Trade facilitation as a key to unlocking trade potential in LLDCs

Transcription

1 Trade facilitation as a key to unlocking trade potential in LLDCs Tengfei Wang Economic Affairs Officer Trade, Investment and Innovation Division UNESCAP wangt@un.org Expert group meeting on the regional implementation of the Vienna Declaration and Programme of Action for landlocked developing countries 30 November 2016 UNCC, Bangkok, Thailand

2 Agenda 1. Why Trade Facilitation important for LLDCs? 2. How to address trade facilitation - A holistic approach covering at-the-border and behind-the-border matters - Business Process Analysis for simplification of trade procedures - Trade facilitation monitoring at Macro-level 3. What should be done to advance trade facilitation in LLDCs? - Join the treaty on framework agreement on cross-border paperless trade. - Explore the synergy of the Belt Road Initiatives (or OBOR) - Establishment of Trade and Transport Facilitation Monitoring Mechanism (TTFMM) 2

3 Trade Facilitation and Sustainable Development Goals (SDGs) Significantly increase the exports of developing countries, in particular with a view to doubling the least developed countries share of global exports by 2020

4 Why Trade Facilitation important for OBOR? Extraordinary claims require extraordinary evidence - Carl Sagan Trade facilitation makes trade cheaper and faster Implementation of the WTO TFA narrow trade facilitation - is expected to reduce global trade costs by 11% to 15% (OECD, 2014; based on ESCAP-World Bank Trade Cost Database). Strong correlation between trade facilitation and trade costs Trade costs (excluding tariff) 400% 300% 200% 100% 0% 0% 20% 40% 60% 80% 100% Trade facilitation implementation (%) Trade facilitation generates new trade and employment Peterson Institute estimates that trade facilitation reforms will expand global trade by as much as $ 1 trillion annually and generate 21 million jobs. ESCAP studies reveal that the potential export gains from cross-border paperless trade could be $250 billion annually. However, barriers for trade facilitation in LLDCs remain A study jointly carried out by ESCAP and Islamic Development Bank provides empirical evidence that some LLDCs corridors still face complex trade procedures. For instance, it typically takes 35 days to export fabrics from China to Kyrgyzstan involving over 20 trade procedures and over 20 actors. 4

5 Trade facilitation and trade diversification Export diversification vs. trade costs Export diversification 5

6 Agenda 1. Why Trade Facilitation important for LLDCs? 2. How to address trade facilitation - A holistic approach covering at-the-border and behind-the-border matters - Business Process Analysis for simplification of trade procedures - Trade facilitation monitoring at Macro-level 3. What should be done to advance trade facilitation in LLDCs? - Join the treaty on framework agreement on cross-border paperless trade. - Explore the synergy of the Belt Road Initiatives (or OBOR) - Establishment of Trade and Transport Facilitation Monitoring Mechanism (TTFMM) 6

7 UN/CEFACT Buy-Ship-Pay Model Supplier Intermediary Authorities Customer Buy Ship Pay Prepare for export Export Transport Prepare for import Import Commercial Procedures Establish contract Order goods Advise on delivery Request payment Transport Procedures Establish transport contract Collect, transport and deliver goods Provide waybill, gods receipt and status reports Regulatory Procedures Obtain export/import licenses, etc. Provide customs declaration Provide cargo declaration Apply trade security procedures Clear goods for import/export Financial Procedures Provide credit rating Provide insurance Provide credit Execute payment Issue statements Source: UN/CEFACT Recommendation No. 18 UN/CEFACT: the United Nations Centre for Trade Facilitation and Electronic Business 7

8 Trade Facilitation: at-the-border, behind-the-border and beyond-the-border issues Day days days 1 day 4 1 day 5 1 day day 9 3 days days 1 14 days Buy - Conclude sales contract and trade terms 2. Have product sampled and technically examined 3. Arrange transport 4. Prepare export permit 5. Apply for cargo insurance 6. Prepare and submit customs declaration 7. Stuff container and transfer it to port of departure 8. Clear goods through customs 9. Handle container at terminal and stow it on vessel 10. Prepare documents required by importer as listed in L/C 11. Pay - Claim payment of goods Process 8

9 Documents related to Export of Rice in Thailand (from purchase order until the cargo container leaving the sea port) 36 Documents involving 15 parties, and more than 1,140 data elements to be filled in 1. Proforma Invoice (35) 2. Purchase Order (39) 3. Commercial Invoice (51) 4. Application for Letter of Credit (24) 5. Letter of Credit (32) 6. Packing List (25) 7. Cargo Insurance Application Form (20) 8. Cover Note (23) 9. Insurance Policy (24) 10. Booking Request Form Border Crossing (25) 11. Booking Confirmation Border Crossing (30) 12. Booking Request Form Inland Transport (16) 13. Booking Confirmation Inland Transport (18) 14. Bill of Lading (42) 15. Empty Container Movement Request (TKT 305) (20) 16. Request for Port Entry (TKT 308.2) (27) 17. Equipment Interchange Report (EIR) (24) 18. Container Loading List (28) 19. Container List Message (32) 20. Outward Container List (34) Buy/Pay Docs Transport Docs 21. Master Sea Cargo Manifest(17) 22. House Sea Cargo Manifest (37) 23. Export Declaration (114) 24. Good Transition Control List (27) 25. Application for Permission to Export Rice (KP. 2) (24) 26. Sales Report (KP 3) (21) 27. Application for the Collection of the Permit for the Export of Rice (A. 3) (35) 28. Permit for the Export of Rice (A. 4) (35) 29. Application for Certificate of Standards of Product (MS. 13/1) (44) 30. Certificate of Analysis (17) 31. Certificate of Product Standards (MS. 24/1) (45) 32. Certificate of Fumigation (21) 33. Application for Phytosanitary Certificate (PQ. 9) (29) 34. Phytosanitary Certificate (33) 35. Application for Certificate of Origin (42) 36. Certificate of Origin (38) * Number in parenthesis is the no. of data elements Regulatory Docs

10 Use Case Diagram of Rice Export 3) Ship 3.1) Obtain Export License Ministry of Commerce (Directorate of Trade) Private Bank MCB Customs department ICD 3.2) Arrange Shipping (maritime) Feeder line &/or Box operator 1) Buy 1.1) Conclude Sales Contract 3.3) Arrange Pre-Inspection And Fumigation Transporter 3 rd party inspector Importer 2) Pay Exporter (or representative) 3.4) Declare CusDec 2 3.5) Terminal Procedure and Customs Exam at Port Customs broker 2.1) Make Advance Payment Port Customs Importer s bank Exporter s bank 3.6) Arrange Berthing of Vessel Ship UNNExT Business Process Analysis Guide for the Simplification of Trade Procedures 3.7) Arrange Port Clearance for Vessel Departure 3.8) Prepare Shipping Documents Ministry of Finance (Revenue Department) UMFCCI SAD DMA MPA

11 Transporter Transporter delivers loaded container to terminal Port terminal Review documents Exporter (or representative) Request for delivery of loaded container Prepare for security card Shipping Instructions National Registration Card Request for fumigation 3.5.1Request examination of goods Sealed case file from Customs headoffice (ED, EL, Invoice, Packing List) (Original) 3 rd party inspector Receive the request for fumigation Customs department (at port) Receive documents Register case file Check Export License & duty Shipping Agency Department (SAD) Issue security card Receive terminal charges Review documents and issue gate pass Weigh container at export container yard Verify documents and Customs seal Complete challen as in shipping instructions for terminal charges Make payment Terminal charges; (lift on/lift off; cargo inspection & labor fees) Prepare to obtain gate pass for container Paid challen 103 challen Shipping instructions (Copy) Equipment interchange receipt Prepare documents for terminal operation procedure Fumigate the container(s) after Customs Examination Arrange X-ray of cargo (random selection) Assign Customs exam group (Group A to J) Found correct Examination of goods Found Incorrect Case file is sent back to the Customs department Sealed container Transport container to the container terminal Load the cargo onto the vessel 103 challen Prepare cargo loading list based on mate receipt

12 BPA: the first step to be taken before introducing other trade facilitation measures There is no one-size-fits-all solution. It is imperative to apply BPA for analysis of the uniqueness of each trade process and procedure 5 6 e-single Window and paperless trading Cross Border Data Exchange 4 National Data Harmonization 3 Document Simplification & Standardization 2 Process Simplification and Harmonization 1 Business Process Analysis for Trade Facilitation

13 Completed studies in selected LLDCs in Central Asia BPA studies were carried out for selected products along specific corridors From China to Kyrgyzstan; from Kyrgyzstan to Kazakhstan; and from Kazakhstan to Azerbaijan 13

14 A typical export process from China to Kyrgyzstan 14

15 Similar studies in South Asia including LLDCs Inception Workshop in Bangkok 2013 National workshop in Phuentsholing Bhutan 2014 National Workshop in Dhulikhel Nepal 2014 National Workshop in Dhaka Bangladesh

16 TF Monitoring at Macro-level ESCAP-World Bank Trade Costs Database Ad-valorem trade costs (per cent) LDCs LLDCs SIDs LDCs, LLDCs, SIDs Asia-Pacific East Asia-3 ESCAP-led joint United Nations regional Commissions survey on TF and paperless trade implementation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 16

17 Agenda 1. Why Trade Facilitation important for LLDCs? 2. How to address trade facilitation - A holistic approach covering at-the-border and behind-the-border matters - Business Process Analysis for simplification of trade procedures - Trade facilitation monitoring at Macro-level 3. What should be done to advance trade facilitation in LLDCs? - Join the treaty on framework agreement on cross-border paperless trade. - Explore the synergy of the Belt Road Initiatives (or OBOR) - Establishment of Trade and Transport Facilitation Monitoring Mechanism (TTFMM) 17

18 Framework Agreement on the Facilitation of Cross- Border Paperless Trade in Asia and the Pacific Key features Enabling framework: The focus is on promotion and facilitation of cross-border paperless trade (i.e., exchange of electronic trade data between the Parties not mandatory) A set of general principles: To facilitate interoperability between paperless trade systems and to ensure that solutions developed under the Agreement lead both to higher levels of trade facilitation and regulatory compliance UN treaty with a multi-layered institutional arrangement and ESCAP as Secretariat: Provides a strong dedicated platform for collaboration A comprehensive action plan: To develop standardized solutions and protocols for cross-border electronic exchange and recognition of trade-related data and documents, including pilot projects Capacity building provision [Entry into force after 5 ESCAP Member States ratify] See:

19 What should be done to advance trade facilitation in LLDCs? Join the treaty on framework agreement on cross-border paperless trade. Explore synergy of the Belt Road Initiatives (or OBOR) Establishment of Trade and Transport Facilitation Monitoring Mechanism (TTFMM) 19

20 SDGs BPA studies were carried out for selected products along specific corridors Investment From China to Kyrgyzstan; from Kyrgyzstan to Kazakhstan; and from Kazakhstan to Azerbaijan Trade Poverty reduction Logistics Inclusive development employment A journey of a thousand miles begins with a single step: Trade Facilitation 20