Workshop on Advancing Interoperability of Single Windows 31 May 1 June 2017 / Cholpon-Ata, Kyrgyzstan Trade Facilitation and Paperless Trade in Eurasian region(eec) : State of Play Yann Duval Chief Trade Facilitation Unit Trade, Investment and Innovation Division United Nations Economic and Social Commission for Asia and the Pacific 1
Outline Introduction Regional State of Play Trade costs & Trade Facilitation Performance WTO Trade Facilitation Agreement Update Trade Facilitation and Paperless Trade Implementation in Asia-Pacific (Survey results) Conclusions Annex - Support from ESCAP 2
Trade Facilitation (TF)? - Definition The plumbing of international trade (Staples, 1998) The simplification and harmonization of international trade procedures., where trade procedures are the activities, practices and formalities involved in collecting, presenting, communicating and processing data and other information required for the movement of goods in international trade. (WTO documents) Any measure, or set of measures, that aims to increase the cost-effectiveness of international trade transactions. http://www.gfptt.org/
Trade Facilitation? Definition
Paperless Trade ( Digital Trade Facilitation)? Paperless Trade Conduct of trade activities on the basis of electronic rather than paper documents e.g. electronic Customs declaration, electronic cert. of origin (application of e-commerce to international trade domain) Shipper Exporter Forwarder eco Customs Importer Paperless Trade Systems Legal/regulatory and technical frameworks in which paperless trade transactions take place e.g. Digital customs system, electronic Single Window facility, e-port management systems, Framework Act on Electronic Transaction (in RoK) 5 Chamber Inspection
Why are trade facilitation & paperless trade increasingly important? Tariffs are (often) already low and getting lower Trade flows increasingly associated with regional/global production networks Predictability / timeliness is essential High import content of exports Supply chain security initiatives are making electronic submission of information a must for developing countries The rise of cross-border e-commerce
Outline Introduction Regional State of Play Trade costs & Trade Facilitation Performance WTO Trade Facilitation Agreement Update Trade Facilitation and Paperless Trade Implementation in Asia-Pacific (Survey results) Conclusions Annex - Support from ESCAP 7
http://www.unescap.org/resources/escap-world-bank-trade-cost-database
Source: Asia-Pacific Trade and Investment Report 2016, ESCAP
Bilateral comprehensive trade costs of selected economies with China and United States (ad valorem equivalents, excluding tariff costs, 2009-2014) Source: ESCAP-World Bank Trade Cost Database, updated June 2016. Available from Trade costs: http://artnet.unescap.org/databases.html#first
Bilateral trade costs excluding tariff among EEC economies Armenia Belarus Kazakhstan Kyrgyzstan Belarus 168.2% (3.3%) Kazakhstan 245.7% 114.4% (15.5%) (15.1%) Kyrgyz Republic 359.9% 172.5% 73.4% (-21.2%) (-0.1%) (9.9%) Russian Federation 111.5% 47.2% 66.9% 95.8% (5.2%) (N/A) (27.3%) (9.2%) Source: ESCAP-World Bank Trade Cost Database, updated June 2016. Available from Trade costs: http://www.unescap.org/resources/escap-world-bank-trade-costdatabase
Bilateral comprehensive trade costs excluding tariff of EEC economies with China and Germany Source: ESCAP-World Bank Trade Cost Database, updated June 2016. Available from Trade costs: http://www.unescap.org/resources/escap-world-bank-trade-costdatabase
Trade cost of EEC Countries with large developed economies Source: ESCAP-World Bank Trade Cost Database, updated June 2016. Available from Trade costs: http://www.unescap.org/resources/escap-world-bank-trade-costdatabase
Trade Facilitation Performance Examples: WB Trading Across Border (TAB) indicators www.doingbusiness.org WB Logistics Performance Index http://lpi.worldbank.org/ UNCTAD Liner Shipping Connectivity Index http://unctadstat.unctad.org/wds/tableviewer/tablevie w.aspx?reportid=92 WEF Enabling Trade Index (composite of others) 14
Source: Asia-Pacific Trade and Investment Report 2016, ESCAP, United Nations
Source: Asia-Pacific Trade and Investment Report 2016, ESCAP, United Nations 16
Doing Business 2017: EEC at a glance In terms of trading across border, EEC on average is still leading North and Central Asia. Kazakhstan and Russian Federation lag behind EEC average. In terms of ease of doing business, East and North-East Asia, followed by North and Central Asia, are the lead performers; EEC average is higher than that of North and Central Asia. South and South-West Asia lags behind other sub-regions in Asia. Note: Score (0-100: least to most close to the frontier) Source: Doing Business Database Available from http://www.doingbusiness.org
Trading across Border 2017: EEC at a glance Economy Time to trade: Border compliance (hours) Cost to trade: Border compliance (USD) Time to trade: Documentary compliance (hours) Cost to trade: Documentary compliance (USD) Armenia 40 100 2 125 Belarus 3 54 4 70 Kazakhstan 68 287 67 160 Kyrgyz Republic 29 479 29 173 Russian Federation 96 945 34 123 EEC Average 47 373 27 130 Korea, Rep 10 250 1 19 Turkey 29 516 8 115 Note: Value of time/cost to trade is the average of import and export of time/cost Source: Doing Business Database Available from http://www.doingbusiness.org 18
Logistic Performance Index: 2016 Note: scores are provided at a 1 (worst performance) to 5 (best performance) scale Source: Logistic Performance Index Database. Available from LPI: http://lpi.worldbank.org
Source: Asia-Pacific Trade and Investment Report 2016, ESCAP, United Nations
Key factors in lowering trade costs Asia-Pacific Perspective Contribution of natural barriers, behind-the border facilitation and trade-related practice to trade costs 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 procedure 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 costs. 21
Outline Introduction Regional State of Play Trade costs & Trade Facilitation Performance WTO Trade Facilitation Agreement Update Trade Facilitation and Paperless Trade Implementation in Asia-Pacific (Survey results) Conclusions Annex - Support from ESCAP 22
The WTO Trade Facilitation Agreement (TFA) Negotiated over more than a decade Focus on improvements of GATT Articles V (freedom of transit), VIII (fees and formalities for import/export) and X (publication and transparency of trade regulations) + customs cooperation Adopted in Bali in December 2013; Entered into force in February 2017 After 2/3 of WTO Members ratified it (110+ countries) New baseline for trade facilitation globally WTO FTA specifies list of TF measures, but implementation very flexible (in terms of how and when) www.tfafacility.org 23
Source: Asia-Pacific Trade and Investment Report 2016, ESCAP
Gains from WTO TFA implementation Trade cost reductions almost double if full implementation of binding + not binding measures (-11%) ICT applications in TF (i.e. paperless trade measures) have high trade cost reduction potential 25
Outline Introduction Regional State of Play Trade costs & Trade Facilitation Performance WTO Trade Facilitation Agreement Update Trade Facilitation and Paperless Trade Implementation in Asia-Pacific (Survey results) Conclusions Annex - Support from ESCAP 26
The Global Survey on Trade Facilitation and Paperless Trade Implementation The survey is being conducted by five UN regional commissions, with overall coordination of ESCAP and support from other partners - first Global Survey conducted in 2015 - second Global Survey on-going with data to be released in 2017
Structure of the Questionnaire (1): Common measures included in the 2015 & 2017 surveys Trade facilitation measure (and question No.) in the questionnaire Transparency 2. Publication of existing import-export regulations on the Internet 3. Stakeholder consultation on new draft regulations (prior to their finalization) 4. Advance publication/notification of new regulation before their implementation (e.g., 30 days prior) 5. Advance ruling (on tariff classification) 9. Independent appeal mechanism (for traders to appeal Customs and other relevant trade control agencies rulings) General TF measures Formalities 6. Risk management (as a basis for deciding whether a shipment will be or not physically inspected) 7. Pre-arrival processing 8. Post-clearance audit 10. Separation of Release from final determination of customs duties, taxes, fees and charges 11. Establishment and publication of average release times 12. Trade facilitation measures for authorized operators 13. Expedited shipments 14. Acceptance of paper or electronic copies of supporting documents required for import, export or transit formalities. Institutional arrangement and cooperation 1. Establishment of a national trade facilitation committee or similar body 31. Cooperation between agencies on the ground at the national level 32. Government agencies delegating controls to Customs authorities 33. Alignment of working days and hours with neighbouring countries at border crossings, and 34. Alignment of formalities and procedures with neighbouring countries at border crossings 28
Structure of the Questionnaire (2): Common measures include in the 2015 & 2017 surveys Paperless trade Cross-border paperl ess trade Transit facilitation 15. Electronic/automated Customs System established (e.g., ASYCUDA) 16. Internet connection available to Customs and other trade control agencies at bordercrossings 17. Electronic Single Window System 18. Electronic submission of Customs declarations 19. Electronic Application and Issuance of Trade Licenses 20. Electronic Submission of Sea Cargo Manifests 21. Electronic Submission of Air Cargo Manifests 22. Electronic Application and Issuance of Preferential Certificate of Origin 23. E-Payment of Customs Duties and Fees 24. Electronic Application for Customs Refunds 25. Laws and regulations for electronic transactions are in place (e.g. e-commerce law, e-transaction law) 26. Recognized certification authority issuing digital certificates to traders to conduct electronic transactions 27. Engagement of the country in trade-related cross-border electronic data exchange with other countries 28. Certificate of Origin electronically exchanged between your country and other countries 29. Sanitary & Phyto-Sanitary Certificate electronically exchanged between your country and other countries 30. Banks and insurers in your country retrieving letters of credit electronically without lodging paperbased documents 35. Transit facilitation agreement(s) with neighbouring country(ies) 36. Customs Authorities limit the physical inspections of transit goods and use risk assessment 37. Supporting pre-arrival processing for transit facilitation 38. Cooperation between agencies of countries involved in transit 29
Overall implementation of trade facilitation measures in 44 Asia-Pacific economies surveyed Source: unnext.unescap.org/untfsurvey2015.asp
TF and Paperless Trade Implementation in Asia-Pacific Transparency measures most implemented; Cross-border paperless trade measures least implemented Source: unnext.unescap.org/untfsurvey2015.asp 31
Transparency Formalities Institutional arrangement and cooperation TF and Paperless Trade Implementation in Asia-Pacific Most and least implemented TF measures in Asia-Pacific Most implemented 1. Stakeholder consultation on new draft regulations (prior to their implementation) 2. Publication of existing import-export regulations on the internet 1. Risk management 2. Pre-arrival processing 1. Cooperation between agencies on the ground at the national level 2. Establishment of National Trade Facilitation Committee Least implemented 1. Advance ruling (on tariff classification) 2. Advance publication/notification of new regulation before their implementation 1. Establishment and publication of average release times 2. Trade facilitation measures for authorized operators 1. Government agencies delegating controls to Customs authorities Paperless trade Cross-border paperless trade Transit facilitation 1. Internet connection available to Customs and other trade control agencies at border-crossings 2. Electronic/automated Customs System 1. Laws and regulations for electronic transactions 2. Recognised certification authority - Cooperation between agencies of countries involved in transit - Customs authorities limit the physical inspections 1. Electronic Application and Issuance of Preferential Certificate of Origin 2. Electronic Application for Customs Refunds 1. Banks and insurers retrieving letters of credit electronically without lodging paper-based documents 2. Electronic exchange of Sanitary & Phyto- Sanitary Certificate 1. Supporting pre-arrival processing for 32 transit facilitation
Implementation of WTO TFA-related measures in Asia Pacific http://www.unescap.org/sites/default/files/trade-insights-no12.pdf
OECD Trade Facilitation Indicators on WTO TFA Implementation* (EEC+ RoK) *2015 http://www.oecd.org/trade/facilitation/indicators.htm
Source: unnext.unescap.org/untfsurvey2015.asp 35
Source: unnext.unescap.org/untfsurvey2015.asp 36
Towards Next Generation TF [and cross-border e-commerce] in Asia-Pacific Implementation of TF as a step-by-step process WTO TFA Full Compliance (Minimum implementation score associated with) unnext.unescap.org/untfsurvey2015.asp
Trade facilitation and paperless trade implementation : EEC Economy Scores Source: TF Implementation Database, updated June 2015. Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-andpacific-2015
Trade facilitation and paperless trade implementation : EEC and selected benchmarks - For transparency and formalities, Armenia and Kyrgyzstan lag behind that of EEC average. - Kazakhstan and Kyrgyzstan lag behind EEC average on paperless trade and cross-border paperless trade facilitation, while Armenia is lack behind on cross-border paperless trade. Note: maximum implementation of each TFI is 100% Source: TF Implementation Database, updated June 2015. Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-and-pacific-2015 39
Trade facilitation and paperless trade implementation : North and Central Asia Source: TF Implementation Database, updated June 2015. Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-andpacific-2015 40
Trade facilitation and paperless trade implementation : North and Central Asia Transparency Source: TF Implementation Database, updated June 2015. 41 Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-and-pacific-2015
Trade facilitation and paperless trade implementation : North and Central Asia Formalities Source: TF Implementation Database, updated June 2015. 42 Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-and-pacific-2015
Trade facilitation and paperless trade implementation : North and Central Asia Institutional arrangement The most implemented measure : Cooperation between agencies on the ground at the national level The least implemented measure : Government agencies delegating controls to Customs authorities Source: TF Implementation Database, updated June 2015. 43 Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-and-pacific-2015
Trade facilitation and paperless trade implementation : North and Central Asia Transit facilitation The most implemented measure : Customs Authorities limit the physical inspections of transit goods and use risk assessment The least implemented measure : Supporting pre arrival processing for transit facilitation Source: TF Implementation Database, updated June 2015. 44 Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-and-pacific-2015
Trade facilitation and paperless trade implementation : North and Central Asia Paperless trade The most implemented measure : Electronic/ automated Customs System The least implemented measure : Electronic application and issuance of trade licenses Source: TF Implementation Database, updated June 2015. 45 Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-and-pacific-2015
Trade facilitation and paperless trade implementation : North and Central Asia Cross-border paperless trade The most implemented measure : Laws and regulations for electronic transactions The least implemented measure : letters of credit electronically without lodging paper based documents; Electronic exchange of Sanitary & Phyto Sanitary Certificate; and Electronic exchange of Certificate of Origin Source: TF Implementation Database, updated June 2015. 46 Available from UNRCs Joint Survey on TF: http://www.unescap.org/resources/trade-facilitation-and-paperless-trade-implementation-asia-and-pacific-2015
Towards Next Generation Trade Facilitation in EEC and Central Asia Source: TF Implementation Database, updated June 2015. Available from UNRCs Joint Survey on TF: http://www.unescap.org/resour ces/trade-facilitation-andpaperless-tradeimplementation-asia-andpacific-2015 47
Challenges to moving forward on cross-border paperless trade Adoption of common International Standards Harmonization of legal frameworks Capacity gaps among the parties (infrastructure & HR) Cooperation between public and private sectors Lack of intergovernmental coordination mechanism Legal Framework
Framework Agreement on the Facilitation of Cross-Border Paperless Trade in Asia and the Pacific - Overview A new UN Treaty Open to interested (53) ESCAP member states (voluntary) to become parties Opened for signature on 1 October 2016 at UN Headquarters, New York Objective To facilitate cross-border paperless trade (data exchange) among willing ESCAP member states by providing a dedicated intergovernmental framework to develop legal and technical solutions Complementary to the WTO Trade Facilitation Agreement as well as (sub)regional efforts 4 year step-by-step development process (ESCAP resolutions 68/3,70/6,72/4) Over 30 countries directly involved in finalizing the treaty text in March 2016 Regional Study Expert Review & Member Consultations Negotiation & Finalization Adoption by the Commission 2012 2013 2013-2016 19 May 2016 49
It is expected to provide countries of Asia and the Pacific with a new tool and digital complement for better implementation of the WTO Trade Facilitation Agreement (TFA) and the development of cross-border e-commerce. 50
Concluding remarks Trade facilitation essential to trade competitiveness and enabling participation in production networks A lot of room for improvement in EEC Need to keep the big picture in mind to be able to really reduce trade costs Need for a whole of supply chain approach to TF Comprehensive assessment/analysis of import-export procedures needed + monitoring WTO TFA implementation provides a great opportunity to engage in TF reform But achieving basic compliance will not be enough to be competitive Participation in regional/subregional initiatives can make a difference Being ambitious is useful (case of ASEAN SW)
Thank you unnext.unescap.org www.unescap.org/our-work/tradeinvestment/trade-facilitation http://communities.unescap.org/cross-borderpaperless-trade-facilitation 52