Apec: Is transport harmonisation lost at sea?

By Nikki Mandow

Transport issues will increasingly come to the fore in Apec and WTO negotiations over the next few months, experts say, as it becomes clear that bureaucracy and bottlenecks involved in moving goods from place to place are a significant barrier to regional trade.

Exporters from New Zealand and elsewhere face the costs of a multitude of different transport-related problems.

It might be the politically-motivated reluctance of governments to loosen up tightly-controlled air transport regulations.

Or the legal and regulatory complications caused by each country - and often each transport mode within each country - having its own set of rules and pile of forms to fill in.

Or the hassles of varying customs compliance systems, different international insurance procedures, and even bribery norms.

It is hard to quantify in terms of numbers of millions of dollars, says Christopher Kissling, Professoressor of Transport Studies at Lincoln University, and coordinator of the Pacific Economic Cooperation Council (PECC)'s Transportation Task Force.

But transport liberalisation is an area with "a lot of room for improvement" and one that will be a key issue in regional liberalisation over the next few years.

Professor Kissling recalls a recent international insurance wrangle over a ship sunk in international waters but containing goods from various shippers to various destinations. It cost $6 million in legal and other costs to settle.

"We believe long-distance transport issues are going to be of particular importance in the context of the new rounds of [WTO] trade talks," says Dr Christopher Findlay, PECC's coordinating group chairman.

"And with trade facilitation being a very important concern in this cycle of Apec, people will also be focusing on this area."

PECC is at present involved in a major research project into the non-tariff barriers to regional trade.

Largely funded by the Apec Business Advisory Council (Abac) and due to be presented to Abac in midyear, this study aims to establish the relative importance of different trade barriers to business people. Further research will then be concentrated on these areas - including transport harmonisation - Dr Findlay says.

There are many practical potential benefits for New Zealand exporters of harmonisation, Professor Kissling says. For example, there could be significant financial and time benefits if goods were transhipping through Singapore, Hong Kong or Australia.

However, this isn't viable until the plethora of different paperworks in different countries can be simplified. The key would be the region-wide adoption of pre-clearance of goods through electronic data exchange, and the harmonisation of regional legal and regulatory frameworks, he says.

But this isn't easy - or necessarily popular. New Zealand has one of the most liberal transport regimes in the region, and tends to be an early adopter of new technologies, but Professor Kissling believes business would benefit from other countries' transport regimes being more liberal and more harmonious.

"Some people say it is to our advantage for Australia's waterfront not to perform because we get advantages in third markets, for example," he says. "But if there were efficient turnarounds, New Zealand companies could get savings through being able to tranship goods through Australia."

The PECC Transportation Task Force is also looking at possible research in other areas, including: human resources and training; deregulation of the air cargo market; the impact on trade of regional monopolies affecting transport; and the environmental effects of transport.

In particular, Professor Kissling is interested in how to incorporate environmental factors into transport pricing and he is hoping to get support - and possibly funding - from New Zealand's Ministry of Transport for work in this area.

Transport will also be on the agenda at a PECC Coordinating Group meeting in Canberra tomorrow, as part of a wider project on building sustainable cities in rapidly-developing economies.

While Apec has an active transportation working group, and many businesses are involved in transportation solutions, PECC - combining the resources of academics, business and officials and with formal observer status at Apec - has the benefit of being independent and apolitical, Professor Kissling says.

Issues that might easily be stalled by political considerations if considered within a government-controlled organisation, can be reactivated by some practical research coordinated by PECC and then thrown the way of the relevant Apec ministers and officials.

Professor Kissling calls it the "shout from the rooftops" approach. The more you can communicate the liberalisation benefits message to relevant ministers, the more likely they are to continue down the liberalisation pathway. And, the more you can demonstrate the practical (rather than the theoretical) benefits, the more persuasive your argument.

Take the issue of air transport deregulation, for example - one of the most thorny transportation questions. Some regional economies argue that open-skies policies will lead to their own national carrier being swamped by bigger competitors. A look at New Zealand as a case study suggests, however, that liberal policy in a small country has not led to the demise of Air New Zealand, he says.

In fact, liberalisation can be shown to bring quantifiable benefits to the country's tourism industry from more flights and lower airfares.

During the next six months, Professor Kissling himself will be working on a $30,000, multi-economy, research project trying to quantify the benefits of liberalisation in some areas of the air transport sector, for example routing, timing, increased city pairings, code sharing, network structures and - most politically sensitive - ownership.

Under international aviation rules, national carriers have to be majority locally owned. "We will be asking the question to what extent is foreign ownership a liberating or a limiting factor."

Professor Kissling is looking at the possibility of holding an air transport meeting in October this year, under the auspices of PECC, and of New Zealand hosting an air transport workshop in 2000.

Progress, particularly in the air transport sector, is likely to be slow, however. New Zealand aviation sources say that regional political figures and officials are often surprised when reminded that the Bogor Declaration (removal of trade barriers by 2010 in developed countries and 2020 in less developed ones) is directly applicable to air transport. Any change to the overall structure based on bilateral, government-to-government negotiation - is a long way off.

However, aviation industry figures, Ministry of Transport officials and MFAT officials working on APEC 1999 recently held preliminary discussions on how to re-introduce some aviation issues into this year's APEC agenda.

"There are some airlines in the region contemplating using the APEC process through Abac to support the efforts New Zealand has already made [on aviation industry liberalisation] and to try to keep some momentum going on air services," says Nigel Mouat, head of international relations at the Ministry of Transport.

"There is no collective commitment [from Apec ministers], but Apec is to a large extent about trying to make a difference to business in the region. So if there were to be an expression from airlines that they wanted more to happen, the message would be reinforced with those governments that have been reluctant to move on air services liberalisation."

* Nikki Mandow is manager, external relations, at the University of Auckland's New Zealand Asia Institute.