Trade Facilitation and Paperless Trade Implementation in Asia: Status and Lessons Learned

Trade Facilitation and Paperless Trade Implementation in Asia: Status and Lessons Learned BY Y A N N D U V A L C H I E F, T R A D E F A C I L I T A T I O N, T R A D E A N D I N V E S T M E N T D I V I S I O N U N I T E D N A T I O N S E C O N O M I C A N D S O C I A L C O M M I S S I O N F O R A S I A A N D T H E P A C I F I C

UN ESCAP, Bangkok One of five United Nations Regional Commissions 62 member and associate member states ESCAP-ADB Asia-Pacific Trade Facilitation Forum 2014

Overview of Presentation Trade Facilitation? Paperless Trade? Where does Asia stand: On trade facilitation On paperless trade implementation Way forward: cross-border paperless trade A few lessons learned

Trade Facilitation (TF)? - Definition the simplification and harmonization of international trade procedures increasing the cost effectiveness of international trade transactions

Trade Facilitation? Definition

Paperless Trade? Conducting trade using electronic rather than paper documents Government Effective & Efficient Deployment of Resources Correct Revenue Yield Improved Trader Compliance Enhanced Security Increased Integrity & Transparency Paperless Trade Benefits Traders Cutting Costs through Reducing Delays Faster Clearance & Release Predictable Application and Explanation of Rules Effective & Efficient Deployment of Resources Increased Transparency

World Bank Doing Business Report 2015 Ease of Trading Across Border in Asia-Pacific Time to import/export (in days) - 2014 Cost to import/export (international shipping excluded; in US$ per container) - 2014 3000 60 50 40 30 20 10 0 2500 2000 1500 1000 500 0 3 of the top 5 world performers (out of 189 countries) are Asian But 3 of the bottom five are also Asian Source: based on data from www.doingbusiness.org

ESCAP-World Bank Trade Cost Database: International trade costs in World s developing regions* 300 250 200 150 100 East Asia and the Pacific 50 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa South Asia Sub-Saharan Africa *based on ESCAP-World Bank International Trade Cost Database; http://data.worldbank.org/data-catalog/trade-costs-dataset

ESCAP-World Bank Trade Cost Database: Intra- and inter-regional trade costs

Key factors in lowering international trade costs Asia-Pacific Perspective 10 Tariff Trade Costs 0-10%* 60-90%* 1% 6-7% Direct Behind- & At-the border Trade Costs Availability/use of ICT Services 6-7% Business (Regulatory) Environment Policy-Related Non-Tariff Trade Costs 16-18% Maritime Connectivity/Services 52-57% Other Trade Costs Indirect cost of trade procedures Currency fluctuation Other non-tariff barriers Natural Trade Costs (Geographical and Cultural Factors) 10-30%* * Illustrative based on casual observation of the data only. Natural trade costs for landlocked countries may be outside the range shown for natural trade cost s. See Duval and Utoktham (2011) and Arvis et al. (2012) for details.

ESCAP Survey on Trade Facilitation and Paperless Trade Implementation: 2013/14 Survey conducted in conjunction with annual A-P Trade Facilitation Forum (APTFF) Started from APTFF 2012 in collaboration with ADB 2013/14 survey structure: 1) General trade facilitation measures; 2) Paperless trade facilitation measures; 3)Towards cross-border paperless trade; 4) Border agency cooperation; 5) transit facilitation; 6) trade-related information availability and 7) key challenges and recommendations Data collected from Sept.13 to Mar.14 APTFF participants + UNNExT experts and secondary data 11

Trade Facilitation and Paperless Trade Implementation in Asia-Pacific: 2013-14 100 90 General TF measures (WTO TFA related) Paperless trade measures (including e-single Window) Cross border paperless trade measures 80 70 60 50 40 30 20 10 0 Source: Wang T. and Y. Duval (2014) http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-201314-asia-pacific-update

General Trade Facilitation Measures (included in the WTO Trade Facilitation Agreement) Publication of existing import-export regulations on the Internet Stakeholder consultation on new draft regulations (prior to their finalization) Advance publication/ notification of new regulation before their implementation Post-clearance audit Risk management Independent appeal mechanism Separation of Release from final determination of customs duties, taxes, fees and charges Advance ruling (on tariff classification) Pre-arrival processing Expedited shipments National single window Trade facilitation measures for authorized operators Establishment and publication of average release times 13 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Fully implemented Partially implemented Not Implemented Source: ESCAP 2013 /14 Survey

Paperless Trade Facilitation Measures (electronic submission) Electronic submission of Customs declarations Electronic submission of air cargo manifests Electronic application and issuance of trade licenses Electronic submission of sea cargo manifests E-Payment of Customs duties and fees Electronic application and issuance of preferential Certificate of Origin Electronic application for Customs refunds 0% 20% 40% 60% 80% 100% Fully implemented Partially implemented Not Implemented 14 Source: ESCAP 2013/14 Survey

Towards Cross-border Paperless Trade Laws and regulations for electronic transactions Recognised certification authority Engagement of cross-border electronic data exchange Banks and insurers retrieving letters of credit electronically without lodging paper-based Electronic exchange of Certificate of Origin electronically Electronic exchange of Sanitary & Phyto-Sanitary certificate 0% 20% 40% 60% 80% 100% Fully implemented Partially implemented Not Implemented Source: ESCAP 2013-14 Survey 15

Challenges to moving forward on cross-border paperless trade Adoption of common International Standards Harmonization of legal frameworks Capacity gaps among the parties Cooperation between public and private sectors Lack of intergovernmental coordination mechanism

Bilateral/regional trade agreements with trade facilitation provisions involving Asia-Pacific countries Source: Duval (2011) Paperless trade related provisions increasingly featured 17

ASEAN Single Window Agreement (2005) 18 ASW Concept: connecting national single windows so that relevant trade data and information is automatically available to authorities in both the importing and exporting country, avoiding any delays and inconsistencies. ASEAN: Association of Southeast Asian Countries

Next generation trade facilitation: Enabling cross-border paperless supply chain ESCAP Resolution on Enabling paperless trade and the cross-border recognition of electronic data and documents (adopted in May 2012) 19 Legal and technical barriers in information exchange (across borders) Increased implementation of (national) single window and paperless trade systems, but Need for cross-border paperless trade

Progress in implementation of ESCAP Res. 68/3 20 Conduct Study Expert Review Member Consultation Report To CTI First Inter Gover nmental Meeting Draft text of an Agreement on Cross-Border Paperless Trade Facilitation proposed in Annex ESCAP brings together technical & legal experts to refine the text 4 (Sub)regional informal consultations are held with Member States on the text ESCAP Committee on Trade and Inv. recommends formal negotiation begins First intergovernmental negotiation of the text of the regional arrangement Aug. 2012 - Feb. 2013 Nov. 2012 - Mar. 2013 Jul. Nov. 2013 Nov. 2013 April 2014 * ERM: Expert Review Meeting EGM: Expert Group Meeting For details see: http://unnext.unescap.org/reso683.asp

Benefits of Cross-Border Paperless Trade Annual regional export gains : $36bn (for partial implementation) to $257 bn (full implementation) Export time reduction: 24% to 44% Export cost reduction: 17% to 31% Total direct cost savings across all trade: $1bn to $7bn annually Source: http://www.unescap.org/resources/estimating-benefits-cross-border-paperless-trade

Concluding remarks: A few lessons learned 22 Trade facilitation (& paperless trade) begins at home Strong political will a must Need for institutionalization / assigning a lead agency Regular stakeholder consultations Consult and systematically involve the private sector Set ambitious (long-term) targets National/regional paperless trade Apply information and communication technologies (ICT) Don t forget the legal framework Take a holistic approach to trade facilitation in order to identify bottlenecks along the entire supply/transaction chain Services and behind the border measures often key to efficiency Measure progress & update strategy accordingly Micro-level analyses and monitoring needed!

Thank you Email: duvaly@un.org For more Information: ESCAP Trade Facilitation programme http://www.unescap.org/our-work/tradeinvestment/trade-facilitation United Nations Network of Experts for Paperless Trade in Asia and the Pacific (UNNExT): http://unnext.unescap.org/ ESCAP Res. 68/3 on Enabling Paperless Trade: http://unnext.unescap.org/reso683.asp

Global TF and Paperless Trade Implementation Survey 2014-15: Your participation and expertise are needed! Launched last month by 5 UN Regional Commissions in collaboration with OECD including Economic Commission for Latin America and the Caribbean (ECLAC) Based on ESCAP earlier regional surveys Public and private country experts and responsible officials can complete the survey Available in English and in Spanish http://unnext.unescap.org/tfforum14-survey-quesword.asp Regional and global reports expected to be available in June 2015

A N N E X E S

ESCAP-WB Trade Cost: Definition* Based on the comprehensive trade costs measure proposed by Jacks, Meissner and Novy (2009) Measure derived from the theory-consistent gravity equation, i.e., ratio based essentially on Bilateral Trade data and Gross Output data objective measure of costs Captures all additional costs involved in trading goods bilaterally relative to those involved in trading goods domestically. It includes: International shipping and logistics costs Tariff and non-tariff costs, including indirect and direct costs associated with trade procedures and regulations Costs from differences in language, culture, currencies *For details and data, see: http://artnet.unescap.org/databases.html#first

ESCAP new tools/ approach to monitor TF 27 UNNExT Business Process Analysis Methodology for simplification of trade procedures http://unnext.unescap.org/tools/default.asp ADB-ESCAP Trade and Transport Facilitation Monitoring Mechanism (TTFMM) Combines BPA, WCO TRS and other methods for national monitoring of TF ESCAP s Trade Process Analysis Database 50+ detailed searchable cases of import and export processes (country and product specific)

Business Process Analysis (BPA) for Trade Facilitation Trade procedures for importing electronics from CHINA to THAILAND Number of parties: 11 on export side; 12 on import side Number of documents: 17 on export side; 44 on import side

Key features of the draft Regional Arrangement on the Facilitation of Cross-Border Paperless Trade 29 A set of Principles on which to base future cross-border paperless trade implementation efforts. A multi-layered institutional arrangement as an operating platform. A comprehensive action plan (to be developed jointly by the signatories): The collective implementation of the action plan is expected to result in the emergence of practical standardized solutions and protocols for cross-border paperless trade. Action plan would include development of: technical and legal measures, detailed actions for designing pilot projects and subsequent actual projects, capacity building support and information and experience sharing activities among members, etc.

Afghanistan Azerbaijan Bangladesh Bhutan Cambodia China India Indonesia Japan Lao PDR Malaysia Maldives Mongolia Nepal Philippines Republic of Korea Russian Federation Sri Lanka Thailand Uzbekistan Viet Nam Key Challenges to trade facilitation and paperless trade implementation Lack of coordination between government agencies 3 3 3 1 1 2 3 2 1 3 2 3 2 2 1 Lack of political will 3 1 3 2 2 1 1 1 No clearly designated lead agency 3 2 2 2 1 2 Financial constraints 1 1 1 1 1 3 1 1 2 Limited human resource capacity 2 1 2 2 2 3 3 2 3 3 3 3 Others 1 1 1 Note: 1 indicates the most challenging factor Source: ESCAP 2013-14 Survey