Analysis on the cross-border trade processes and reference map for cross-border paperless trade. HA, Sung Heun (Rama)

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1 Analysis on the cross-border trade processes and reference map for cross-border paperless trade. HA, Sung Heun (Rama) Sept. 2015

2 International Supply Chain with Cross-Border Transactions Documents crossing borders Exporter PO Confirm/ Proforma Invoice L/CReceive Booking Apply for Conformity 선적 /Export Declaration 요청 1. Shipping Notice Export Declaration Receive Transportation House B/L Receive Payment Term? T/T L/C 5. Shipping document Nego / Collection Collect Exchange Bank L/C Arrival Notice -Invoice -Packing List -Invoice -Packing List -B/L etc Shipping document Settle ment Forwarder/ Broker Booking/Notice Shipping Instruction/ Confirm Export Declaration/ Approval Notice Pick up 2. Terminal-In Report House B/L Issue 4. H Manifest Notice H Manifest submission Customs Approval of Declaration Departure Report Approval Manifest Filing Sea/Air Carriers (Terminal) Booking Shipping Instruction acceptance Terminal In 3. Gate In Report Master B/L Issue Manifest send Departure Report Application/submission Manifest submission SWIFT Customs Departure Report Approval Forwarder/ Broker H Manifest receive Exchange Bank L/Copening Shipping document Hand over Payment Settlement Importer PO Issue Yes L/C Term? No Shipping Notice receive Shipping document Receive Import payment Settlement Agency/Lab/Association Conformity Certificate Agency/Lab Terminal In Report Acceptance Port Departure Report acceptance Port / Immigration

3 International Supply Chain with Cross-Border Transactions Documents crossing borders (Continue) Exporter Payment Notice acceptance Exchange Bank Payment Notice Forwarder/ Broker Customs Sea/Air Carriers (Terminal) Manifest send Arrival submission Unloading/ Terminal-In submission 사전 Warehouse-Out acceptance Warehouse-Out Report SWIFT Customs Manifest acceptance Arrival submission acceptance Unloading submission acceptance In Report acceptance Import Declaration Approval Warehouse-Out Report acceptance Forwarder (Broker) H Manifest submission 1. Cargo arrival Notice Pre-Terminal-Out submission In Report Cargo Arrival Notice Delivery Order Issue Import Declaration/ Approval Notice Cargo Hand over Warehouse-Out Report Exchange Bank Payment Importer Cargo arrival Notice receive 2. Cargo Arrival Notice receive Cargo Fee Settlement D/C Receive Apply for Conformity Hand over Request Import Declaration Import Declaration Receive Cargo Payment Request Payment Settlement? End Agency/Lab/ Association Arrival submission/ acceptance Immigration Terminal-In submission acceptance Port Terminal-Out Report acceptance Port Conformity Agency/Lab

4 International Supply Chain with Cross-Border Transactions Border-crossing activities in 4 major areas of international trade Process Buy Category Commercial transaction sector Actions (a) Business opportunity finding: (b) Contract (c) Order and production monitoring (d) Other commercial measures including trade documentation Ship Transport and related services Forwarding and cargo handling Transport Insurance (k) Shipping and cross-border transportation (including issuing Bill of Lading) (l) Entry port activity (i) Insurance Official controls (e) Conformity certifying activity at exporting country (f) Regulatory compliance activity at exporting country (m) Conformity certifying activity at importing country (n) Regulatory compliance activity at importing country Pay Payment sector (r) Trade settlement

5 4 major areas Border-crossing documents and data in 4 major areas Commercial Transactions Offer, Counter Offer, Proforma Invoice Framework contract, contract Invoice, Packing List (Self) Test Certificate, Manufacturing Certificate Cargo Insurance (Insurance Policy) and etc Trade financing and settlement Letter of Credit, Bill of Exchange and etc Transportation and related services Cargo/Vessel Status information In-Transit report Bill of Lading, Sea Way Bill, Air Way Bill and etc Official control measures Country/Certificate of Origin Conformity Certificates such as Fumigation Certificate, Safety/Health Certificate and National/International Standard Certificate Import/Export License/Permit and Quota Customs clearance information, Advance Manifest and etc

The cross-function of trade documents 4 major areas of cross-border trade documents and data The cross-function of trade documents implies that

6 The cross-function of trade documents 4 major areas of cross-border trade documents and data The cross-function of trade documents implies that documents used in multiple areas are more challenging In other words, documents needed only in its own area could be rather easily migrated into online process

7 A challenge for B2B transactions Recognition of border crossing B2B data & documents Trader, Carrier and etc B2B Trader, Carrier and etc Message Message B2B2G Customs, PGAs G2G Customs, PGAs Message Message

8 Reference map Reference map (1) : Commercial transactions and trade financing & settlement Category Commercial transactions Trade financing and settlement Related trade documents/ information Cross-border projects, services and agreement Cases Ownership - Korea-Japan e-mp project Public Contract, Order and etc B2B e-marketplace (i.e. Alibaba) Private Purchase Order, Forecastin g, Production status, Ship Notice Purchase Order, Invoice, P acking list, Advance Shippi ng Notice e-l/c(local L/C) P/O, Invoice and shipping d ata P/O, Invoice and e-b/l International Supply Chain B2B Transactions (i.e.. GM, Ford, BMW, Apple and Walmart) PAA Secure Cross-Border Transaction service s utradehub (Trade financing with L/C) Bolero e-l/c SWIFT TSU & BPO TradeCard Bolero TEDI Private PAA (Private) PPP Private SWIFT (Private) TradeCard (Private) Bolero (Private) TEDIANET (Private) - Paypal, Alipay Private e-b/l utradehub e-nego PPP

9 Reference map Reference map (2) : Official controls Category Official controls Entry port activity Related trade documents/ information e-c/o Conformity Certificate e-phyto Cross-border projects, services and agreement Cases Ownership ICC ECO Task Force ICC (Private) Korea-Taiwan, China e-c/o PPP ASEAN ATIGA Form D ASEAN (Public) China Hong Kong, China Customs (Public) China Taiwan, China Customs (Public) A pilot project for electronic exchanges of UEMOA Certificates of Origin (Senegal and Cote d ) South America ILAC, APLAC MRA APEC TEL MRA OECD MAD IECEE MRA e-phyto exchange (ROK-Netherland, China-Netherland, Keny a-netherland) e-phyto Hub PPP Private APEC (Public) OECD (Public) IEC (Private) IPPC & Quarantine agency (P ublic) IPPC (Public) e-cert e-cert (Australia, New Zealand, USA and Japan) Quarantine agency (Public) Pre-arrival information EU SEED Italian Customs (Public) CUSDEC Asian Region Customs EDI project Customs & AFACT (PPP) Export Declaration Customs Data Exchange between Korea - Malaysia and Kore a-philippines Customs (Public) ASEAN Customs Declaratio n Document ASW pilot project ASEAN (Public) 20 documents including Airw IATA e-freight ay Bill and Manifest IATA (PPP) Customs information (inc. da Globally Networked Customs ta from commercial sources) WCO (Public) Passenger list APIS (Advance Passenger Information system) Customs, immigration and airlines

10 Reference map Reference map (3) : Transportation measures Category Related trade documents/ information Cross-border projects, services and agreement Cases Ownership Manifest EAC RADDEx EAC (Public) COMESA Customs Declaration COMESA Regional Customs Transit Guarantee (RCTG) system COMESA SADC Customs Declaration SADC Transit System (Transit Data Transfer Module, TDTM) SADC Transit electronic Transit Declaration The ASEAN Customs Transit System (ACTS) ASEAN (Public) electronic Transit Declaration e-tir UNECE (Public) - UNDA Project on Customs-to Customs (C2C) electronic information exchange for transit UN (Public) 20 documents including Airway Bill and Manifest IATA e-freight IATA (PPP) Transportati on Invoice, Packing List, AWB PAA e-awb PAA (Private) Advance Manifest USA AMS, Japan AFR, EU ICS Customs (Public) e-airway Bill IATA e-airway Bill IATA (Private) AWB, Freight Invoice AIR CCS (Cargo Community System) Private and/or Public

11 Factors affecting the cross-border projects Evaluation of up and running and out of operation projects Cross-border paperless trade project cases are classified into five (5) status; (i) Planning, (ii) Developing, (iii) Pilot running, (iv) Up and running, and (v) Out of operation and evaluation conducted on (iv) and (v) Market penetration Public and Private Process changes No. of message types Technical assistance Legal framework Number of Project cases Low (1) Middle (2) High (3) Cross-border paperless trade project to be initiated with limited number of message types and it shall be incorporated with international development bodies and legislations of supporting laws. Limited number of message types can be interpreted that when planning a large scale cross-border paperless trade project, phased approach is more feasible than single unitary project.

12 Cross-border transaction models CB Models Web access system Peer to Peer interconnection system Central repository / platform Single window /Service Provider interconnectio n

13 Factors affecting cross-border projects Cross-border documents/processes and factors Commercial Stake holder Number Technical Assistanc e Simplicity Process innovation Legal Framework Business needs Readiness e-contract Low Low High High Middle Middle Low e-invoice/ e-p/l Low Low Low High Middle Middle Middle e-insurance Low Low High Low High Middle High Priority Trade financing /Settlement e-l/c Low Low High Middle Middle High High e-settlement High Low Low High Middle Middle Low e-manifest Low Low Middle Low High Low High Transportation e-b/l High Middle Low High Middle Middle Low Regulatory Control e-awb Middle Low High Low Middle High High e-swb Middle Low High Low Middle Middle Middle Cargo Tracking High High Low Low Middle High Middle 1 NCB* e-sps Low High High High High High Middle e-license / e-certificate with cross-border MRA other e-license / e-certificate Low High High High High Middle High Low Middle High High High Middle Low 2 NCBs* eco High Middle Low High High High Middle Transit Middle High Middle High High High Middle * 1 NCB: Issuer and receivers are identical control bodies across borders (eg.: Quarantine agency for SPS Certificate) * 2 NCBs: Issuer and receivers are different control bodies across border (eg: Chamber of Commerce and Customs for C/O)

14 Summary of SC - Workshop Group 2 Workshop group on Documents and processes in cross-border paperless trade The countries highlighted the need for intergovernmental arrangements for the recognition of electronic trade documents and mutual recognition of the certification process Some countries were concerned about the forgery of document, data security and integrity, and technical solution such as PKI and document repository system were introduced Since there is a MRA on the SPS certificate among CIS countries, the pilot project on electronic SPS exchange can also be pursued Everybody agreed with the certificate of origin, SPS certificate (health, phytosanitary and pharmaceutical) and manifest as the top priority document, and transit documents for landlocked countries

15 Implications from the Cross border projects Implications Electronic equivalents should be accepted by Governments in order to fully realise the benefits of paperless trade environments Strengthening cooperation with the relevant international body has been a key success factor Legal framework plays key role in promoting and expanding paperless trade services, being a driving force to the project behind it, encouraging early adopters and lowering threshold for late movers to get on board, through stability and predictability of the services and lowered potential legal conflict All-in-one attempts have not been successful in many case projects; Phased approach is highly feasible Process simplification shall go ahead of process automation to maximize the potential benefit from the cross-border project Public and private cooperation is critical Further study on the assessment on readiness of important cross-border documents exchange and proper exchange model is recommended

16 Recommendations for pilot projects and road map Recommendations for the cross-border paperless trade pilot models and road map Participation of private sector experts to the Legal and Technical Work Group under Steering Group will be crucial (Tech Group) When selecting the top priority target cross-border paperless trade projects and documents, factors affecting the projects shall be considered Conformity Certificates under MRA, C/O and SPS are recommended Transportation and Transit projects have been most successful cross-border projects (Tech Group) The readiness and business needs of top priority documents to be exchanged online among the member states shall be assessed (Tech Group) Various horizontal technical issues, such as Interconnectivity, Standard documents, Harmonization of processes and security measures shall be discussed and prepared (Legal Group) In parallel with the cross-border transaction of electronic trade document, legal framework including international protocols as well as domestic model laws on the recognition of electronic documents shall be prepared Mutual Recognition Framework (Cross-border) Recognition of electronic equivalent (Domestic) Level of service and quality

18 Figure 1 Web access system country A Verification of document country B Data input Docum ent Web view system of country C

19 Figure 2 Peer to Peer emessage emessage emessage Paperless trade system of country A Paperless trade system of country B Paperless trade system of country C

20 Figure 3 Gateway to Gateway SP or SW emessage SP or SW emessage emessage SP or SW Paperless trade system of country A emessage emessage Paperless trade system of country B emessage Paperless trade system of country C

21 Figure 4 Central Platform/ Repository Model Central Platform / Repository emessage emessage Authority of country A emessage Authority of country B Authority of country C

22 e-coo status in Asia and the Pacific Country Issuing body e-c/o System Note Australia Australian State Chambers of Commerce e-certify /Ozdocs ESCAP Belgium Federation of Belgium Chamber of Commerce and Industry Digi Chambers Brazil Brazilian Confederation of Trade and Business Associations (CACB) Certisign National Confederation of Industry Digital Certification of Origin (COD) Canada Canadian Chamber of Commerce Tradecert / ecertify France Paris Ile-de-France Regional Chamber of Commerce and Industry GEFI ESCAP Hong Kong Hong Kong General Chamber of Commerce Tradelink System ESCAP Netherlands The Netherlands Chamber of Commerce DAE Electronic COs ESCAP New Zealand New Zealand Chambers ecertify ESCAP Norway Norway Chambers ecertify Singapore Singapore International Chamber of Commerce TradeXchange ESCAP Republic of Korea Korea Chamber of Commerce and Industry KCCI Trade Facilitation Service Center ESCAP Switzerland Basel Chamber of Commerce e-origin United Kingdom British Chamber of Commerce e-z Cert / Tradecert ESCAP United States of ecertify ACCE Affinity ACCE America Program ESCAP 22

23 e-coo status in Asia and the Pacific Survey result on e-coo (APEC, as of 2012) Has your economy implemented the online application of CO? Has your economy implemented the online issuance/certification of CO? Yes No Don't know Yes No Don't know China Hong Kong Indonesia Malaysia Mexico Peru Thailand The Philippines Vietnam 23

24 Implications! Paperless trade in Commercial transactions A great deal of private projects have been successfully implemented for decades as private sector sees values from the automation of international supply chain management and finding opportunities using cross-border e- Commerce. But electronic transactions/records of private sectors are not recognized by most governments due to various reasons including lack of appropriate legislation or technical gaps. So most of transactions remain as information exchange level, thus requiring additional traditional paper based transaction in the supply chain for regulatory procedures. The law of the market has been strictly applied

25 Implications! Paperless trade in Trade financing and settlement Legal framework plays important role in the facilitation of trade financing through paperless platform bringing huge value to traders. Emerging trend of cross-border e-commerce are creating new vehicles for trade settlement shifting paradigm from conventional Letter of Credit based transactions All commercial settlement transactions in one platform initiatives of private sectors were not very successful even with its seamless transaction model. Some of the identified factors were immature market, non-interconnectivity with trade regulatory systems, huge initial cost and unfriendly user interface.

26 Implications! Paperless trade in Official controls Process reengineering, harmonization and simplification of regulatory control procedures are more effective than plain transition into online. Application process of Conformity Certification for exporter shall be considered as an extension of integrated process of other trade documents cross-border exchange such as electronic Certificate of Origin and Commercial Invoice Country specific requirements shall be respected Bilateral approaches are more successful than multilateral one

27 Implications! Paperless trade in Transportation and related services Most of successful cross-border paperless trade cases of public sectors are from transit and transportation area. Practical value to private sector or mandated use of the regulatory system were critical for successful implementation in this area By enhancing the Inter-governmental cooperation, the process can be further streamlined All in one platform didn t work and phased approaches have made practical step forwards As two or more countries are involved in the Transit projects, coordination and technical / financial support of international development bodies have been crucial in successful implementation

28 Regulatory control measures MRA (Mutual Recognition Agreement) How MRA works? The designated agency of the exporting country accredits or appoints the conformity assessment institute (testing agency or certification agency) that can conduct the conformity assessment pursuant to the importing country s technical regulations. At this time, it may appoint the accreditation agency that conducts the conformity assessment agency s accreditation matters on behalf of the designated agency. Also, when it gives the importing country the list of designated accreditation agencies and the designated or accredited conformity assessment agencies, the importing country decides on the approval after assessment. MRA aims to facilitate the trade, increase the market accessibility, and eliminate or reduce the Non-Tariff Barrier (NTB), not to unify Standards or Technical Regulations.

29 Regulatory control measures Before MRA Manufacturing Export Test Certification Marketing Exporting Country Importing Country After MRA (1) Recognition of Lab/Test Result Manufacturing Test Export Certification Marketing Exporting Country Importing Country After MRA (2) Recognition of Lab/Certification Manufacturing Test Certification Export Marketing Exporting Country Importing Country

30 Cases of cross-border exchange B2B ISC Typical ISC B2B Documents Ordering Transactions ANSI X.12 EDIFACT Purchase Order (Ack.) 850 (855) ORDERS (ORDRSP) Purchase Order Change (Ack.) 860 (865) ORDCHG (ORDRSP) Order Status Report (Inquiry) 870 (869) ORDREP (ORSSTA) Materials Management Transactions ANSI X.12 EDIFACT Planning Schedule/Material Release 830 DELFOR Shipping Schedule 862 DELJIT Ship Notice 856 DESADV Financial Transactions ANSI X.12 EDIFACT Invoice 810 INVOIC Freight Invoice 859 IFTMCS Payment Order/Remittance Advice 820 REMADV Shipping/Receiving Transactions ANSI X.12 EDIFACT Shipment Information 858 IFTMCS Receiving Advice 867 RECADV

31 Cases of cross-border exchange TSU/BPO BPO (Bank Payment Obligation)

Cases of cross-border exchange Japan AFR

In Japan Carrier, NVOCC Same corporation

NACCS Japan Customs EDI EDI Dedicated line

32 Cases of cross-border exchange Japan AFR Japan Advance Filing Rules Outside Japan In Japan Carrier, NVOCC Same corporation Carrier, Shipping Agent and NVOCC in JAPAN NACCS Japan Customs EDI EDI Dedicated line Carrier, NVOCC Web Entry Web application provided by SP Connection between NACCS and filer s own system is established only through servers located in Japan, not outside Japan. Dedicated line EDI Service Provider (SP) Web

Exporting Country SOAP Server Request Response(XML) Request (Result Status update) SOAP Client SOAP Client e-cert Request Network Plant Quarantine Integated

33 Cases of cross-border exchange e-phyto NL Korea Netherland e-phyto Certificate Project Certificate data Importing Country find_certificates_by_update_date_and_status get_signed_official_certificate_xml Request Certificate Mastering System(CMS) DB Certificates Information SOAP Server Exporting Country SOAP Server Request Response(XML) Request (Result Status update) SOAP Client SOAP Client e-cert Request Network Plant Quarantine Integated Information System (PQIIS) Result Response(update result) Acknowledge_certificate accept_certificate reject_certificate request_replacement_certificate Inspector(KR) * SOAP : Simple Object Access Protocol

34 Cases of cross-border exchange - e-c/o ECO [Korea Taiwan province of China] KCCI ECO Enquiry on KCCI Website With ID and Password Customs Exporter 1CO APP 2ECO (for view) 3Inv, P/L 1CO APPORG (specify ECO Number) KTNET Repository 2ECO CERTIF 3Inv, P/L, Attach ECO from repository Trade-Van Repository 6Import Declaration ECO confirmed by importer 3Inv, P/L, ECO 4 Sign to confirm ECO Assign Customs Broker 5 Generate Import Declaration Data Importer 6Import Declaration Customs Broker Korea Chinese Taipei

Analysis on the cross-border trade processes and reference map for cross-border paperless trade. HA, Sung Heun (Rama)

Analysis on the cross-border trade processes and reference map for cross-border paperless trade. HA, Sung Heun (Rama) April 2015 4 major areas 4 major areas of cross-border trade documents and data Commercial