3rd Interactive Session: Nguyen Van Thach

Nguyen Van Thach
Deputy Director General, International Cooperation Dept., Ministry of Transport, Vietnam, Ministry of Transport, Vietnam

Impacts of the Shanghai Agreement on the Development of Asian Highway Network and the GMS Agreement on Progress of Road Transport in the region

I. Introduction
The Intergovernmental Agreement on the Asian Highway Network was originally signed in Shanghai in April 2004 and put into force on July 4, 2005. Among 32 member states in the Asian region, 27 countries, including Viet Nam, have been signatory parties to the agreement.

The GMS Agreement, formally known as the "Agreement between and among the Governments of the Kingdom of Cambodia, the People's Republic of China, the Lao People's Democratic Republic, the Union of Myanmar, the Kingdom of Thailand, and the Socialist Republic of Viet Nam for Facilitation of Cross-Border Transport of Goods and People", was originally signed in November 1999. Currently, GMS countries are on the way of finalizing all annexes/protocols of the agreement with an aim of starting the implementation of the agreement in 2006. Up to date, 16 of the total 20 annexes/protocols were agreed and signed by the GMS countries. The remaining 4 annexes/protocol continue to be discussed and finalized in 2005.

The Shanghai Agreement and the GMS Agreement are initiated and supported by the UNESCAP and the ADB respectively. The Shanghai Agreement aims at promoting the development of international road transport in the region while the GMS Agreement, considered as "a practical approach, in the short to medium term, to streamline regulations and reduce nonphysical barriers in the GMS", is really a multilateral instrument for the facilitation of cross-border transport of goods and people.

II. Impact of the Shanghai Agreement on the Development of Asian Highway Network
The Shanghai agreement sets technical standards for road and route signage to be applied on highway routes of international importance within Asia. Thus, the agreement will be a crucial technical guideline for member countries to complete 141,000 kilometres of standardized roadways in the region.

Many developing countries in the region are in short of capitals for road infrastructure development. By signing the agreement, those countries are confirmed to undertake the development of the proposed highway network within the framework of their national priority programmes. Therefore, all member countries will give their prioritization for the allocation of either their domestic financial resources or foreign financial support for the development of their designated road corridors.

Viet Nam has designated 4 routes as parts the Asian highway network which connect main cities and provinces centers, ports and major tourist destinations of Viet Nam with neighbouring countries. The designated roads include sections of: (i) AH1; (ii) AH14; (iii) AH15; and (iv) AH16. Many of highways sections in Vietnam are completely upgraded to meet the required standards using ODA loans provided by international financial institutions (AH1, AH 14 and AH16); however, some road sections of the route from Ha Noi - Lao Cai and Vinh - Cau Treo are still below minimum standards and need further upgrade.

Regionally, 16 per cent of the roads of the Asian highway network do not meet the minimum requirements. It is estimated by ADB that an amount of US$18 billion is needed to upgrade and improve the highways. Therefore, the cooperation among UNESCAP member countries and potential financial organizations and partners is a key factor to help countries identifying resources for investment of their roads.

Upgrade of the Asian highway network paves the way to facilitating regional trade and tourism and opening up land-locked countries. However, in order to make effective use of that network for regional development, member countries need further cooperation in establishing either bilateral or multilateral instruments for the facilitation of international traffic, of which the GMS Agreement is one example.

III. Impact of the GMS Agreement on Progress of Road Transport
The GMS Agreement is a comprehensive multilateral instrument, which covers all the relevant aspects of cross-border transport facilitation such as single-stop/single-window customs inspection and transit traffic regimes.

According to the single-stop/single-window customs inspection scheme, people, vehicles and goods shall be subject to border crossing clearance formalities conducted jointly and simultaneously by competent authorities of adjacent countries. The harmonization of border clearance procedures will considerably reduce required time for clearance of cross-border formalities. As an example, Viet Nam and Lao are harmonizing their cross-border clearance procedures with the aim of reducing the average clearance time for a commercial vehicle crossing Lao Bao-Densavanh border check-point on the east-west corridor to just 30 minutes against the currently required time of 3 hours.

As far as the transit traffic regimes are concerned, the GMS countries endeavour to further facilitate the transit traffic by undertaking various measures such as exemptions from physical customs inspection, bond deposit and escort, and simplify phytosanitary and veterinary inspection.

Given the fact that a number of GMS designated corridors connect deep seaports with potential areas of development and the growth rates of cross-border trade volume on these corridors have increased from 20-33% annually over the last years, the above-mentioned facilitation measures will surely further increase cross-border trade volumes on the GMS designated corridors.

Thus, the application of multimodal transport and facilitation for cross-border traffic on the regional transport linkages under the GMS agreement will give GMS countries unprecedented opportunities to boost the regional transit traffic, increase the effectiveness of their transport systems, cut down travel costs and time, improve competitiveness of goods and services in the region, and as result to promote trade and tourism, attract more foreign investment and support their national programmes on poverty reduction, etc.

IV. Conclusion
The implementation of both agreements will no doubt provide their member countries with great opportunities for economic growth and social progress.

See his Powerpoint Presentation

In partnership with the China Road Transport Association (CRTA)

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