, has been received from the UNCTAD
Secretariat.
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The importance of efficient transit systems for land-locked countries has been
emphasized in numerous studies, reports and other publications over the last 30 years.
There is a general understanding that, in spite of what has already been achieved to
facilitate transit, national and international efforts and resources are still required toeliminate existing physical bottlenecks - e.g. inadequate port facilities and rail or road
infrastructures, poor transport equipment, insufficient telecommunication facilities –
as well as any remaining non-physical barriers to the smooth movement of transit
goods.
This document briefly describes the UNCTAD’s contribution to alleviating the major
transit problems of land-locked countries.  First, it covers general considerations ontransit goods.  Then, it presents UNCTAD’s role in the search for practical solutions
to the transit issues of landlocked countries through studies and information
technology developments.  Finally, it pr ovides examples of UNCTAD’s technical
assistance activities regarding transit issues.
I. OVERVIEW
1. As world trade continues to increase at a rapid rate, so does the need for efficient economic
and environmentally sound national and international transport. With increased competition in major
markets forcing business to adapt to just-in-time production and management systems, thecommercial success of any export-oriented industr y in developing countries will depend more and
more on its ability to satisfy customers, in terms of speed, reliability and flexibility regarding the
delivery of goods.  Flexibility,  because transport logistics must be capable of adapting to variations in
consumer demand and unforeseen circumstances; speed,  because the quickness with which transport
operations are carried out reduces the duration for tying up products – and therefore capital; andreliability, because it reduces the risks of breakdown in the supply or distribution of goods, and
therefore reduces the need for safety/buffer stocks.G/C/W/230
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II. TRANSIT COST DISADVANTAGE FOR LANDLOCKED DEVELOPING
COUNTRIES
2. Unfortunately, in many landlocked developing countries, notably in Africa, inland transport
accounts for more than half of the total door-to-door transport time and cost of imports and exports.
For example, transporting goods from the port of Mombasa, Kenya, over a distance of 1'700 km toKigali, Rwanda, takes up to 30 days and costs between US $ 3,000 to $ 4,000 per Twenty-tonne
Equivalent Unit (TEU) or container while a container delivered in Mombasa from Europe, more than
7,000 km away, takes around 18 days and costs US$ 1,500 to ship.
3. Landlocked developing countries in particular, suffer from excessively high transport costs.
Such costs inflate the consumer prices of their imported goods, and undermine the competitiveness of
their exports in foreign markets. The high cost of international trade for landlocked developing
countries is thus a serious barrier to trade.
4. Africa, which has 15 landlocked developing countries, experiences the highest cost of
international trade. In 1997, while freight costs were approximately 4 per cent of c.i.f. import values
of developed countries and 7.2 per cent of c.i.f. import values of developing countries, for WestAfrica and East Africa, it was about 12.9 per cent and 13.8 per cent, respectively. Transport cost for
landlocked countries were of course higher than the average. Mali's (West Africa) freight costs for
example, were 29.6 per cent while Malawi's (East Africa) were 39.4 per cent.
III. FREEDOM OF TRANSIT - ARTICLE V OF THE GATT 1994
5. The factors accounting for the high cost include inadequate infrastructure, imbalance of trade,
inefficient transport, poor utilization of assets, and a proliferation of cumbersome government
regulations and procedure in both landlocked and transit developing countries.  These factors frustrate
the objective of Article V of the General Agreement of Tariffs and Trade (GATT) which stipulatesthat "there shall be freedom of transit through the territory of each contracting party via the routes
most convenient for international transit, for traffic in transit to or from the territory of other
contracting parties …" .
IV. REGIONAL TRANSIT TRANSPORT CO-OPERATION
6. In its work designed to promote specific measures related to the particular needs and
problems of landlocked developing countries, UNCTAD emphasizes the importance of effective and
close co-operation and collaboration between landlocked developing countries and their transit
neighbours, at regional, sub-regional and bilateral levels.  Indeed, the shared recognition that transit
transport cannot occur efficiently without co-operation among neighbouring countries has led to the
establishment of a broad range of transport instruments. Countries which have taken concrete steps toharmonize their transport policies and adopt common technical standards and legal principles have
experienced a significant overall reduction in transport costs.
7. However, transit transport co-operation takes time and considerable effort to construct.  In
Europe, for instance, there are more than 50 agreements and conventions that form the basis of suchco-operation. The complexity and multilateral nature of transit transport require an appropriate
intergovernmental machinery to monitor and review progress in the implementation of international
agreements and programmes.  Moreover, maintaining and improving common programmes and
arrangements requires considerable financial resources and technical capacity as well as political
commitment on the part of Governments.G/C/W/230
Page 3
8. UNCTAD has played an entrepreneurial role in promoting regional transit transport co-
operation in developing countries. Priority areas of work include: assistance in negotiating and/or
implementing bilateral and regional agreemen ts and arrangements; the streamlining and
harmonization of customs and administrative procedures and documentation; assistance in institution
building and human resource development in the transit sector and development and implementationof customs and transport information systems.
V. LEGISLATIVE AUTHORITY
9. The meeting of Governmental Experts from Landlocked and Transit Developing Countries
and Representatives of Donor Countries and Financ ial and Development Institutions, which meets in
New York once every two years, has provided an intergovernmental forum for analysis andconsensus-building on issues related to transit transp ort.  The reports of the these meetings, which are
submitted to the General Assembly of the United Nations for review and discussion, have provided
impetus for bilateral and multilateral financial and technical assistance to landlocked developing
countries and their transit neighbours. UNCTAD technical assistance projects and programmes have
attracted financial support from individual countries for bilateral projects as well as multilateralagencies.
10. Much of UNCTAD's earlier technical assistance work was concentrated in Africa, but
developing countries in Asia and Latin America have also benefited and more recently assistance has
been extended to economies in transition in Asia and Europe.  UNCTAD’s knowledge andunderstanding of transit issues is derived from both its analytical work and technical assistance
experience.
11. UNCTAD has also worked very closely with regional organizations of developing countries.
In Africa, there have been long-standing relations notably with the Common Market of Eastern andSouthern Africa (COMESA); the Economic Community  of West African States (ECOWAS) and the
Southern African Development Community (SADC). In Asia, UNCTAD has worked with the
Association of South-East Asian Nations (ASE AN) and the Economic Co-operation Organization
(ECO). In Latin America, there has been co- operation with the Southern Cone Common Market
(MERCOSUR).
12. UNCTAD co-operation with regional organizations is intended to promote three main
objectives: (i) ensure intergovernmental support to programmes; (ii) reduce transaction costs by using
local experts and administrative support; and (iii) ensure sustainability of new programmes.
13. As a result of concerted efforts, a variety of transport instruments are being implemented in
Africa, Asia and Latin America.  In Southern Africa, for example, the six landlocked developingcountries and their transit neighbours acting under the auspices of COMESA and SADC, have made
significant progress in transit facilitation.  This includes: the operation of harmonized axle load limits;
adoption of COMESA carrier licensing; and the app lication of a regional third-party motor insurance
scheme.
14. Planned activities which will further strengthen co-operation include: region-wide use of the
COMESA/SADC single administra tive document, and implementation of the Regional Customs
Guarantee Scheme (RCGS).  These two instruments are necessary for the establishment of a
harmonized customs transit system in southern Africa.  The new system will be supported by
computer-based information technologies and additional transit transport facilitation measures, suchas the establishment of a “one-stop border post system”.  These measures will speed-up transit
procedures and reduce delays.  Border crossing delays are at present considered to be excessive.  ItG/C/W/230
Page 4
has been reported that the economic cost to the SADC  region in terms of reduced truck productivity in
1996 was about US$ 50 million.1
15. Early steps towards transit transport facilitation in West Africa came from the Treaty of the
Economic Community of West African States (ECOWAS) in 1975, which committed member Statesto evolve common transport policies and formulate plans for the improvement and reorganization of
their transport infrastructure.  The ECOWAS treaty was supplemented by two transit transport
conventions adopted in 1982.  The first, the Conv ention Relating to Inter-State Road Transportation
established the ECOWAS road transport networ k and technical standards.  The second, the
Convention Relating to Interstate Road Transit of Go ods, sought to establish an international customs
transit system.  Other important legal instruments relate to the region-wide Third Party Motor
Insurance Scheme; agreement on the Harmonization of Highway Legislation; the Convention on the
Temporary Importation of Passenger Vehicles; and a Protocol Relating to Free Movement of Persons.
16. Unlike the African continent where sub-regional legal instruments dominate, transit
facilitation in Central Asia is being carried out largely through accession to international conventions.
The countries in this sub-region, have done a commendable job in complying with the Economic andSocial Commission for Asia and the Pacific (ESCAP) Resolution 48/11 of 23 April 1992, which
recommends that its members should make efforts to accede to: (a) the Convention on Road Traffic,
1968; (b) the Convention on Road Signs and Signals, 1968; (c) the Convention on the International
Transport of Goods under cover of TIR Carnets (TIR Convention), 1975; (d) the Customs Convention
on the Temporary Importation of Commercial Road Vehicles, 1956; (e) the Customs Convention onContainers, 1972; (f) the International Convention on the Harmonization of Frontier Control of
Goods, 1982 and (g) the Convention on the Contract for the International Carriage of Goods by Road
(CMR), 1956.
VI. RECENT RECOMMENDATIONS AND STUDIES ON TRANSIT ISSUES IN
DEVELOPING COUNTRIES
17. For the United Nations International Symposium on Trade Efficiency held in Columbus,
Ohio, United States (October 1994), UNCTAD prep ared, in co-operation with the UN-ECE, the
United Nations Compendium of Trade Facilitation Recommendations.
2 This Compendium contains
28 Recommendations, relating to the formalities, procedures and documents for goods in international
transit (Group M).
18. More recently, UNCTAD has carried out various studies on transit transport in Africa,  Asia
and Latin America including: Improvement of Transit Transport Systems in Landlocked and Transit
Developing Countries: Issues for Consideration (T D/B/LDC/AC.1/13); Review  of progress in the
development of transit transport systems in Latin America and proposals for future action; Review ofprogress in the development of transit transpor t systems in Southern Africa (UNCTAD/LDC/101);
Review of progress in the developments of transit transport systems in West and Central Africa
(UNCTAD/LDC/102) , of June 1999, and Review of progress in the development of transit transport
systems in Eastern Africa" (UNCTAD/LDC/103), of 15 June 1999; "Selected transport and trade data:
landlocked developing countries (UNCTAD/LDC/ 104) of 15 June 1999; "Trade and Transport
Facilitation: Case study of Mongolia (UNCTAD/LD C/105) of 15 June 1999; Review of progress in
the developments of transit transport systems in North-East Asia (UNCTAD/LDC/100) of
                                                     
1 SADC Border Post Design, Operation and Transit Facilitation, 1998.
2“Compendium on Trade Facilitation Recommenda tions” (UNCTAD/SYMP.TE/3), New York and
Geneva, 1994G/C/W/230
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15 June 1999; and "Transit environment in the landlocked States in Central Asia and their transit
neighbours, 2000, (A/55/332).
19. In response to paragraph 150 of the Bangkok Plan of Action, the UNCTAD Secretariat will
publish, by 2002, an assessment of the impact of trade facilitation and multimodal transport on tradeand industry with particular emphasis on the least developed, landlocked and transit developing
countries.  Background documents on progress in the development of transit transport systems of
interest to the 30 landlocked developing countries will also be prepared for the Meeting of
Governmental Experts from Landlocked and Transit Developing Countries and Representatives of
Donor Countries and Financial and Development Institutions scheduled to be held in the first half of
the year 2001.  The issue of transport for Least Developed Countries many of which are also
landlocked is likely to feature high on the agenda at the LDC-III Conference to be convened inBrussels, Belgium in May 2001.
VII. INFORMATION TECHNOLOGY AND TRANSIT ISSUES
20. Recognizing that lack of effective control of transport equipment and cargo in transit
undermines the credibility of existing transit tran sport arrangements and threatens to reverse major
achievements in transit facilitation, the UNCTAD Commission on Enterprise, Business Facilitation
and Development convened an expert meeting in Geneva in May 1997. The main objective of the
expert meeting was to provide opportunities to experts to assess information technologies for
facilitating transit transport operations, strengthening customs transit control and simplifying customstransit procedure with a view to making transit arrangements more effective.
21. The meeting's recommendations highlighted th at "UNCTAD should, in co-operation with all
other interested parties, work towards developing a transit module, in the context of the Customs
Reform Modernization Programme (ASYCUDA) and Advance Cargo Information System (ACIS),which would incorporate the structure of messaging systems outlined in the report", presented by the
secretariat. Furthermore, "[T]he transit module could cover all functions of Customs control and
transport monitoring of transit goods from the beginning to the completion of the transit operation,
including the release of securities where appropriate …  A group of countries both transit and
landlocked, with a priority on LDCs, could be targeted to act as pilot sites for such an electronic
transit module." The importance of strengthening technical co-operation in favour of developing
countries, particularly the LDCs, to enable them to benefit from the progress in using information
technology for customs transit, was also considered. The meeting recommended that UNCTAD
should pursue its support for current users of ASYCUDA and ACIS and continue the development
and further implementation, including promo tion and ongoing support of both systems.
22. As a result of this expert meeting, a new module of the ASYCUDA++ software was
developed, in 1999, to manage customs transit procedures: A pilot version of this module, called
Transit Module (MODTRS), was released for live testing in selected user countries in April 1999 and
the fully operational module was included in the version 1.15 of the software and delivered to all the
user countries.
23. This module handles three transit documents, namely the Transit Form (T1), the TIR carnet
and the First Identification Procedure (FIP). It is usable for all the types of transit as defined in the
Kyoto Convention covering the movements from the:
a) border office of entry to an inland office (import transit);
b) border office of entry to a border office of exit (through transit);
c) inland office to a border office of exit (export transit); and
d) inland office to another inland office (internal transit).G/C/W/230
Page 6
24. The three documents are different and present specific features, but all apply the following
principle: the system allows for data capture by the traders using the DTI module and/or by the
customs officers. Upon validation of the document, a message is automatically transmitted to the
office of destination using the appropriate  ASYCUDA software, A++ GATE (ASYCUDA Global
Access to Trade Efficiency), through the national telecommunications network. This message informs
the office of destination that a cargo should arrive in a given time delay. When the cargo arrives at
destination, the transit message is retrieved, the transaction is closed and the release message
automatically broadcast to the office of departure. This functionality gives customs complete and
timely information on all operations.
25. The module works satisfactorily on a nationwide scale and it has been recently enhanced by
the development of new functions such as re-routing (changing the office of destination). As customs
receive in advance complete and timely information on all the operations and there is no need for re-
keying at the office of destination, processing delays are tremendously reduced at the border thus
facilitating trade.
26. The system is technically designed for permitt ing future extension to cover the international
transit operations (data exchange of messages between countries).
VIII.  NEW PROJECTS UNDERTAKEN BY UNCTAD
Nepal
27. UNCTAD is executing a technical assistance project to the Government of Nepal aimed at the
promotion of the trade and transport sectors (Project NEP/97/A53). This project, financed by the
Government through a World Bank loan, is providing substantive support to secure the most efficientuse of the construction of three inland clearance depots along the Indian border. The main activities
covered by the project include the implementation of ASYCUDA and ACIS, and the establishment of
a proper legal and commercial environment for efficient transport operations. In this context, advice
was provided to the on-going negotiation process between Nepal and India for the revision of a transit
treaty.
28. At the time of the renewal of the transit treaty between the Government of Nepal and the
Government of India (December 1998), the project was asked to prepare comments on the then Treaty
of Transit between these two Governments, dated 8 December 1991. It was also thought appropriate
that the Treaty should be revised, where appropriate in order to :
a) integrate the 1996 agreement on containerized traffic;
b) take account of changes that have taken place in the nature of transit trade;
c) reflect changes which may permit some relaxation of customs control of transit goods;
d) incorporate international recommendations concerning transit traffic, and
e) having regard to (ii) - (iv) above, simplify the requirements and procedures for customs transit
control.
29. The new Transit Treaty consists of the following components:
a) the basic Treaty which sets out the rights and obligations of the signatories (dated December
1991);
b) the Protocol which describes the facilities to be made available, and terms and conditions
relating to the transit of goods (dated December 1991);G/C/W/230
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c) the Memorandum which sets out in detail the procedures to be followed (dated December
1991); and
d) Annex A to the Protocol, which introduces simplified procedures for secure containerized
cargo (dated December 1996).
30. The last component (item d) was negotiated to maintain the Treaty's relevance to the current
situation, i.e. reduce risk to transit country reve nue resulting from containerization. However, other
changes, such as the abolition of duty on goods of Nepalese origin, may not be adequately reflected in
the current text.
Mongolia
31. UNCTAD is providing assistance for negotiations of a draft Transit Traffic Framework
Agreement (TTFA) between the People's Republic of China, Mongolia and the Russian Federation.
32. The TTFA would lay the basis of a solid s ub-regional regulatory framework that would make
transit operations in North-East Asia efficient and cost effective, thus promoting the external trade ofthe sub-region and bolstering its economic growth. The TTFA is defined as a framework agreement
because it foresees the negotiation of Annexes, which would form an integral part of it TTFA. As
indicated in the relevant Articles, for example Articles 7 and 8, the Annexes would be negotiated and
agreed at a later stage. They address technical issues such as customs procedures, vehicle dimensions
and maximum vehicle weights.
33. The first negotiating meeting held in Ulaanbaatar, Mongolia, from 15-17 May 2000, made
very good progress. A second meeting is scheduled in the second half of 2000.
Zambia and the United Republic of Tanzania
34. UNCTAD is providing assistance to Zambia and the United Republic of Tanzania for
implementing a SADC commitment on development of Road Traffic Information Systems. The
requirement states that:
a) member States shall develop compatible national road traffic information systems in support
of the administration and enforcement of their national and the regional road traffic and roadtraffic quality systems.
b) the road traffic information systems shall contain information in respect of, amongst others:
vehicle registration and licensing; driver and professional driver registration; registration of
vehicle and driver testing facilities; traffic offences and prosecutions; and traffic incidents.
35. Furthermore, the systems adopted in each country should be able to communicate with each
other to assist in law enforcement.
36. Several countries have already introduced or are introducing computerised systems for
vehicle registration and driver licensing. These include: Botswana, Lesotho, Malawi, Namibia, South
Africa and Zimbabwe.
37. In general, the advantages of using computerized systems coupled with documents, which
have built in security features, include:
a) accurate and up-to-date registers;
b) considerable reduction in fraud;
c) knowledge of vehicle fleet;G/C/W/230
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d) removal of suspect vehicles and drivers resulting in improved road safety;
e) better collection of revenues and full audit trails;
f) links with other systems including police, customs and local authorities;
g) better, more appropriate and up-to date statistics; and
h) better interregional co-operation.
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