1. Nurturing an Integrated Logistics and Transportation System for the APEC Economics September 6, 2006 Asst. Prof. Dong Keun Ryoo Korea Maritime University Republic of KOREA 2006/TPT-WG-28/IEG/016 28th APEC Transportation Working Group Meeting Vancouver, Canada 5-8 September 2006 Nurturing an Integrated Logistics and Transportation System for the APEC Economies Purpose: Information Submitted by: Republic of Korea

2. Nurturing an Integrated Logistics and Transportation System for the APEC Economies September 6, 2006 Asst. Prof. Dong Keun Ryoo Korea Maritime University Republic of KOREA 2006/TPT-WG-28/IEG/016

3. Contents Background of the Project Structure of the Project Barriers & Areas in Building an Integrated Logistics Market Research Methodology Successful Logistics Integration Future Work Schedule Implications of the Survey 2006/TPT-WG-28/IEG/016

4. Background of the Project  APEC economies have been closely working together to realize the Bogor Goal, particularly in the maritime sector, by adopting and implementing APEC Common Principles to Shipping Policy.  Korean Government proposed a self-funded project of “The Study on the Costs of Non-APEC in the Field of Logistics and Transportation” at the TPT-WG 26th meeting in Vladivostok, Russia.  The objective of the project is to overcome the obstacles from different levels of logistics systems and to nurture a more integrated logistics and transportation system for the APEC Economies, particularly in Northeast Asia. 2006/TPT-WG-28/IEG/016

5. Structure of the Project Contents Research Organizations Schedule Identifying the costs of being separated non-APEC economies in the field of logistics, incorporating the door-to-door shipping concept Developing strategic plans or basic directions for nurturing an integrated logistics and transportation system in Northeast Asia Formulating action plans for realizing the vision of nurturing an integrated logistics system Korea Maritime Institute (KMI), 7 Korean universities & GLORI Close cooperation with Chinese and Japanese universities The years of 2006 - 2008 2006/TPT-WG-28/IEG/016

6. Barriers to Integration of a Logistics & Transportation System  Institutional barriers  Legal barriers  Customs barriers  Physical barriers  Technical barriers 2006/TPT-WG-28/IEG/016

7. Building an Integrated Logistics & Transportation System  Infrastructure (Standardization) - Logistics equipment and facility - Logistics technology - Logistics information network  Operation (Harmonization & Facilitation) - Cabotage - Customs procedure - Mutual recognition agreement  Institution (Cooperative Organization) - Joint conference on integrated transportation and logistics market - Dispute settlement mechanism (Jun, et al, 2005) 2006/TPT-WG-28/IEG/016

8. Research Methodology Finding obstacles to integration of a logistics and transportation system in Northeast Asia Questionnaire Survey Computable General Equilibrium (CGE) Models Evaluating the economic effects of an integrated logistics and transportation system in Northeast Asia 2006/TPT-WG-28/IEG/016

9. Questionnaire Survey Purpose – finding main obstacles to integration of a logistics and transportation system in Northeast Asia Questionnaire design and pilot survey by September 2006 Survey carried out by October 2006 Survey – Government Organization, Logistics Expert Group, Shippers, Logistics & Transportation Companies etc. 2006/TPT-WG-28/IEG/016

10. Key Survey Questions What is legal barriers to logistics and transport services? What is key barriers to customs procedures? What is international barriers relating to the entry into a logistics & transport market What is technical barriers to integration of a logistics and transportation system 2006/TPT-WG-28/IEG/016

11. Computable General Equilibrium (CGE) Models Beginning with the NAFTA negotiations, CGE models have become a widely used tool for evaluating the effects of trade policy reforms in both regional and multinational initiatives (U.S. International Trade Commission, 1992; Francois and Shiells, 1994; Martin and Winters, 1995). While economic theory identifies how policy changes will affect economic variables, it does not define the size of the impact and, in the case of RTA’s, leaves the net effect ambiguous. CGE models provide an empirical foundation for policy analysis that can quantify the magnitudes of the effects identified by theory, and suggest the likely net effect, whether trade creating or trade diverting, of an RTA. (http://www.ers.usda.gov/publications)http://www.ers.usda.gov/publications 2006/TPT-WG-28/IEG/016

12. Requirements for Successful Logistics Integration  Successful integration of logistics and transportation system for APEC economies is a lengthy process because of inherent economic, political and social obstacles - Clearly identify winners and losers, and losers need to be compensated - Maximizing the potential benefits of the integration of logistics and transportation system while minimizing negative effects - Joint research by the relevant countries is essential to provide the intellectual guidance and policy supports to the integration process - Initiating and reinforcing cooperation through institution arrangements - Streamlining various administrative and technical procedures (Zhang, 2005) 2006/TPT-WG-28/IEG/016

13. Future Work Schedule Questionnaire survey carried out by October 2006 Collecting macroeconomic logistics costs such as transportation costs, inventory carrying costs & administration costs in Korea, China & Japan by October 2006 Preliminary survey findings by December 2006 Make a presentation on survey findings of obstacles of integrating logistics and transportation system in Northeast Asia at 29 th APEC TPT-WG in 2007 Results of the economic effects of an integrated logistics and transportation system by December 2007 2006/TPT-WG-28/IEG/016

14. Implications of the Survey Identification of barriers to integration of a logistics and transportation system is important in analyzing the nature of the market and in policy-making Removing existing legal, institutional, technical and physical barriers promotes freer and efficient cross-border movements of goods, people, and information Achieving the ultimate goal of an integrated logistics and transportation system in APEC Economies 2006/TPT-WG-28/IEG/016