Transit and the Special Case of Landlocked Countries

Based on material prepared by ECORYS N.V. and supported by a grant from the government of the Netherlands.

Customs transit refers to customs procedures under which goods are transported through countries from one customs office to the other without paying import duties, domestic consumption taxes, or other charges normally due on imports. These procedures are intended to protect the revenues of

Transit most frequently refers to road transportation to and from landlocked countries. However, it is useful to make a distinction between national transit and international transit. International transit refers to crossing national borders. National transit occurs when goods are transferred within national borders, from the first point of entry in the country to a location where customs procedures are undertaken (for example, dry ports or inland container depots). The two types of transit can be combined; in fact, this is a standard situation in many landlocked developing countries. Imported goods arriving at national borders from transit countries are most often shipped under national transit to the main economic centers. The basic customs mechanisms are similar in both cases; however, implementation is easier for the national transit link.

Most transit takes place between landlocked countries and countries with access to the sea. In some instances, transit is simply from one country to the destination country, and borders are crossed only once. In other instances the transit shipment crosses several borders, as is the case when a shipment goes from the Netherlands to Russia, and crosses Germany and Poland. In other cases the cargo originates and ends up in the same territory, but transits through a second country. For example, commodities destined for the northeastern part of India that originate from other parts of India transit Bangladesh, as all alternative Indian routes are much longer.1 When available, transit by rail offers a number of advantages, including simpler customs transit mechanisms. Rail transit is widely used in central Asia and is being rejuvenated in West Africa.

This chapter focuses on international transit. The first section reviews the general principles of transit while the second section details a typical transit operation. The third section reviews existing major transit arrangements based on the Transport International Routier (TIR). The fourth section presents various institutions set up to facilitate transit, such as bilateral and regional agreements. The final section provides some operational conclusions.

The Case of Landlocked Developing Countries

Customs transit is only one part of a wider transaction range that includes many other participants and procedures-cross-border vehicle regulations, visas for truck drivers, insurance, police controls, infrastructure quality, quality of available transport services, and the organization of the private trucking sector. Even if transit procedures are made effective and efficient, full trade facilitation will require that these issues be dealt with, too.

The interdependence of these issues is well illustrated by the Action Plan issued by the International Ministerial Conference of Landlocked and Transit Developing Countries (August 2003) that notes, "An integrated approach to trade and transport sector development is needed that takes into account social and economic aspects, as well as fiscal policy, as well as regulatory, procedural and institutional considerations" (UN 2003 p. 4). These concerns will be returned to in the Implementation Issues section of this chapter. However, the customs component is the principal bottleneck of transit and is a source of major inefficiencies that affect many activities.

Costs of Transit Operations

The high logistics costs and the many developmental problems faced by the landlocked countries of the world can be attributed to their geographical fate. The importance of the transit facilitation agenda to these countries and to the countries of transit stem from these circumstances.2 Indeed, out of 31 landlocked developing countries, 16 are classified as highly indebted poor countries (HIPC), while 20 out of the 50 least developed countries worldwide are landlocked.3 Research conducted by the World Bank and other organizations4 con...

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