Creating

54 DOING BUSINESS IN 2006
trade barriers. 2 And with faster ships and bigger planes,
the world is shrinking.
Yet Africa’s share of global trade is smaller today
than 25 years ago. So is the Middle East’s, excluding oil
exports. One reason is that entrepreneurs in these regions
face numerous regulatory hurdles to exporting. In
the case of manufactured goods, customs and transport
together represent the single greatest cost of trading
in developing countries—even higher than the cost of
tariffs on their exports imposed by rich countries. Trade
agreements, except those with the European Union and
between Central American countries and the United
States, do not address these high costs. As a consequence,
much of the reform fails to remove the largest
barriers to trade. This is why Doing Business studies
the procedures and time of going through customs
and using trade infrastructure such as roads, ports and
warehousing (box 9.1).
BOX 9.1
What are the Doing Business trade indicators?
Doing Business compiles the procedural requirements for
exporting and importing a standardized cargo of goods.
A procedure is counted from the time the business starts
preparing the necessary documents to the time the cargo
is in the client’s warehouse. Every official procedure is
counted—from the contractual agreement between the
2 parties to the delivery of goods—along with the time
necessary for completion. All documents and signatures
required for clearance of the goods across the border
are also recorded. For example, the importing process is
divided into 4 stages: prearrival documentation necessary
for the cargo to be loaded on the ship or train, procedures
necessary during the vessel’s arrival at the port and the
associated terminal handling, going through customs and
cargo inspections, and inland transport for the cargo’s
delivery to the warehouse (box table 9.1).
On average, the 2 stages that require “hard infrastructure”—ports
and inland transport—account for only a
quarter of the time. The preparation of prearrival documents
accounts for more than half the time (box figure
9.1). The time when the cargo is at sea is not counted.
Once the trader has completed the prearrival documents,
the counting of time stops; it starts again when the ship
is docked. If the destination is a landlocked country, the
time for inland transport includes transit time.
Information on the documents and signatures required
and the time to complete each procedure is
provided by local freight forwarders, shipping lines,
customs brokers and port officials, using several assumptions:
The traded product travels in a dry-cargo, 20-foot,
full container load. It is not a hazardous product, does
not require refrigeration and meets international phyto
sanitary and environmental safety standards. The survey
respondents consider several product categories: textile
yarn, fabrics, apparel and clothing accessories, coffee, tea,
cocoa and spices.
BOX TABLE 9.1
Days to complete each stage of importing
Prearrival Port and terminal Customs Inland transport Total
Region documents handling and inspections to warehouse time
OECD high income 8 2 2 2 14
East Asia & Pacifi c 18 3 4 3 28
Latin America & Caribbean 24 4 5 3 36
Middle East & North Africa 25 5 9 4 43
Eastern Europe & Central Asia 25 4 7 7 43
South Asia 24 6 7 10 47
Sub-Saharan Africa 33 8 10 9 59
World 23 5 6 5 39
Source: Doing Business database