geography: transport; storage; and physical inspection and presentation of documentation at border agencies. Taking the example of transport, international road shipping involves border crossing, and transit through neighboring countries. Road and rail transporters have to meet possibly different local legal regimes and standards. Different transport standards, such as varying maximum axle loads permissible for trucks (Namibia, Zambia, Botswana),<sup>7</sup> or changing rail gauges width for trains necessitates unloading and reloading and disrupt the supply chain.<sup>8</sup> Compliance with different regulations at each border increases compliance costs and add to the time spent there.

Enforcement of border agency controls is highly localized, often near border crossings (although not all controls are). When crossing several borders, costs have to be incurred many times if customs do not cooperate (at the border of the originating and destination country, and of countries of transit). Arvis et al. (2007) talk of “triple clearance time” because of duplicating lengthy clearances on most transit corridors in least developed countries. The cost of duplication is also magnified by the number of regulations affecting trade implemented by border agencies, including entry visa requirements, technical and phytosanitary standards, security checks, tax levying, etc.<sup>9</sup> Such requirements involve producing paper documentation at border posts, storage in bonded warehouses and physical inspections. The tangible elements of international trade transactions therefore strongly suggest that costs are geographically localized. This may require local solutions: such as the sharing of border facilities.<sup>10</sup> However, a feature of modern trade facilitation is the elimination of costly physical operations. Thus the tangible nature of trade transactions is being reduced: paper work is replaced by electronic documentation - de-linking the production of documentation with the physical flow of goods (National Board of Trade, 2003) - modern risk management and nonintrusive techniques reduce considerably the need for physical inspection. One consequence is that transport costs become less related to geographical distance.

> 7 Röschlau (2003).

> 8 Lack of regulatory interconnection of rail systems creates also disruptions. Before its collapse in 1977, the East African Community (Tanzania, Kenya and Uganda) had an integrated rail network. In the 1980s the Kenya Railways Corporation was transporting twice the volume of freight that it now carries. http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=40941&menuPK =228424&Projectid=P079734 for more info.

> 9 De Wulf & Sokol (2005) give this example: “the United States Customs and Border Protection enforces laws on agriculture, alien and naturalization, banks and banking, census, commerce and trade, conservation, copyrights, crimes and criminal procedures, customs duties, food and drugs, foreign relations, internal revenue, intoxicating liquors, money and finance, navigation, patents, postal service, public building and property, public land, railroads, shipping, telegraphs and telephones, territories and insular possessions, transportation, war and national defense, and international treaties, statutes, and agreements”.

> 10 We discuss this below in the text.

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