TRADE DATA SYSTEMS COULD RESULT IN COST SAVINGS OF $75 BILLION A YEAR

TRADE DATA SYSTEMS COULD RESULT IN COST SAVINGS OF $75 BILLION A YEAR

Advanced information technologies and electronic data interchange networks could slash global trading costs by 25 percent, saving $75 billion annually, a U.N. agency estimates.

Customs, insurance, freight and related activities like banking and letters of credit, are thought to account for about 10 percent of the total value of international trade.A one-fourth reduction in such costs would bring worldwide savings of $75 billion a year, the U.N. Conference on Trade and Development calculates.

Efforts to improve trade efficiency will be a key item on the agenda at the upcoming Unctad VIII conference to be held in Cartagena de Indias, Colombia, from Feb. 18-25. The draft proposal, which still contains some bracketed paragraphs in dispute, was first distributed to governments only last month.

But informal diplomatic discussions over the concept began about a year ago, spurred by Unctad officials working on the Asasycuda project who realized that focusing on improved trade practices could help reduce existing inefficiencies and help streamline organizational arrangements.

Asasycuda helps developing countries automate their customs services. About 50 developing countries are interested in participating in the Asasycuda project. Funding is primarily provided by France, Switzerland, Sweden, and the U.N. Development Program.

Results of Asasycuda trials conducted to date are mixed, officials said. In Mauritania, for example, the pilot succeeded in getting 96 percent of trade documents processed electronically. But in some other cases, such as Zaire, the system collapsed when the experts left after most of the computers were stolen, officials close to the project said.

A two track "trade efficiency" policy will be put forward at the Colombia venue:

* International - Identifying possible international trade agreements that could benefit in terms of time and cost savings through the universal use of electronic data interchange systems.

* National - Using domestic models adapted to each level of development to help traders and the public sector integrate into the international networks and build up local infrastructure needs.

High level Western diplomatic sources are optimistic that the project will get the green light at the meeting, which could see the creation of an international panel of experts and the staging of a conference in 1994 on information technologies and "trade efficiency."

However, the project is also attracting attention because it could represent a turning point in the politics of Unctad.

Unctad officials admit that developing countries were slow to catch on to the significance of electronic data interchange, which replaces paper documents with strictly standardized electronic messages that are transmitted

from computer to computer. Rich Western nations have been working on it for over 20 years.

A senior official from the U.S. State Department told The Journal of Commerce that the Bush administration was "cautiously positive" to the trade efficiency proposal.

"In principle this is the type of thing Unctad should be doing more, i.e. bringing practical benefits to member countries," he said.

This in itself represents a 180-degree turn in thinking over Unctad by Washington, which has for decades regarded Unctad as a highly politicized agency endlessly attacking the West.