Improving Road Freight Transport
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One-on-one dealings on quotas in bilateral negotiations tend to favor the state that is least dependent on the economy of the other, which is more likely to be the transit country than the LLDC. So, although LLDCs often look to quota agreements to protect their smaller or less efficient trucking companies, this does not often work in practice, and the LLDCs continue to face difficulties defending their haulers’ interests. A recent example of a trading block that has eliminated truck quotas is found in the Greater Mekong subregion (GMS) of Southeast Asia. Under a cross-border transit agreement signed by GMS countries,4 quotas are issued for transport between member countries on the basis of a number of approved vehicles rather than number of trips. This arrangement offers greater flexibility in responding to varying demand, but still raises opportunities for rent-seeking because quotas are still used. After the quota curbing the number of authorized transit operators (trucking services) between Thailand and Laos was lifted, tariffs fell by 20–30 percent. The dominant operator remained dominant, but the fact that shippers now had the option of going to other carriers gave them market power to negotiate lower tariffs.
Truck Driver Border Crossing Procedures Systems for allowing truck drivers to cross borders can be almost as imposing as those for vehicles. Where trucks themselves are not allowed to cross the border, there is usually an exception so that the vehicles of each country can travel at least as far as a site where the freight can be transferred from one truck to the other, and these exceptions also specify the nationality of the driver who can take the truck this minimum distance into the other country. But these arrangements can require that two drivers are needed in each direction, either to change roles at the actual border or for a driver of one nationality to operate the vehicle in one direction and the other to operate it for the return to the original country. These and all other systems require that drivers have a passport and usually a visa to enter and work in the second country. The most efficient systems are those that require a passport only, but because the driver will perform paid work in the second country, a visa is usually needed. A few bilateral agreements substitute a temporary passport entry for commercial drivers, with some requirement that they leave the country within a specified time. Where a multiple entry visa is allowed—and this can be issued at a consulate of the second country—the imposition of border cost and time penalties is minimized. But even where this is the