Capacity building to improve trade facilitation. Prepared by the Commission on Customs & Trade Regulations

Transcription

1 International Chamber of Commerce The world business organization Policy Statement Capacity building to improve trade facilitation Prepared by the Commission on Customs & Trade Regulations Introduction Business as well as governments and international organizations have been involved in capacity building related to cross border transactions and customs issues for some time. A large proportion of the funding and technical assistance has been undertaken in the form of isolated projects and not part of a coherent improvement process using recognized best practices. As a result, improvements in the management and control of international trade have not progressed as much as might have been expected, considering the resources that have been applied to capacity building. As new focus and new resources are now being brought to this issue, the International Chamber of Commerce (ICC) considers it timely to review the essential elements to ensure positive results. Capacity building to improve trade facilitation in cross-border transactions is currently commanding a higher priority in response to a number of reinforcing developments: the World Trade Organization (WTO) Doha Development Agenda commits WTO members to ensuring adequate technical assistance and support for capacity building in this area, which is part of the broader commitment to technical assistance and capacity building for trade-related purposes in this negotiation; the World Bank has recognized that trade facilitation is important to achieve trade benefits that address the Bank s objective of reducing world poverty; the World Customs Organization (WCO) has identified capacity building as an important component to improve the security and facilitation of the goods supply chain; capacity building will be needed to implement the WCO s revised Kyoto Convention to simplify customs procedures; WTO is already coordinating technical assistance to improve implementation of the WTO Valuation Agreement; there is emphasis on trade facilitation capacity building in various regional initiatives such as the Asia Pacific Economic Cooperation (APEC), Free Trade Area of the Americas (FTAA) and Southeast Europe. ICC support for capacity building in trade facilitation International Chamber of Commerce 38, Cours Albert 1er, Paris, France Telephone Fax Web site icc@iccwbo.org

2 ICC, on behalf of its member companies, is already on record as supporting the need for capacity building related to many of these initiatives. In its policy statement on a WTO agreement on trade facilitation of April 2003, ICC said that capacity building is vital for countries unable to finance improvements in border management. ICC called for inclusion of capacity building commitments with designated funding in the negotiations on a WTO agreement on trade facilitation. ICC has also supported capacity building and technical assistance to improve the capacity of developing countries to detect and prosecute valuation fraud as they implement the WTO Valuation Agreement. The updated ICC Customs Guidelines, which now include Explanatory Notes, can be an important tool for assessment and management of capacity building initiatives (see attached Annex). Points of concern to business To improve the efficiency of capacity building efforts and to avoid waste and duplication, ICC has identified several challenges for these renewed efforts: Co-ordination The piecemeal approach to capacity building that has prevailed in the past is no longer acceptable. Governments and international organizations responsible for the disbursement of funds and technical resources must adopt a coherent approach to capacity building, which ensures that programmes are based on agreed best practices, designed to suit the specific needs of individual recipient countries and are not a short term stopgap measure, but are instead aimed at producing sustainable benefits. Co-ordination must be achieved through a leadership role taken by one of the relevant international organizations or developed between them. ICC calls on donor governments and institutions to vastly improve the coordination of assistance elements to ensure efficient use of resources while minimizing duplication and maximizing synergies. Coordination should take place in a partnership with all key stakeholders, including donor governments, recipient governments, and the private sector. Sustained efforts and durable results A primary requirement of capacity building is that it should develop a sustainable capability to manage international transactions more effectively. One key to sustainable results is to ensure that Customs personnel understand the need for and are committed to lasting improvements in Customs performance. Building management capacity Though detailed knowledge of trade regulations and customs law is important, the overall organizational management process is equally vital. Development of efficient and effective management has to be one of the highest priorities for capacity building. Skills to manage organizational change are essential for sustained efforts and durable results. Common standards Given the large number of active donor organizations and consultants involved in renewed efforts, it will be critical to maximize the promotion of common standards, compatible practices and interoperability. Donors should provide common training modules that are politically neutral

3 Technical training should reinforce global standards, not national or regional variations. The WCO is a key engine of common standards for Customs practices, for example with its revised Kyoto Convention for Harmonization and Simplification of Customs Practices. Other donors should help promote these and other international standards. A center that collects, collates and analyses best practices related to the management of the international supply chain would be of immeasurable value for all concerned with international trade. The ICC Guidelines embody the standard elements of a modern Customs authority sought by business. In this regard, ICC supports the establishment of permanent regional training centers modeled on the WTO s prototype on regional trade policy training courses in Kenya and Morocco. Combined with distance learning technologies, such centers would bolster both the sustainability and the uniformity of training. One critical area is the need for interoperability of electronic systems (as stated in the ICC policy statement on security and trade facilitation of November 2002). Adaptation to specific needs Commitment to capacity building should be based on individual member needs and not just limited to training packages. Efforts should take due regard of the infrastructure development of countries and build both capability and competence in a way that will lead to sustainable development. Holistic approach Capacity building should not be an isolated activity. Effective and sustained improvement requires a holistic approach to the modernization and overall management of the trading process. For example, it is of little value improving the legal basis of customs regulations if the judicial system is not effective. Similarly, release of goods in advance of final settlement of duty obligations is not possible where a country s financial system does not accommodate an adequate guarantor payment. Transparency and measurement Transparency is key to the improvement of any management process. It is crucial to ensure that capacity building projects result in a measurable improvement in the border management process and more efficient movement of goods across national borders. Before a capacity building project is undertaken, there should be a pre-assessment of the state of the border management process. That assessment should be followed by subsequent assessments during the process and after it has been completed. The ICC Guidelines can be used as one tool for a general pre-assessment. Measurements are needed of both the before and after process so that improvements can be clearly quantified and sustained. Programmes should include targets for completion and builtin measuring systems. Monitoring systems should be maintained after completion to serve as alerts to any deterioration of capacity. Measurement should be applied to all elements of the border transaction including port facilities and other agencies beyond Customs authorities. This is a critical diagnostic tool to avoid expensive investment in infrastructure that does not address the facilitation obstacles lodged elsewhere, as for example in a real case of port expansion documented in the ICC policy statement "Trade liberalization, foreign direct investment and customs modernization: a virtuous - 3 -

4 circle" of October Pre-assessment is also necessary to check the likely viability of capacity building programmes, and to identify the critical elements and priority issues in each case to permit the adaptation to individual needs. Capacity building should improve the efficiency of the supply chain, enabling cost effective control and revenue collection, lower inventory levels, and ensure a predictable and secure supply. Building confidence Consistent with the above concerns, WTO members should explore creative ways to build confidence in the benefits of trade facilitation through targeted capacity building and technical assistance. For example, WTO members could develop comprehensive capacity building and technical assistance programmes for selected test countries, covering trade facilitation, judicial reform, corruption, and other matters. The experience under these programmes, as demonstrated using measurable benchmarks, could then be used to build members confidence in trade facilitation generally and in developing effective capacity building and technical assistance measures for other countries in the future. Partnership with the private sector Private sector involvement can help ensure that new capacity actually does improve facilitation and smooth border clearance, which is the primary trade facilitation objective. Business can make positive contributions toward this goal, including those outlined below. Business contribution to capacity building International business is very supportive of the process of capacity building. The competitive environment in which enterprises operate ensures that they constantly seek improvements in the supply chain process. They can readily measure the impact of improvements and deficiencies in the management of cross border transactions

5 Companies can contribute significantly in a number of areas that would be of real benefit to the capacity building programme: contribute to assessment of capacity needs, in conjuction with other assessment techniques such as measurement and peer review; assist in establishing an effective coordinated funding process for capacity building and the standards/best practices that should be adopted; provide expertise in the development of free market economies, private enterprise and in supply chain management; provide expertise in international law; provide expertise in managing border transactions; share real experience in the management of change; assist in the use of measurement to improve performance. A framework for capacity building must be agreed to amongst the major donors and likely recipients at the same time while a WTO agreement on trade facilitation is being implemented. Even before the WTO agreement is implemented, work must start on a coordinated approach to funding and managing capacity building. Annex: ICC Customs Guidelines (available at: Document rev.2 Final 17 September 2003 ****** - 5 -

6 PROGRESS ON THE TRADE FACILITATION ACTION PLAN (TFAP) AND ASEM MEMBERS EFFORTS TOWARDS TRADE FACILITATION : ASIAN PRIVATE SECTOR S VIEW 1 Presented by : SUGIHONO KADARISMAN - Executive Director, Asia Europe Business Forum (AEBF), Indonesia - Executive Director, International Chamber of Commerce (ICC), Indonesian National Committee At the Third ASEM Customs Seminar on Trade Simplification and Harmonization Customs Procedures Jakarta, 8 9 December Background a. The Trade Facilitation Action Plan is one of the two economic pillars of the cooperation between Asia and Europe, referred to as ASEM (Asia Europe Meeting), involving 15 European Union Countries (EU) and 10 Asian Countries (7 ASEAN countries, Cina, Japan and Korea). The ASEM TFAP is meant to better facilitate the flow of goods and enhance trade between the two regions. b. The TFAP is mainly aimed at reducing non-tariff barriers, increasing transparency and promoting trade opportunities between the two regions while complementing and considering the work being carried out in bilateral and multilateral fora (such as the WTO). c. The TFAP is not a forum for negotiations, but it contributes to the goal of promoting, facilitating and liberalizing trade between Asia and Europe by providing a venue for exchange of views and work on the implementation of commonly agreed deliverables. d. The TFAP was created during the second Summit meeting of ASEM Heads of Governments in Its implementation is supervised by the ASEM Senior Officials Meeting on Trade and Investment (SOMTI) in close counterparting for inputs with the AEBF (Asia Europe Business Forum), which was established by private sector in the two regions earlier in the year The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB) or its Board of Directors or the governments they represent. ADB makes no representation concerning and does not guarantee the source originality, accuracy, completeness, or reliability of any statement, information, data, finding, advice, opinion, or views presented.

7 2 2. Specific priority areas of TFAP and their goals a. Basically, the TFAP priority areas which were decided by ASEM through its Economic Minister s Meeting (EMM) in 1998 has not been changed until today. These priority areas are : 1). Customs Procedures 2). Standards and Conformity Assessment 3). Public Procurement 4). Quarantine and SPS Procedures 5). Intellectual Property Rights (IPR) 6). Mobility of Business People 7). E-Commerce 8). Other trade activities Working Groups (WGs) were formed by the EMM to deal with each of these priority areas. The work of the Working Groups is supervised by the SOMTI. Several Working Groups which have been active in their meetings are the WG on Customs Procedures, WG on Standards and Conformity Assessment, WG on Quarantine and SPS Procedures, WG on IPR and WG on E-Commerce. b. Goals set in the TFAP priority areas In support to the existing and/or on-going cooperation, ASEM through its EMM has set the goals in each of these areas, as follows : 1). Customs Procedures The ASEM-TFAP is aimed at promoting simplification, harmonization and transparency in customs procedures, such as : a). Accelerated alignment and harmonization of tariff nomenclatures using WTO and WCO standards. b). Accelerated implementation of obligations with respect to customs valuation procedures. c). Standardized and simplified documentation, including if possible, paperless systems. d). Transparency of customs regulations and procedures. e). Collection and dissemination of information on ASEM partners respective rules of origin. f). Exploration of possible common position of ASEM partners in WTO and WCO (where appropriate). 2). Standards and Conformity Assessment

8 3 The ASEM-TFAP is aimed at closer cooperation among standards, testing, certification and accreditation bodies, particularly with regard to : a). Exchange of information among standards bodies and establishing national contact points as appropriate. b). Facilitating the alignment of domestic standards of ASEM partners with international standards. c). Simplification and transparency in standards, certification information and procedures, and drawing on electronic media where appropriate. d). Exploring possible common positions amongst ASEM partners, where appropriate, in relation to the work of international standards bodies (such as ISO and IEC). e). Preparing for eventual progress towards mutual recognition agreements, where appropriate. f). Technical and institutional capacity-building relating to standards, testing and certification. 3). Public Procurement In addition to the on-going works in other fora, the ASEM-TFAP aims at promoting transparency within the public procurement domain at a practical level for example through exchange of information on procedures, statistics and opportunities. 4). Quarantine and SPS Procedures In addition to the on-going works in other fora, the ASEM-TFAP would inter alia intensify efforts in : a). Simplification and rasionalization in procedures and documentation, with reference to the international best practices. b). Transparency through the timely and accessible information availability and drawing where appropriate, on electronic media. 5). Intellectual Property Rights (IPR) In addition to the on-going works in other fora, the ASEM-TFAP is aimed at promoting a broad-ranging dialogue among ASEM partners on IPR-related issues, thus encouraging an enhanced understanding of the application of intellectual property rules in both the public and the business sector. 6). Mobility of Business People The ASEM-TFAP is aimed at identifying concerns of the private sector with respect to formalities for business travel and temporary stay, which will consecutively be

9 4 conveyed to ASEM partners with a view to better facilitating direct business-tobusiness contact between the two regions. 7). E-Commerce With a view of enhancing the growth of e-commerce transactions between Asia and Europe, the ASEM-TFAP is aimed at identifying the existing regulations and standards on e-commerce of ASEM partners, followed by making cooperative efforts towards reducing the differences among these regulations and standards which hinder transactions between the two regions, and examining the possibility of establishing common standards and norms for Asia and Europe. 8). Other trade activities In addition to the on-going works in other fora, the ASEM-TFAP is also aimed at : a). Promoting understanding among partners, in both the public and private sector, on the manner in which market access in the distribution sector can be best enhanced. b). Creating an ASEM database as virtual market place, providing the business community with easy access to comprehensive/up-to-date information on legal and administrative trade regimes of ASEM partners, business opportunities and market trends. 3. TFAP Deliverables a. In order that efforts to achieve these (general) goals can be made in a more concrete way, and with measurable results, ASEM through its EMM has decided to set deliverable goals in the pursuit of these goals. The deliverables encompass all priority areas and set on bi-annual basis, the latest being the on-going set of deliverables. b. Progress in the achievement of the deliverables are addressed in the respective TFAP Working Groups, reviewed and consolidated among ASEM partners during SOMTI meetings, and reported to the EMM. c. Based on the assessment on the progress, and taking into account the need for continuity in making efforts, new bi-annual deliverables are set. Next year the deliverables will be decided. d. TFAP Deliverables in Customs Procedures The TFAP Deliverables in Customs Procedures, are inter-alia : 1). Implementation of HS 2002 version tariff nomenclature in all Customs Administrations.

10 5 2). Continue discussions on customs cooperation and mutual administrative assistance agreements between the EU and Asian ASEM partners, with a view to starting negotiations. 3). Enhancing transparency through improving/updating of ASEM Customs Database concerning customs duties & nomenclature, tariff quotas, import & export procedures/formalities, rules of origin, customs legislation, etc. 4). Organizing seminars on key issues such as risk analysis, EDI, paperless systems and speeding-up of customs handling, etc. 5). Improving predictability through publication and clarification upon request of customs regulations and procedures in force, adoption of modern customs techniques such as risk management, pre-arrival declaration and post clearance audit as well as encouragement of ratification of the revised Kyoto Convention by ASEM partners who have not yet done so. 6). Improving consistency in interpretation of rules. 7). Promoting standardized and simplified documentation taking into account the existing international standards (including UN/EDIFACT) and the ongoing discussions in various international fora, and also launching an ASEM study for harmonizing elements on Customs Clearance Procedures based on G7 data set. 8). Providing one stop shop services for cargo clearance procedures (Single Window) within each ASEM member country, where possible. 9). Developing a Code of Conduct on Integrity by each partner, taking into account the diversity of ASEM partners. 10). Formulating, where appropriate, of common positions of ASEM partners in WTO and WCO. 11). Taking into account resources available, and providing possible technical assistance/training programs related to customs simplified procedures that will contribute to ASEM expertise and experience. 4. Progress of the TFAP a. Report by the SOMTI SOMTI reported to the EMM that an encouraging progress has been made in achieving the 11-deliverable goals among the ASEM member countries. Although the achievement differ from one member country to another, and also differ from one deliverable area to another, in total the progress is considered to be significant. Notable achievements in the deliverables are seen in the following areas : 1). Application of the HS-2002 Tariff-Nomenclature system by almost all ASEM partners (to improve and accelerate alignment and harmonization of tariffnomenclature). 2). Publication/Database on Customs Regulations & Procedures (to promote transparency). 3). Adoption of Modern Customs Techniques as recommended in the revised Kyoto Convention (to improve predictability). 4). Consistency in Interpretation of Rules (for uniform application of Customs rules).

11 6 5). Adoption of the UN/EDIFACT (to promote standardized and simplified documentation). 6). Code of Conduct on Integrity (to enhance the level of integrity of Customs Officials). 7). Holding ASEM Seminars on Simplification and Harmonization of Customs procedures on a more regular basis (to increase awareness and deepen mutual understanding on the need to simplify and harmonize customs rules & regulations). b Deliverables Based on these positive achievements SOMTI submitted a new set of deliverables for period of (which is on-going presently). At their meeting in Copenhagen (September 2002) the EMM approved it. Basically, the TFAP deliverables are continuation of the previous ones with more depth in setting the targets in the respective deliverables. 5. A Private Sector s view on the TFAP and its progress a. In the following subparagraphs a private sector s view will be made from the perspective of Asian developing member countries of ASEM (which almost represents ASEAN). An assessment is made on the effectiveness of TFAP with its progress, with respect to their interest. The TFAP is viewed from two points of view, namely : 1). The TFAP as merely a set of facilitation measures to enable a smoother flow of traded goods between Asia and Europe in the framework of ASEM, based on the existing trade regime of rules and regulations of respective member countries. 2). The TFAP as a set of facilitation measures to enhance trade between Asia and Europe in the framework of ASEM. b. TFAP to enable a smooth flow of traded goods 1). The ASEM TFAP with its deliverables is in effect a set of measures taken by ASEM governments to promote understanding and cooperation among themselves with respect to the need for removing impediments in the flow of traded goods through harmonizing the implementation of respective countries existing rules and regulations. This harmonization efforts encompasses activities in customs procedures, standards & conformity assessment, quarantine and SPS procedures (sanitary & pythosanitary), IPR (intellectual property rights), mobility of business people, government procurement and e-commerce. TFAP basically serves as a venue for exchanging information and persuasion among all ASEM governments on their activities in these respective areas. 2). From business community s perspective, TFAP as a set of measures taken voluntarily by all ASEM governments has been so far quite successful in making progress. The EU and all Asian member countries have shown seriousness in their stride for achieving concrete milestones in the TFAP implementation. TFAP could contribute

12 7 with greater effectiveness if its implementation by ASEM governments is accompanied by : a). Benchmarking set on each of the deliverables for member countries to work on with a clear-cut objective, and with a certain timeframe to accomplish it. b). Socialization of the TFAP to the business community in order to make them aware of the facilitations that it provides, which they can beneficially and readily make use of. Up to date, as a matter of fact, a great deal of business people are still unaware of the TFAP existence. 3). Field problems. While progress has been made, and the TFAP goals are well understood for their merits by business community, in reality however, implementation discrepancies are still at large. The spirit of trade facilitation as dictated by the TFAP is often not shown on the field. As an example, the following are just two unpleasant cases experienced by Asian business people when TFAP was to be implemented, hampering and inflicting losses to their trade business a). Export to Asia In starting to implement paperless customs the Customs Office in one of ASEAN countries decided that by a certain date in 2003 all importers must have been registered and given special registration number at the Customs Office headquarters office. This is for the sake of future administrative orderness in customs clearance through electronic data processing (in line with the TFAP). This decision is fine and quite welcome by the business community. As a consequence however, suddenly starting from that particular date all customs offices at international sea-ports in the country ceased processing clearance for those cargo imported by companies having no such registration number yet, while in the mean time their cargoes had been unloaded to the container terminal undergoing and/or queuing for customs clearance. For further process the importing companies were first required to apply for registration number in the Customs Office headquarters. Only when the registration number has appeared in the computer s screen at the local customs office, clearance could be resumed. This period of waiting took almost a month, and the companies had to pay significant amount of warehousing excess charges, jeopardizing their cashflows and business plans. On such cases, business community would expect for more flexibility and business friendly attitude on the part of customs officials during this procedure transition period. New regulations like that should not have been applied indiscriminatively, but rather, selectively only to those cargoes which are waiting for shipment at the exporting country so that compliance to the new regulation can be carried out with sufficient preparation time. Clearly this is an issue of conduct on integrity on the part of local customs officials which TFAP is trying to deal with, but it has not been progressing as expected in that particular country.

13 8 b). Export to Europe Exports of food products to Europe from Asian developing country members of ASEM is experiencing great difficulty today. These exports had been going on relatively smooth for many years when they could deal directly with the national food authority of the EU respective countries. But since January 2003 the EU Commission has effectively applied a one stop shop for the clearance of imported food products into EU countries through the Single EU Food Authority. While the idea behing this measure is well understood and welcome (as an effort to better facilitate business in line with TFAP), i.e. to uniformize Standards & Conformity Assessment and Sanitary & SPS Procedures on incoming food products, the quick change from normalcy to this new system is quite shocking to the Asian exporters. It would take a great deal of time and costs to adjust their compliance to the new rules. In fact, many of the exporters would require extensive capacity building programs first before they are able to comply with the new EU Food Authority rules. While they are still wondering about what to do and trying to consolidate themselves, in the mean time their European markets would certainly have been lost. On such cases, these Asian exporters would expect a flexibility and pro-business attitude of the EU Food Authority in applying their new rules, and with cooperation spirit extend their concrete technical assistance & financial support for the necessary capacity building projects in Asia. b. TFAP to enhance trade 1). To enable smoother flows of traded goods between Asia and Europe is not the ultimate goal of promoting trade between the two regions. The existing TFAP which is aimed only at facilitating the flow of traded goods is in effect minor in its role with respect to the pursuit of the real enhancement of trade between the two regions. 2). TFAP will be much more meaningful to the business community if it touches the upstream trade issues and policies. Three urgent issues that need to be addressed are : a). Product standards - EU Product standards are in most cases set beyond common international standards. Although the associated WTO Agreements refer to these commonly accepted international standards, but because of the too broadly defined terms in the Agreement articles, such higher standards enforced by the EU for imported products would not be considered as a violation to the WTO rules. Meanwhile, the EU is presently also linking all product standards with environment, animal welfare and labour issues. Product

14 9 traceability linked to these issues are now a mandatory requirement for certification on which very high EU qualification standards are applied. - Since to meet these strict standards by Asian developing countries exporters would be very costly and require a high degree of technical sophistication, which could not be acquired in a short time ahead, clearly the new EU measures constitute a serious non-tariff barrier to the Asian exporters. Conducting such Standards Conformance & Assessment and Sanitary & SPS procedures is a routine matter with the EU, thus their products would find no difficulty in entering the Asian market. But on the contrary, conducting similar routine would be very costly to Asian developing countries exporters, thus their products would find great difficulty and are no longer competitive in entering the EU market. As a consequence, this capacity gap would quickly lead to an unbalanced trade between the two regions, only to the advantage to the EU and disadvantage to Asian developing countries. While Asian exporters are still wondering on what to do to cope with these issues, the EU Commission has lately also been poised to follow steps with the Americans concerning bio-terrorism. If this should materialize, obviously the situation would become even worse for exporters from Asian developing countries. b). Capacity building and Mutual Recognition of Standards - Of course, the customer is king, and the king here is the EU market. Indeed, the very high EU market standards are not to be questioned, and the EU Commission is actually just responding to that demand. This is fully understandable, and thus the chance is remote that the EU standards could be compromized for the sake of enhancing international trade. Then, how to go about enhancing trade between Asia and Europe? There is no other way than to meet these high standards. Therefore capacity building is the way to go for Asian developing countries s exporters; and for that the EU should provide technical assistance to them. Technical assistance programs should be launched. However they should not be conducted as general education/training packages, but rather to the specific needs of the individual country members. The training is aimed at practical level where actual field guidance by EU inspectors are given to enable their products eventually qualify for export to Europe. - At this juncture, it is worth to note the voice of the International Chamber of Commerce (ICC), the world business organization, through its Policy Statement on Capacity Building to improve trade facilitation (attached). The background of this ICC Policy Statement is that business as well as governments and international organizations are recognized to have been involved in capacity building related to cross border transactions and customs issues for some time. A large proportion of the funding and technical assistance however, has been undertaken in the form of isolated

15 10 projects and not part of a coherent improvement process using recognized best practices. As a result, improvements in the management and control of international trade have not progressed as much as might have been expected, considering the resources that have been applied to capacity building. As new focus and new resources are now being brought to this issue, the ICC considers it timely to review the essential elements to ensure positive results. - To improve efficiency in capacity building efforts and to avoid waste and duplication, several points of concern to business are identified : Co-ordination (not piecemeal approach) Sustained efforts and durable results Building management capacity Common standards Adaption to specific needs Holistic approach Transparency and measurement Building confidence Partnership with the private sector (see attached ICC document for further elaboration). - Effective capacity building efforts should eventually lead to the adoption of a Mutual Recognition Arrangement (MRA) between Asian and EU Product Standards. Both Asian and EU relevant authorities, such as the Customs Agencies should honour to each other their work in passing products using common standards/best practices and certifications. c). Mobility of business people (Immigration) Today, Asian businessmen face greater difficulties in their business travelling to Europe. While in the past granting of entry visa to European Schengen countries and other EU member countries took not more than three days, now it takes between 14 to 30 days, and with much more elaborate procedures. This development is clearly in contradiction to the TFAP, where mobility of business people is one of its prioritized goals. Obviously this development also constitutes a significant impediment to promoting trade between the two regions. Fully realizing the need for more vigilance and tighter security measures after the September terrorist attack, the EU should somehow device an appropriate processing system of security scrutiny, so that simplicity and speed in granting travel visas can be brought back to levels of that before September Jakarta, 19 November 2003

16 International Chamber of Commerce The world business organization Policy Statement ICC recommendations for a WTO agreement on trade facilitation Prepared by the Commission on Customs and Trade Regulations ICC is actively addressing a wide range of international issues with the aim of improving processes associated with cross border trade. The 1996 WTO Singapore ministerial conference recognized the benefit of addressing trade facilitation within the WTO, and the 2001 Doha ministerial conference agreed that this topic should be considered for a WTO rules-based agreement with particular reference to the modernization of Articles V, VIII and X of the GATT Trade Facilitation ICC s preferred definition of trade facilitation focuses on improvements in the efficiency of the processes associated with trading in goods across national borders. This requires the adoption of a comprehensive and integrated approach to simplifying and reducing the cost of international trade transactions, and ensuring that all relevant activities take place in an efficient, transparent, and predictable manner, based on internationally accepted norms, standards and best practices. Trade facilitation is not just a matter of improving customs procedures but should also target the growing range of controls being implemented at national borders by other authorities. Procedures associated with agricultural products and security are just two areas where many new controls are being implemented and where it is imperative that a rational, transparent and standardized approach be adopted. ICC s aim is to encourage the establishment of a trade facilitation agreement that benefits all WTO Members through the establishment of mutually agreed rules covering trade procedures that improve the management process of traded goods as they cross national borders. International transactions sometimes span a series of countries, some not necessarily directly concerned with the manufacture or use of the goods. Specific issues may arise through the goods physical transit of intervening territories and the availability or not of arrangements linking initial export and final import. Facilitation of trade therefore concerns not only the countries directly involved in a transaction but also others indirectly linked to the transaction. International Chamber of Commerce 38, Cours Albert 1er, Paris, France Telephone Fax Web site icc@iccwbo.org

17 An important role for an International Trade Facilitation Agreement (ITFA) will be to define the responsibilities of governments involved in complex transactions covering export, transit, and final import of the goods. Benefits ICC is convinced that an ITFA will deliver very significant benefits to all Members -- especially those that suffer from commercially damaging delay or lack of predictability due to inefficient border or transit procedures. The more specific benefits will be: more gross revenue collection, more cost effective revenue collection, more effective detection of non-compliance, improved security of international transactions through improved control of high risk transactions, more efficient and correct application of regulations, thereby ensuring that any differential treatment of traders is based on objective criteria, more predictable and faster movement of goods, more efficient transit procedures, increased trade, increased revenue, and improved economic performance, and more efficient and predictable border procedures encouraging increased foreign direct investment. The bottom line for Members is increased trade, increased foreign direct investment, enhanced competitiveness, overall reduction in costs, and enhanced government revenues. (For more details on benefits see the ICC statement Trade liberalization, foreign direct investment and customs modernization: a virtuous circle 8 October 1999.) The largest potential for improvement in trade facilitation exists in, and therefore the main potential beneficiaries are generally likely to be, developing countries. An ITFA will augment the capacity of developing countries to handle and grow their share of international trade, not least in trade with other developing countries. Increased efficiency will enable higher volumes of both imports and exports to be managed with the same level of resources, resulting in higher compliance and lower costs for both governments and business. Scope of an agreement The WTO ministerial conference in Cancún in September 2003 offers the opportunity to make a key change in the effective border management of international trade. Not only is there huge scope for improving the efficiency of the current international trade process but there is also a compelling need to improve customs efficiency to deal with disciplines covering emerging and potentially costly new areas of control, such as security issues and agricultural goods. For example, modern customs administrations are an operational necessity to ensure that security and trade facilitation objectives are integrated in ways that maintain both objectives. (See also ICC Policy Statement on Supply Chain Security, 18 November 2002.) - 2 -

18 Binding commitments are essential because only the WTO can ensure the political support required for durable improvements in global trade facilitation. ICC believes that a WTO agreement covering trade facilitation should encompass the following principles: rules should have sufficient impact to cause a measurable improvement in trade facilitation; measurement of the improvement in trade facilitation, for example through the measurement of release times, is in the interest of all WTO members as it will quantify improvement and help ensure the sustainability of improved border procedures; rules should set global standards in facilitation, encourage sustainable progress, and assist in the progressive adoption of those standards; rules should be non-discriminatory, and must be based on objective criteria; rules should not undermine the efficiency and reliability of traders and transport or impose unnecessary costs; implementation of a rules-based trade facilitation agreement must be linked to increased overall economic benefits and capacity building to help fund and enable sustainable improvements in those countries with the greatest need; and implementation of the rules should be capable of objective assessment and enforcement through the WTO dispute settlement process and policy review mechanism. In particular, ICC recommends that the WTO seek to improve efficiency and facilitation with reference to the trade facilitation objectives outlined in the attached Annex. Securing commitment For agreement to be secured on an approach that is sufficiently ambitious and comprehensive to deliver the benefits described, it is essential to take account of the needs and capabilities of all WTO members. All members should sign up to a significant set of core commitments that will bring about progressive improvements in international trade. There should be a commitment to assess facilitation through the measurement of release times and to reduce them over a period of time. This approach allows improvements to be made within the structure of the existing processes and legal systems. ICC recognizes that an ITFA should acknowledge the state of development and ability of some WTO member countries to implement the agreement. In such cases it may be necessary to make appropriate accommodation both in transition time and support to ensure that all member countries are capable of implementing and benefiting fully from the agreement. Capacity building In line with the commitment made in Doha to establish this round as the development round, capacity building for those countries unable to finance improved border management is vital

19 Capacity building should not just consist of a package of training. It must be a project that takes due regard of the infrastructure development of countries and builds both capability and competence in a way that will lead to sustainable improvement. ICC urges that the agreement include commitments to capacity building based on member needs, with designated funding and WTO coordination of donor activity to ensure efficiency and common standards. Business very much supports the process of capacity building and will work energetically together with international organisations and local administrations to help manage the process of change and contribute expertise where required. To ensure that capacity really produces the benefits on a sustainable basis, a system of measuring the benefits achieved through this process should be implemented. Conclusions A trade facilitation agreement is fundamental to the establishment of an improved and more efficient management process for international trade in goods on a global basis. All WTO member countries will benefit from it -- especially those burdened with the least efficient trading processes, either through infrastructure or managerial limitations or because of procedural barriers being imposed by trading partners. ICC is committed to assisting the WTO and its member countries to realize the full benefits of international trade through a trade facilitation agreement that encourages improved border management and discourages both inefficient and artificially complex or burdensome border procedures. To realize these benefits for all parties, WTO negotiations should be launched at the upcoming Cancún ministerial regardless of the decisions made on the other Singapore Issues. In view of the high level of mutual benefits for all parties, it will be in their interest to begin implementing eventual results without waiting for the formal conclusion of the Doha Development Round. Document n 104/8 Final 15 April 2003 AS/am - 4 -

20 Annex: general ICC trade facilitation objectives transparent conduct by customs and other government agencies, with easily accessible procedures and regulations, including an open, independent and efficient appeal process of customs decisions open to all importers; an authorization for legitimate traders, allowing operators to cross national borders with minimal interference, through the use of pre-arrival declarations and post release audits, enabling Customs to concentrate their resources on the key target of illegitimate trade; the measurement of release time at the frontier and, the introduction of targets to encourage governments to reduce release time; use of modern customs techniques such as risk assessment and profiling, enabling administrations to make direct resources gains, while reducing the time for legitimate trade to cross borders; utilization of commercial systems for customs controls including sophisticated information technologies, the internet and integrated information systems more rapidly adaptable to business and government needs than independent customs information technology systems; adoption and implementation of international standards in the trade transaction process such as those of the United Nations, WCO and ICC; global automation to create a paperless environment, with data transmitted and processed by Electronic Data Interchange (EDI) or over the internet; administration of official frontier controls by a single agency, preferably customs; consider where appropriate, a Seamless Integrated Transaction where a core set of identification control data can be generated, submitted and processed at any time during the transaction, to avoid duplication of the traditionally separate export and import procedures