China joins U.N. trucking treaty, stepping onto new Silk Road

By Tom Miles

GENEVA (Reuters) – China has taken a major step towards establishing a speedy new “Silk Road” to Europe by signing up to a U.N. trucking treaty.

Fifteen years after joining the World Trade Organization (WTO), China is hoping a revival of its ancient trading corridor to the west will help boost its slowing economy.

Becoming a member of TIR, an international guarantee scheme that will enable Chinese freight containers to travel all the way to Ireland without being opened up for time-consuming customs checks, is a first step towards putting the legal framework of the plan into action.

SILKROADCARAVAN

“It’s a key element …for the Chinese government… If you had to stop a container at every border from China to Europe it would add substantial costs,” said Christian Friis Bach, executive secretary of the U.N. Economic Commission for Europe, which oversees the TIR convention.

China’s new Silk Road to Europe includes countries in Central Asia as well as Russia and Turkey, and potential maritime links to the Gulf and East Africa.

President Xi Jinping said in March 2015 that he hoped annual trade with the countries involved in the plan would surpass $2.5 trillion in a decade. Last year it amounted to $1 trillion.

Less than 10 percent of Chinese exports to the European Union go by road, with most transported by sea or air.

The International Road Transport Union (IRU), which administers TIR, hopes accredited trucks will soon be able to zoom from China through Central Asia to Europe – albeit while still subject to random checks by border guards.

Expanded road transport with less red tape would offer faster trade than by sea for large shipments of time-sensitive goods, such as smartphones or fashion items.

“By truck you can go from western China to Europe in 8-12 days,” IRU Secretary-General Umberto de Pretto said.

“It costs more than going by ship but the time savings you have are enormous… Waiting times at the border will be one hour instead of 3-4 days.”

The impact of China joining TIR could end up being significant, especially if partners in Asia and Africa also join, and if China uses it for shipping and rail routes as well.

Pakistan recently joined and India and several East African and Gulf countries have expressed interest.

China spent a decade considering membership of the international goods transport convention before joining, and will become the 70th TIR member next January.

“They have done their homework and they understand it,” said Friis Bach.

(Reporting by Tom Miles; editing by John Stonestreet)



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