1. 1 TRADE PROMOTION POLICIES IN THE BLACK SEA REGION Presentation by Oleh Havrylyshyn Black Sea Conference on Regional Integration And Growth Feb. 23-24,2009

2. 2 OUTLINE I. TRADE PATTERNS AND TRENDS II. STATUS OF GOVERNMENT POLICIES AFFECTING TRADE III.MAIN POLICY CHOICES FOR PROMOTING TRADE,REGIONAL INTEGRATION, AND SUSTAINED GROWTH

3. 3 TABLE 1. KEY TRADE DATA: BLACK SEA COUNTRIES Country TOT.Expo rt Growth p.a.2000-06 Exports to BS $m. BS Export Share BS Import Share Share of Manufactu res in BS Exports Armenia 24.5 18719.333.19.9 Azerbaijan 34.3 1,14217.9 (49.4) 37.82.4 Bulgaria 21.6 2,82018.715.337.7 Georgia 23.1 49253.949.920.3 Moldova 14.7 52051.050.239.1 Romania 21.2 4,844 15.0 56.0 Russia 23.028,105 9.3 (12.0) 9.76.0 Turkey 18.5 5,514 6.510.057.7 Ukraine 20.419,78140.131.624.5

4. 4 KEY FEATURES OF BLACK SEA ECONOMIES AND TRADE Tab.1: Black Sea Region (BSR) 9 countries, definition could be wider BSR quite large: population 300m (EU 550m); GDP $3.5tr.= one-fifth of EU GDP BSR very diverse in size, income percap etc Recent GDP growth very high (5-10%+), trade growth even higher Exports of transition BSR: concentrate on resources or resource-intensive manufactures

5. 5 DIRECTION OF TRADE CHANGE Transition led to opening up, TRADE/GDP ratios now 50-100%+ Big shift from intra-Soviet trade to global,EU now major market for most. Trade among BSC increased, now 10-50%; UNDP study suggests potential much higher Nevertheless EU will continue to dominate as a market both because of much greater size and orientation of formal trade agreements

6. 6 THREE TYPES OF POLICIES AFFECT TRADE BORDER MEASURES (BR) : TARIFFS AND NON-TARIFF MEASURES (NTM’s) BEHIND-THE-BORDER INSTITUTIONAL CONDITIONS (IE):EASE OF DOING BUS., CORRUPTION, RULE-OF-LAW, etc. TRADE FACILITATING CONDITIONS (TF): QUALITY OF INFRASTRUCTURE, CUSTOMS PROCEDURES, TRADE FINANCING etc.

7. 7 RELATIVE IMPACT ON TRADE FROM : BR, IE, TF NEW CONSENSUS IN RECENT TRADE POLICY STUDIES: BORDER MEASURES DECLINED, BUT LIBERALIZATION STILL GIVES BENEFITS IMPROVING IE OFTEN MORE BENEFITS THAN REDUCING BR TF MEASURES OFTEN YIELD VERY LARGE TRADE BENEFITS

8. 8 TABLE 2. POLICIES AFFECTING TRADE OF BLACK SEA COUNTRIES. Country1.Averag e Tariff % 2.TTRI Rank 3.IE Rank 4.LPI Rank 5.Rule of Law - percentil e 6.Corrup tion Control percentil e Armenia3.0 **n.a 4413240.5+30.0- Azerbaija n 9.2*58 3311123.3 - -11.1 - - Bulgaria5.2**21 45 5551.4+53.1+ Georgia1.4**n.a. 15n.a.42.9+48.3+ Moldova5.2**1210310629.5 - -29.5- Romania5.2**21 47 5150.5 - -55.6 - Russia11.1*72120 9916.7 - -16.4 - - Turkey10.1** 4 59 3453.3 -59.4 - Ukraine6.9**46145 7327.626.6 -

9. 9 CURRENT TARIFFS AND NTM’S IN BSR TARIFF AVERAGES SIMILAR TO EU, LOWER THAN DEVELOPING AVERAGE- EXCEPT IN NON-WTO MEMBERS BUT TARIFF DISPERSION STILL HIGH IN MANY, esp. AGRIC. GOODS; MUCH ROOM FOR REDUCING HIGH TARIFF CATEGORIES NTM’S GENERALLY HIGHER THAN FOR COMPARABLE DEVELOPING COUNTRIES; CONSIDERABLE ROOM FOR REDUCTION

10. 10 INSTITUTIONAL ENVIRONMENT TWO COUNTRIES RANK VERY HIGH FOR IE, BUT EVEN THESE ARE RECENT AND POSSIBLY FRAGILE ACHIEVEMENTS FOR MOST RANK ON IE AND GOVERNANCE INDICATORS BELOW OR WELL BELOW COMPARABLE INCOME COUNTRIES

11. 11 TRADE FACILITATION RANKING THREE COUNTRIES BETTER THAN MEDIAN TF ( THEY ARE MEMBERS OR CANDIDATES FOR EU) MOST CONSIDERABLY ABOVE MEDIAN TF LARGE SCOPE FOR TRADE PROMOTION VIA TF IMPROVEMENTS

12. 12 MAIN POLICY CHOICES FIRST PRIORITY INTEGRATION INTO GLOBAL,REGIONAL, ARRANGEMENTS RECOGNIZING DOMINANCE OF EU MARKET REDUCE MAXIMUM TARIFFS, NTM’S STRONG EFFORTS ON INSTITUTIONS, RULE-OF-LAW,CORRUPTION CONTROL TRADE FACILITATION,FIRST EASIER ACTIONS OF ADMIN. SIMPLIFICATION, ALSO BEGIN LONG-TERM IMPROVEMENTS OF PHYSICAL AND MARKET INFRASTRUCTURE

13. 13 MAIN POLICY CHOICES [[[[ STILL TO EDIT ]]]]