Global TFA Implementation CAI Meeting, FIATA SEPTEMBER 2018, Delhi
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1 Global TFA Implementation CAI Meeting, FIATA SEPTEMBER 2018, Delhi Ankur Huria Trade Facilitation, Logistics and Regional Integration World Bank Group
2 TRADE FACILITATION LEADS TO BIG GLOBAL GAINS US$110 billion Full implementation of TFA: Benefits US$ 210 billion/year Through reductions in time spent at customs Adoption of e-documentation for air cargo: = US$12 billion annual savings through reduced paperwork related delays (70-80%) [Hillberry & Zhang 2015] [WEF, WB and Bain & Company 2013] Reduction of supply chain barriers: If all countries reduce halfway to global best practice (Singapore) = + 4.7% Global GDP (US$ 2.6 trillion) +14.5% World Trade (US$ 1.6 trillion) (WEF 2103) Reduction of delay prior to shipment: + 1 day = - 1% trade [Djankov, Freund, & Pham 2006]
3 ROLE OF THE WORLD BANK Support of trade facilitation, logistics & regional integration Software Reengineering of systems and procedures, reduction of red tape, improvements in the competitiveness of transport and logistics markets, institutional development and coordination of trade-related agencies, and increasing the professionalism of logistics service providers. Hardware Trade-supporting infrastructure investments such as roads, ports, cargo handling facilities, and ICT systems. Maximize economic impact (e.g. complementing cross-border road projects with reforms to streamline border clearance processes) WBG projects directly cut trade costs and facilitate trade by: improving cooperation across border management agencies, harmonizing procedures, and fostering smoother and more cost-effective logistics.
4 TRADE FACILITATION AGREEMENT Section I Technical Measures Section II Special and Differential Treatment Provisions For Developing Country Members and Leastdeveloped Country Members Section III Institutional Arrangements and Final Provisions Article 1-12 Article Article 23-24
5 KEY TECHNICAL TFA ARTICLES Transparency Articles Publication and availability of information 2. Opportunity to comment, information before entry into force and consultation 3. Advance rulings 4. Appeal or review procedures 5. Other measures to enhance impartiality, non-discrimination and transparency 6. Disciplines on fees and charges imposed on or in connection with importation or exportation Concerning fees, charges & formalities Articles Release and clearance of goods 8. Border agency cooperation 9. Movement of goods under customs control intended for import 10. Formalities connected with importation and exportation and transit 11. Freedom of transit 12. Customs cooperation Institutional Arrangement and Final Provisions 23. National Trade Facilitation Committee
6 OBJECTIVE & BENEFITS OF THE WTO TFA Objectives Benefits for Traders Benefits for Government Transparency + Fairness Predictability Reduced time/costs Creation of mechanism of accountability for the government Better compliance More informed decisions Better Governance Reduced costs Reduced delays Reduced complexity Better compliance More effective government More efficient government Modernized Border Procedures and Controls Reduce clearance times and costs Align with modern business practices More effective government
7 TAILORED SEQUENCING PLAN TO FIT SPECIFIC CONTEXT AND NATIONAL PRIORITIES (Article 8) Border agency coordination 1.1 Publication (Publication and availability of information) National Committee on Trade Facilitation 10.1 Formalities and Documentation Requirements 1.2 Information Available Through Internet (Publication and availability of information) 1.3 Enquiry Points (Publication and availability of information) 2.1 Opportunity to Comment and Information before Entry into Force 2.2 Consultations 10.1 Formalities and Documentation Requirements Automation (10.4 Single Window)
8 SOME MEASURES ARE PREREQUISITES FOR OTHERS DETENTION FORMALITIES AND DOC REQ'S ADVANCE RULINGS SEPARATION FROM RELEASE AUTHORIZED OPERATORS At a technical level, some TFA measures are prerequisites for others they set the stage for other activities, or help to establish the basic building blocks for more complex reforms. REJECTED GOODS POST- CLEARANCE AUDIT RISK MANAGEMENT EXPEDITED SHIPMENTS PRE- ARRIVAL PROCESSING This is the case for key disciplines such as risk management, which have a significant impact on the full and effective implementation of a host of other TFA measures 7 PERISHABLE GOODS
9 COMMON CHALLENGES FOR FULL AND EFFECTIVE IMPLEMENTATION OF THE WTO TFA Prioritization and sequencing of WTO TFA provisions: Building consensus around reform priorities amongst all relevant stakeholders Technical Challenges: A general lack of awareness of processes and procedures exists among traders Mandatory documents and official fees and charges are often not published or made easily accessible Excessive manual processes and outdated legislation Lack of an integrated ICT environment & inefficient logistics Lack of an integrated approach to risk management for border clearance across border agencies Multiple checking of documents and duplication in data entry and recording Long delays at check points
10 COMMON CHALLENGES FOR FULL AND EFFECTIVE IMPLEMENTATION OF THE WTO TFA (II) General understanding and knowledge of the TFA: Multiple interpretations of the TFA Lack of clear understanding of the legal implications of the TFA Not all agencies are up to speed Other Government Agencies (OGAs) not fully integrated into TFA agenda Advocacy work needs to be undertaken to ensure buy-in from all relevant stakeholders Planning reforms: Establishment of Trade Facilitation Committees involving both the private and public sectors can be difficult Challenges exist with selecting activities requiring donor support vs. self-implementation Fumigation with no alerts to traders Non-existent or weak NTFC s
11 MEASURES THAT MAY HELP OVERCOME SOME OBSTACLES Identification of political champions who will ensure and provide confidence in effective Government support across the lifetime of the project Investment in and strengthening of public private dialogue regardless of the country s stage of development. Both kinds of cooperation require multiyear support and creating a culture of trust Establishment of a National Trade Facilitation Committee that builds the basis for public private dialogue at a national level on trade facilitation reforms and provides a formal process for the private sector to be included in any reform agenda Establishment of structured and effective border agency cooperation between Customs, health, quarantine, standards and other border agencies Support for data exchanges that reduce duplicative procedures, support coordinated inspections, set common risk profiles and systems, in a realistic time scale
12 MODERN APPROACH TO BORDER MANAGEMENT WTO TFA ARTICLE 8: BORDER AGENCY COOPERATION Each Member shall ensure that its authorities and agencies responsible for border controls and procedures dealing with the importation, exportation, and transit of goods cooperate with one another and coordinate their activities in order to facilitate trade. Each Member shall, to the extent possible and practicable, cooperate on mutually agreed terms with other Members with whom it shares a common border with a view to coordinating procedures at border crossings to facilitate cross-border trade. Such cooperation and coordination may include: (a) alignment of working days and hours; (b) alignment of procedures and formalities; (c) development and sharing of common facilities; (source: WTO) (d) joint controls; (e) establishment of one stop border post control. The definitions of Coordinated Border Management (CBM) quoted below are taken from the WCO Research Paper No. 2 Coordinated Border Management A concept paper (Aniszewski, June 2009). The term Coordinated Border Management (CBM) refers to a co-ordinated approach by border control agencies, both domestic and international, in the context of seeking greater efficiencies over managing trade and travel flows, while maintaining a balance with compliance requirements. While many organizations refer to this as Integrated Border Management, the World Customs Organization prefers Coordinated Border Management as it gives prominence to the principle of co-ordination of policies, programs and delivery outcomes whilst avoiding any perception of favoring a single solution. (Aniszewski, June 2009, p. 6)
13 OBJECTIVES OF GOVERNMENT AT THE BORDER Source: Accenture
14 SO WHO IS AT THE BORDER? Customs Border Security Animal Health What are their challenges? Food Safety Border Management Plant Protection Differing mandates - Security - Trade facilitation - Revenue - Public health Standards & Quality Control Immigration Resource constraints - Trained personnel - Modern equipment / ICT Maritime, Aviation, Sea & Air Ports Anti Narcotics
15 SO WHAT IS CHANGING AT THE BORDER? Historical Approach Priority on control Reform episodes High levels of physical inspection Focus on goods Focus on identifying non-compliance Limited incentives for compliance One size fits all Limited use of ICT Adversarial relationship with trade Competition between agencies Limited cooperation with neighbors Limited operational statistics Immediate transaction focus Modern Approach Facilitation/control balance Continuous improvement Intervention by exception (risk based) Focus on information Focus on compliance & non-compliance Strong incentives for compliance Flexible solutions for different clients Extensive use of ICT Constructive partnership with trade Collaboration between agencies Extensive cross-border cooperation Clear measures of performance Client compliance and audit focus Fast, fair, predictable and transparent processing and clearance of import, export and transit goods
16 MODERN APPROACH TO BORDER MANAGEMENT WTO TFA -Article 23.2: National Committee on Trade Facilitation Each Member shall establish and/or maintain a national committee on trade facilitation or designate an existing mechanism to facilitate both domestic coordination and implementation of the provisions of this Agreement. [Source: WTO] In brief, the main purpose of the National Trade Facilitation Body (NTFB) is to act as an open forum to promote trade facilitation, facilitate inter-agency coordination, and provide directives on major trade facilitation issues. [source: UN Economic and Social Council - Economic Commission for Europe Committee on Trade] NTFC: Who should participate? Government Agencies Department of Trade/Commerce/Industry All border agencies including Customs Border Police Human, animal and plant health Standards Agencies responsible for monitoring imports or exports (documentary or physical checks) Agencies responsible for international airports, rail or road infrastructure Business Community Chamber of Commerce Brokers and Freight Forwarders Associations Industry associations Representation for SMEs Where ports, airports, clearance terminals or warehousing facilities are privatized representation by trade body or individual senior managers
17 Coordinated Border Management: Key Benefits For Border Agencies For Trading Community Decreased administration & enforcement costs through: Process reengineering to streamline and harmonize procedures Empowering manpower across agencies for shared responsibilities; Coordinated risk management: shared information for shareddecision on high-risk cargo Sharing of non-intrusive inspection equipment and inspection bays: e.g., Integrated check posts and mirror image facilities across borders Decreased compliance costs through streamlined and simplified procedures Increased efficiency in inspection and release of phytosanitary goods Improved quality of services rendered by border agencies Expedited border crossing thorough harmonized physical inspections; improved flow management
18 EXAMPLE OF TRADITIONAL APPROACH: MADAGASCAR Madagascar does not have a formally designated lead border agency or until very recently even an NTFC BENEFITS Each agency intervenes based on legal and regulatory mandate Clear lines of reporting for individual agencies Different agencies can initiate reforms associated with their respective mandates without needing to gain agreement with others. CHALLENGES Numerous agencies present at the border Poor coordination between agencies Ad hoc mechanisms for coordination among agencies on one side and a lack of coherence in managing coordination with those of neighboring country Poor management of traffic flows Duplication of some processes, including data capture Poor accountability for overall border performance Poor maintenance of infrastructure and services
19 Example of Modern approach: Nordic experience of AN OSBP Border cooperation between Norway, Sweden and Finland National border authorities of each country are allowed to provide services and exercise legal powers not only on behalf of their home state, but also that of their neighboring states Checks and formalities are carried out at a single spot As a result of the agreements, customs offices have not been established on both sides of the border Resulting time and cost savings: 10 new customs offices would have had to be opened on the Norwegian side of the border. 100 new customs officers would have had to be employed. Approximately $8 million saved by not investing in new infrastructure and staff Approximately $8 million saved annually in operational costs Approximately $39 million saved annually in additional costs for economic operators, longer waiting time and double stops at the border
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