Page 48

28

The Cost of Being Landlocked

destination and origin of the goods (national transit) or in a third country where the merchandise is carried from an entry post to an exit post (international transit). Hence a complete transit operation is a sequence of international and national transit links (figure 3.1). Landlocked countries can trade beyond their immediate neighbors only through transit systems.1 By nature, a transit operation is extended in time and space, and involves several countries and many private and public participants. Therefore, transit systems tend to be complex and vulnerable to fragmentation and rentseeking activities. Transit trade requires more oversight than does intranational trade over similar distances. This is because though a customs transit regime is eventually defined at a multicountry level, its implementation is at the national level. Such trade also depends on measures taken by countries to regulate vehicle movement, people (drivers), and trade in services and foreign investment. The end result is a complex process that has cost, time, and efficiency implications. Box 3.2 points out the underpinnings of most transit systems that regulate these operations. The following basic transit principles of customs procedures are applied in the Transport International Routier (TIR) system. Transit systems following customs procedures as described in box 3.2 can be traced to the Middle Ages in Europe, when the renaissance of intra-European trade had to overcome a high degree of territorial fragmentation. The principles proved robust and allowed for the implementation of freedom of transit. Transit works smoothly if its key features are not perverted. 1. Transit is not primarily a chain of control. Freedom of transit depends on the guarantees provided by operators for covering the potential fiscal loss. In fact, controls en route are redundant with guarantees. 2. Transit is a public-private partnership and requires consensus between public entities (customs, governments) and private operators (transporters, freight forwarders). Figure 3.1

The Generic Series of Transit Operation for Imports

port of entry

rail transit

multimodal transfer

road transit

border crossing

road transit

check points international transit Source: Authors.

national transit

final clearance

The Cost of Being Landlocked  

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The...

The Cost of Being Landlocked  

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The...