trade facilitation as a key to unlocking trade potential ...€¦ · cooperation, wto trade...
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Trade facilitation as a key to unlocking trade potential
along OBOR
Tengfei Wang
Economic Affairs Officer
Trade, Investment and Innovation Division
UNESCAP
GIZ-ESCAP Workshop on promoting economic
diversification of the Landlocked Developing Countries
and the One Belt One Road Policy: Assisting sustainable
development, Bangkok, 14 May 2016
Agenda
1. Why Trade Facilitation important for OBOR?
2. How to address trade facilitation along
OBOR - 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 along OBOR?
2
What is trade facilitation?
There is no universal definition but trade facilitation is
often referred to as the “plumbing of international trade” .
“The (WTO) Trade Facilitation Agreement contains
provisions for expediting the movement, release and
clearance of goods, including goods in transit. It also sets
out measures for effective cooperation between customs
and other appropriate authorities on trade facilitation and
customs compliance issues.”
United Nations Centre for Trade Facilitation and
Electronic Business (UN/CEFACT): The simplification,
standardization and harmonization of procedures and
associated information flows required to move goods
from seller to buyer and to make payments. 3
Mandates for ESCAP to promote trade
facilitation along OBOR
Vienna Programme of Action for
Landlocked Developing Countries for
the Decade 2014-2024
Priority 1: Fundamental transit policy
issues
Priority 2: Infrastructure development and
maintenance
(a) Transport infrastructure
(b) Energy and information and
communications technology
infrastructure
Priority 3: International trade and trade
facilitation
(a) International trade
(b) Trade facilitation
Priority 4: Regional integration and
cooperation
Priority 5: Structural economic
transformation
Priority 6: Means of implementation
Letter of intent between ESCAP and
China on promotion regional
connectivity and the Belt and Road
Initiative
• Article 9 lists “trade facilitation” as a
prioritized areas
• Article 11 emphasizes “cross-
border paperless trade and
transport facilitation”
Why Trade Facilitation important for OBOR?
- from the State Council of China
5
Why Trade Facilitation important for OBOR?
6
IV.
Cooperation Priorities
Policy coordination
Facilities connectivity
Unimpeded trade
Financial integration
People-to-people bond
Some keywords:
trade facilitation, customs
cooperation, WTO Trade
Facilitation Agreement, “single-
window”, information exchange,
investment…
Why Trade Facilitation important for OBOR? “Extraordinary claims require extraordinary evidence” - Carl Sagan
7
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).
0%
100%
200%
300%
400%
0% 20% 40% 60% 80% 100%
Tra
de c
ost
s (e
xcl
udin
g
tari
ff)
Trade facilitation implementation (%)
Strong correlation between trade facilitation and trade costs
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 along OBOR remain
A study jointly carried out by ESCAP and Islamic Development Bank provides empirical
evidence that countries along OBOR 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.
Trade facilitation and trade diversification
8
Export diversification
Export diversification vs.
trade costs
Documents related to Export of Rice in Thailand (from purchase order until the cargo container leaving the sea port)
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)
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) * Number in parenthesis is the no. of data elements
36 Documents involving 15 parties, and more than 1,140 data elements to be filled in
Regulatory Docs
Transport Docs
Buy/Pay Docs
UN/CEFACT Buy-Ship-Pay Model
10
Buy Ship Pay
Supplier – Intermediary – Authorities – Customer
Prepare for export
Export Transport Prepare for
import Import
Commercial
Procedures
Transport Procedures Regulatory
Procedures
Financial Procedures
Establish
contract
Order goods
Advise on
delivery
Request payment
Establish transport
contract
Collect, transport
and deliver goods
Provide waybill, gods
receipt and status
reports
Obtain export/import
licenses, etc.
Provide customs declaration
Provide cargo declaration
Apply trade security
procedures
Clear goods for
import/export
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
1.1) Conclude
Sales Contract
2.1) Make Advance
Payment
3.1) Obtain Export License
3.5) Terminal Procedure and
Customs Exam at Port
Exporter (or
representative)
Importer
Exporter’s
bank
Importer’s
bank
ICD
SAD
Ministry of Commerce
(Directorate of Trade)
Customs
broker
3) Ship
3.8) Prepare Shipping Documents
1) Buy
2) Pay
Use Case Diagram of Rice Export
Customs
department
Ministry of Finance
(Revenue Department)
Feeder line &/or
Box operator
3.7) Arrange Port Clearance
for Vessel Departure
3.4) Declare CusDec 2
3.2) Arrange Shipping (maritime)
3.3) Arrange Pre-Inspection
And Fumigation
3.6) Arrange Berthing of Vessel
Private
Bank
Transporter
UMFCCI
DMA
MPA
Port Customs
Ship
3rd party
inspector
MCB
UNNExT Business
Process Analysis
Guide for the
Simplification of
Trade Procedures
Customs department
(at port)
Exporter (or representative)
3.5.1Request
examination
of goods
3.5) Terminal Procedure
and Customs Exam
at Port
Exporter (or
representative)
3rd party
inspector
3.5.19 Transport container
to the container terminal
Found Incorrect
3rd party inspector
Port terminal
3.5) Terminal Procedure and Customs Exam at Port
Found correct
3.5.10 Register case file
3.5.12 Arrange X-ray of
cargo (random selection)
3.5.2 Receive
documents
3.5.11 Check Export
License & duty
3.5.15 Fumigate
the container(s)
after Customs
Examination
3.5.1 Request
for fumigation
3.5.2 Receive
the request for
fumigation
Port terminal
3.5.1 Request
for delivery of
loaded container
Transporter
3.5.2
Transporter delivers
loaded container
to terminal
3.5.3 Issue security card
3.5.1 Prepare for
security card Customs
department
SAD Transporter
3.5.6 Receive terminal charges
3.5.16 Sealed container
3.5.13 Assign Customs
exam group (Group A to J)
3.5.14
Examination of
goods
Shipping
Instructions
3.5.21 Load the cargo
onto the vessel
3.5.5 Make payment Terminal charges;
(lift on/lift off; cargo inspection & labor fees)
National
Registration Card
3.5.7 Prepare to obtain
gate pass for container
Paid challen 103 challen
Equipment interchange receipt
Shipping instructions (Copy)
3.5.8
Review documents and
issue gate pass
3.5.9 Weigh container
at export container yard
3.5.17 Prepare documents for
terminal operation procedure
103 challen
3.5.18
Verify documents and
Customs seal
3.5.2 Review
documents
3.5.4 Complete challen as in shipping
instructions for terminal charges
Sealed case file from
Customs headoffice
(ED, EL, Invoice,
Packing List) (Original)
Shipping
Agency
Department
(SAD)
3.5.20
Prepare cargo
loading list
based
on mate
receipt
3.5.15 Case file is sent back
to the Customs department
13
1 2 3 4 5 6 7 8 9 10 11
Day
Process
30
20
10
0
5
25
15
35
14 days
3 days
2 days
1 day
3 days
4 days
1 day
1
2
4
3
5 6 7 8
9
10
11
1 day
1 day
1. 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
Trade Facilitation: at-the-border, behind-the-border and beyond-the-border issues
e-Single Window and paperless trading
National Data Harmonization
BPA: the first step to be taken before introducing other trade facilitation measures
Document Simplification & Standardization
Cross Border Data Exchange
Business Process Analysis for Trade Facilitation 1
6
5
3
2
4
Process Simplification and Harmonization
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…
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
15
A typical export process from China to Kyrgyzstan
16
Similar studies in South Asia including LLDCs
17
Inception Workshop in Bangkok 2013 National workshop in Phuentsholing Bhutan 2014
National Workshop in Dhulikhel Nepal 2014 National Workshop in Dhaka Bangladesh 2014
TF Monitoring at Macro-level
18
50
100
150
200
250
300
350
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
Ad
-va
lore
m t
rad
e co
sts
(per
cen
t)
LDCs
LLDCs
SIDs
LDCs, LLDCs, SIDs
Asia-Pacific
East Asia-3
ESCAP-World Bank Trade Costs Database
0%10%20%30%40%50%60%70%80%90%
100%
ESCAP-led joint United Nations regional
Commissions survey on TF and paperless
trade implementation
Legislative
•Enabling paperless trade (Res. 68/3)
•Regional Arrangement
on cross-border
paperless trade
facilitation (Res. 70/6)
Framework Agreement on Facilitation of Cross-
border Paperless Trade in Asia and the Pacific
The second meeting of the Interim Intergovernmental Steering Group on Cross-Border Paperless Trade Facilitation held in Bangkok on 23-25 March 2016, with the participation of 31 ESCAP member States, finalized the text of the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific
Trade procedures along the selected OBOR
corridors are analyzed by country teams
Database and study
report to support
evidence-based policy
making A mapping of trade
procedures and bottlenecks
is available, along with
baseline data to monitor
future progress..
Action plans Action plans are
available for trade
facilitation and
paperless trade
implementation in
OBOR
Capacity building Government officials and
business representatives in
the participating countries
have increased capacity to
develop and implement
appropriate trade
facilitation measures .
Proposed activities/projects (1): Mapping and analysis of trade
procedures along selected OBOR corridors
A pilot project to electronically exchange selected trade data and
documents across border is implemented among interested OBOR countries
Analytical report A report highlighting the
lessons learned from the
pilot exchanges and
describing the relevant
technical and legal models
is made available to other
OBOR countries and the
Parties to the new
Framework Agreement.
Model for cross-
border electronic
exchange of selected
trade-related data A preferred model for
cross-border electronic
exchange of selected
trade-related data and
documents among the
selected OBOR countries
has been identified,
including list of technical
and legal requirements to
be harmonized.
Proposed activities/projects (2): Pilot cross-border electronic
exchange of trade-related data among OBOR countries
BPA studies were
carried out for selected
products along specific
corridors
From China to
Kyrgyzstan;
from Kyrgyzstan to
Kazakhstan; and
from Kazakhstan to
Azerbaijan
22
A journey of a thousand miles begins
with a single step: Trade Facilitation
Trade
Logistics
Investment
Poverty
reduction
employment
Inclusive
development
SDGs