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Story 2.10

Trade without Borders

Simplifying Customs Procedures to Enhance International Trade

Like some 200 other freight haulers, Eduardo Escobar crosses the border almost every day between El Salvador and Honduras with his load of containers. And on every one of those days, until recently, it took him some five hours in the blistering heat to complete all the administrative procedures and inspections to get across.

Why is it necessary to inspect loads at a country’s border crossings if the merchandise is simply in transit to another country? Many countries in the subregion posed that question, so the IDB responded by supporting the design and implementation of the Mesoamerican International Merchandise Transit system (Tránsito Internacional de Mercancías, TIM).3 The system provides an electronic Single Transit Declaration form (Declaración Única de Tránsito) that allows transporters to complete procedures in minutes at border agencies, particularly customs. This in turn enables customs to focus more on its country’s imports and exports.

The IDB provided US$155 million in sovereign-guaranteed (SG) financing for operations associated with the TIM. Part of the system’s success has been due to the purchase and implementation of information systems, the redesign of processes, and improvements in border control posts. This sophisticated system of paperless transit has improved the border crossing process and significantly reduced the costs of commerce in the Mesoamerica subregion. The adoption of the TIM represents a major change that required the agreement of the customs agencies of all of the countries involved, with the IDB serving as mediator to facilitate the process.

Another key factor behind the improvements has been the training of employees from both customs agencies and transport firms who have had to learn how to use the TIM system. This was achieved through specialized training provided by the IDB, with resource support from integration funds of Canada, Chile, Colombia, Japan, Mexico, Spain, Switzerland, the United Kingdom, and the United States as well as multilateral organizations such as the World Customs Organization (WCO), World Trade Organization (WTO), and subregional institutions in Latin America and the Caribbean, particularly the Secretariat of the Central American Economic Integration System (Sistema de Integración Económica Centroamericana, SIECA).

The IDB-financed program has trained more than 305 implementers and users of the TIM system in the Mesoamerican countries, offering widely available and up-to-date courses on a range of topics, available at www.connectamericas.com.

Thanks to the TIM, the five hours it used to take to cross between El Salvador and Honduras now takes only five minutes. For each hour a typical truck idles, it uses on average around 3.8 liters of diesel fuel and emits approximately 10 kilograms of CO2, and the wear to the engine is twice that of running at normal speed, so the cost savings and reductions to emissions are significant. Central American haulers no longer even need to get out of their trucks; they just wait for the computerized system to give them the green light, improving security in addition to efficiency. Eduardo and his fellow haulers can make more trips, which has increased their family incomes, and is accompanied by reduced operating costs and merchandise losses due to heat and humidity.

Story by:
Joaquin Tres, integration and trade principal specialist in the Integration Department at the IDB.

This results story is based on SG operations CR-L1066 and NI-L1083, which are ongoing projects.

Continue reading Chapter 2 - Competitive Regional and Global International Integration