Global TFA Implementation

CAI Meeting, FIATA

SEPTEMBER 2018, Delhi

Ankur Huria

Trade Facilitation, Logistics and Regional Integration

World Bank Group

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)

TRADE FACILITATION LEADS TO BIG GLOBAL GAINS

Reduction of delay prior to shipment:

+ 1 day = - 1% trade[Djankov, Freund, & Pham 2006]

Adoption of e-documentation forair cargo:

= US$12 billion annual savings

through reduced paperwork

related delays (70-80%)

Full implementation of TFA:

US$110 billion US$ 210 billion/year

Through reductions in time spent at customs

Benefits

[Hillberry & Zhang 2015] [WEF, WB and Bain & Company 2013]

Software

Support of trade facilitation, logistics

& regional integration

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.

Reengineering of systems and procedures, reduction ofred tape, improvements in the competitiveness oftransport and logistics markets, institutional developmentand coordination of trade-related agencies, and increasingthe professionalism of logistics service providers.

Hardware

Trade-supporting infrastructure investments such asroads, ports, cargo handling facilities, and ICT systems.

Maximize economic impact (e.g. complementing cross-border road projects with reforms to streamline border clearance processes)

ROLE OF THE WORLD BANK

TRADE FACILITATION AGREEMENT

Section I

Technical Measures

Article 1-12

Section IISpecial and Differential

Treatment Provisions For Developing Country

Members and Least-developed Country

Members

Article 13-22

Section III

Institutional Arrangements and

Final Provisions

Article 23-24

KEY TECHNICAL TFA ARTICLES

TransparencyArticles 1-5

Concerning fees, charges & formalities Articles 6-12

1. 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

7. 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 Provisions23. National Trade Facilitation Committee

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

23. 2. National Committee on Trade Facilitation

10.1 Formalities and Documentation Requirements

10.1 Formalities and Documentation Requirements

1.1 Publication (Publication and availability of information)

1.2 Information Available Through Internet (Publication and availability of information)

1.3 Enquiry Points (Publication and availability of information)

2.2 Consultations

2.1 Opportunity to Comment and Information before Entry into Force

Automation (10.4 Single Window)

(Article 8) Border agency coordination

TAILORED SEQUENCING PLAN TO FIT SPECIFIC CONTEXT AND NATIONAL PRIORITIES

7

RISK MANAGEMENT

ADVANCE RULINGS

SEPARATION

FROM RELEASE

AUTHORIZED OPERATORS

PRE-ARRIVAL

PROCESSING

EXPEDITED SHIPMENTS

PERISHABLE

GOODS

POST-CLEARANCE

AUDIT

REJECTED GOODS

DETENTION

FORMALITIES

AND DOC REQ'S

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.

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

SOME MEASURES ARE PREREQUISITES

FOR OTHERS

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

Long delays at check points

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

COMMON CHALLENGES FOR FULL AND EFFECTIVE IMPLEMENTATION OF THE WTO TFA (II)

Fumigation with no alerts to traders

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

Non-existent or weak NTFC’s

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

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; • (d) joint controls; • (e) establishment of one stop border post control.

MODERN APPROACH TO BORDER MANAGEMENT

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)

(source: WTO)

OBJECTIVES OF GOVERNMENT AT THE BORDER

Source: Accenture

SO WHO IS AT THE BORDER?

Border Security

Customs

Animal Health

Plant Protection

Food

Safety Border Management

Standards & Quality Control

Maritime, Aviation, Sea & Air Ports

Immigration

Anti Narcotics

What are their

challenges?

• Differing mandates

- Security

- Trade facilitation

- Revenue

- Public health

• Resource constraints

- Trained personnel

- Modern equipment / ICT

SO WHAT IS CHANGING AT THE BORDER?

Historical Approach Modern Approach

Priority on control Facilitation/control balance

Reform episodes Continuous improvement

High levels of physical inspection Intervention by exception (risk based)

Focus on goods Focus on information

Focus on identifying non-compliance Focus on compliance & non-compliance

Limited incentives for compliance Strong incentives for compliance

One size fits all Flexible solutions for different clients

Limited use of ICT Extensive use of ICT

Adversarial relationship with trade Constructive partnership with trade

Competition between agencies Collaboration between agencies

Limited cooperation with neighbors Extensive cross-border cooperation

Limited operational statistics Clear measures of performance

Immediate transaction focus Client compliance and audit focus

Fast, fair, predictable and transparent processing and clearance of import, export and transit goods

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

Coordinated Border Management:

Key Benefits

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 shared-

decision on high-risk cargo

Sharing of non-intrusive

inspection equipment and

inspection bays: e.g., Integrated

check posts and mirror image

facilities across borders

For Border Agencies For Trading Community

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

EXAMPLE OF TRADITIONAL APPROACH:

MADAGASCAR

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.

Madagascar does not have a formally designated lead border agency or

until very recently even an NTFC

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

Example of Modern approach:

Nordic experience of AN OSBP

• 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

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