1 Document title: Draft Reference Map for Cross-border Paperless Trade Processes 1 Version and Date: Version 0.9 as of 17 January 2018 Legal and Technical Working Group (LTWG) of the Interim Intergovernmental Steering Group on Cross-border Paperless Trade Facilitation 1. Introduction The reference map for cross-border paperless trade processes defines processes and documents involved in international trade transactions requiring cross-border exchange of data and information. The reference map is intended to be used as a reference in developing pilot projects under the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific. The reference map defines processes under the broader category of buy, ship and pay and then further down under the four categories of the United Nations Layout Key (UNLK) – namely commercial transaction, transport and related services, official control and payment. Then, the reference map defines sub-processes and documentation involved in each process as well as for which products/services such process is executed. For each documentation, a separate map is prepared with relevant information and references that would help design cross-border data exchange pilot project(s) at the level of specific process or document. This document is based on the earlier deliberations of the study report. 2 And the structure of this draft Reference Map is composed of Four (4) chapters as below: 1. Introduction 2. Cross-border process and related documents and data 3. Specification on cross-border trade documents and data 1 Please cite this document as: ESCAP Legal and Technical Working Groups on Cross-border Paperless Trade Facilitation (2018), “Draft Reference Map for Cross-border Paperless Trade Processes“, Version 0.9, 17 January 2018, Bangkok, ESCAP. 2 Analysis on the cross-border trade processes and recommended reference maps
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1
Document title: Draft Reference Map for
Cross-border Paperless Trade Processes1
Version and Date: Version 0.9 as of 17 January 2018
Legal and Technical Working Group (LTWG) of the Interim Intergovernmental
Steering Group on Cross-border Paperless Trade Facilitation
1. Introduction
The reference map for cross-border paperless trade processes defines processes and
documents involved in international trade transactions requiring cross-border exchange of
data and information.
The reference map is intended to be used as a reference in developing pilot projects under the
Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the
Pacific.
The reference map defines processes under the broader category of buy, ship and pay and
then further down under the four categories of the United Nations Layout Key (UNLK) –
namely commercial transaction, transport and related services, official control and payment.
Then, the reference map defines sub-processes and documentation involved in each process
as well as for which products/services such process is executed. For each documentation, a
separate map is prepared with relevant information and references that would help design
cross-border data exchange pilot project(s) at the level of specific process or document.
This document is based on the earlier deliberations of the study report.2 And the structure of
this draft Reference Map is composed of Four (4) chapters as below:
1. Introduction
2. Cross-border process and related documents and data
3. Specification on cross-border trade documents and data
1 Please cite this document as: ESCAP Legal and Technical Working Groups on Cross-border
9 Toward the realization of SCV, A Introduction of NEAL‐NET, 2012
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To evaluate the function of interface, pilot project was conducted by selected typical platforms and ports in China, Japan and the Rep. of Korea
respectively. China selected National Public Information Sharing Platform for Transportation & Logistics (LOGINK) and Ningbo‐Zhoushan Port to join
evaluation. Japan selected Tokyo‐Yokohama Port to join evaluation and Korea selected SPIDC as Korean plat form and Busan Port to join the
evaluation. China, Japan and the Rep. of Korea platforms provided query interface of container status and dynamic vessel schedule which comply
with NEAL‐NET Standard. In 2012, the pilots went successfully achieving its first stage.
Now NEAL-NET is expanding its coverage to other ports in the sub-region and planning to expand to EU and ASEAN in that near future. It is also
hoped that in the near future, logistics information sharing could be expanded to Air Transport and International Railway or Truck Transport through
NEAL-NET.
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Figure 4 Logistics information sharing of NEAL-NET
There are some concerns regarding the service and expansion of NEAL-NET. NEAL-NET has spent huge resource to harmonize the codes and
document slowing down its implementation and lots of capacity building programs have been provided to port operators at a sub-regional level.
However as there has been no international standards for logistics information sharing, except some commercial services, many existing public
logistics system does not have capability in its platform to interconnect with NEAL-NET nor meets the standards that NEAL-NET has developed.
Some other constraint is that some existing logistics platform are selling the logistics information at commercial base while NEAL-NET is a non-profit
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organization and there could be a conflict in the expansion of the NEAL-NET.
4.4 Cross-Border exchange of e-Phyto Certificate
Background
Introduction of electronic Certificate of Sanitary and Phyto-Sanitary have been subject of discussion for many years. Sanitary and Phyto-sanitary (SPS)
certificates are required for the majority of agricultural products traded around the world. On these certificates exporting countries verify food safety
and that the product meets the requirements of the importing country.
One of the early initiative on e-Certificate of Sanitary and Phyto-Sanitary was led by Australia and New Zealand. Two governments have
collaborated to develop and implement a web based system for electronic Certificate of Sanitary and Phyto-Sanitary, known as E-cert. This
partnership was formed following the Food Safety Quadrilaterals in Hawaii in 2002 where Australia, New Zealand, Canada and the USA made
commitments to trial E-cert for meat shipments during 200310. A pilot System was released on 1 July 2003 and went ‘live’ in early 2004. This e-Cert
project between Australia and New Zealand was very meaning and gain international attention as a pioneering G2G project. APEC endorsed it as a
one of paperless trade path finder projects at the APEC Leaders meeting in Los Cabos in 2002 and e-SPS was included in APEC Trade Facilitation
10 E-cert FACT SHEET – Australian Quarantine and Inspection Service
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Action Plan. But it has its limits as the system was available for read only access over the web helping other government agencies verifying the
contents of the Certificate reducing the opportunity for fraudulent activity.
Phyto-Sanitary Certificate is an official document issued by the national plant protection organization (NPPO) of the exporting country to the
national plant protection organization (NPPO) of the importing country. It certifies that the plants or plant products covered by the certificate have
been inspected per appropriate procedures and are free from pests and that they are considered to conform to the current phyto-sanitary
regulations of the importing country. With the current concerns over health and food safety and the viral spread of disease, there is great interest in
facilitating the movement of safe agricultural commodities.
History of e-Phyto Certificate initiatives
The first International Plant Protection Convention (IPPC) meeting on Phyto-Sanitary Certificate was held in Wageningen, the Netherlands in January
2006. During this meeting the possibilities and developments needed were discussed.
An expert working group (EWG) met in February 2008 to revise ISPM 7:1997 (Export certification system) and ISPM 12:2001 (Guidelines for
phytosanitary certificates). During the revision, it was recognized specific guidance would be needed to deal with electronic certificates and a blank
Appendix 1 (Electronic certification, information on standard XML schemes and exchange mechanisms) was included in the ISPM 12:2011
(Phytosanitary certificates). The report of this meeting can be found on the IPPC website.
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Figure 5 Phyto-Sanitary Certificate and e-Phyto
e-Phyto certification standards and procedures
IPPC has come up with a cross-border e-Phyto certification procedures through several work group discussions. Several past and on-going cross-
border (pilot) projects and a support of UN/CEFACT for a harmonization of different standard messages were of great help to IPPC to set up a
standard measure of e-Phyto Certificates. In 2014, IPPC officially adapted revised International Standards for Phytosanitary Measures 12
(‘PHYTOSANITARY CERTIFICATES’) with appendix 1 (‘Electronic phytosanitary certificates, information on standard XML schemes and exchange
For its importance in international trade, e-Phyto Certificate has been one of the primary objects for digitization for trade facilitation and counties
with high portion of agricultural industry have led the e-Phyto Certificate project together with e-Sanitary Certificate such as Netherland. And
harmonization of documents standard has been well cooperated with UN/CEFACT strengthening its standardization.
However, so far the e-Phyto Certificate transaction remains as an adminicular information and quarantine agencies still require paper Phyto
Certificate for import quarantine declaration. And another challenge that national quarantine agencies are facing is the burden of peer to peer
connection set by previous pilot projects. To address this issue, a new of e-Phyto Hub concept; a central repository model, has been introduced in
IPPC. This central repository model may can help the peer to peer connection issue but it also has other constrains such as ownership of the system,
difficulties in catering local requirements, development cost and extra transaction fees by commercialized service.
4.5 Advance Manifest System
Overview
From 2012, the Korea Customs Service (KCS) is requiring electronic advance manifest for cargo being carried into and out of the customs territory of
Korea. Submittal of information to the Korea Manifest System (KMS) is as below:
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• Goods imported via air transportation into Korea
• Goods exported via air or ocean transportation from Korea
Korea Customs has launched the Korea Manifest system to control illegal or counterfeit exports, improve import clearance procedures and become
aligned with international standards. Timing requirements for sending shipment data to the KMS varies depending on which mode of transportation
is used to carry the goods:
• Short haul inbound flights (with a duration less than four hours) must be filed upon departure;
• Long haul inbound flights (with a duration over four hours) must be filed at least 4 hours prior to arrival into Korea;
• Export air cargo must be filed 30 minutes prior to loading
• Containerized Maritime export cargo (except short sea shipping) must be filed at least 24 hours prior to loading at the port of departure;
• Bulk / Break bulk maritime export cargo (except short sea shipping) must be filed prior to departure;
• Short Sea shipping maritime export cargo must be filed at least 30 minutes prior to departure
It is the responsibility of the forwarder/NVOCC to submit manifest data to the Master carriers directly but it is the responsibility of the parties
tendering cargo to the carrier to provide accurate information at the time of shipping instruction submission. Carriers will need to receive the
following information to submit a filing with the time limits specified:
• Shipper name and address
• Consignee name and address
• Precise goods description
• Type of packages
• Number of packages
• Container number (if applicable)
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• Seal number (if applicable)
• Gross mass (kg)
• Export Good Permit Number (EPN)
Legal basis under the provisions of the Customs Act related to the Advance Manifest System (hereinafter referred to as “the AMS”) is stated below:
• (Article 135, Clause 2) If it is required for going through rapid entry and customs clearance procedure, and conducting efficient
supervision and control, the collector of customs (hereinafter referred to as “customs collector”) may have the shipping or aviation
company to which the ship or aircraft entering into the port submit the list of passengers, manifest, etc. prior to the entry, under the
conditions as prescribed by the Commissioner of the Korea Customs Service.
• (Article 136, Clause 2) When a foreign trade vessel or aircraft desires to depart from an open port, the captain thereof shall, prior to
departure, obtain a departure permit from customs collector. The captain of a vessel or aircraft shall submit a list of goods boarded at
the open port.
• (Article 140, Clause 2) When goods are to be loaded to or unloaded from any foreign trade vessels or aircraft, a declaration thereon
shall be made to customs collector and confirmation thereon shall be obtained on the spot from customs officers.
Essential particulars related to the AMS, including timeline of submission, specification templates, preparation method and application for corrections
should comply with the “Notification of Loading and Unloading Procedure of Entry and Departure for Bonded Cargo (2011-7, March 18, 2011)” by
the KCS. Based on the WCO SAFE Framework and in consideration of special circumstance of short-flight or short-sea-shipping and capability of
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concerned logistics entities, due date and time of submission defined by the KCS is as following:
Table 11 KAMS timeline of submission
Type Deadline
SEA Import (Principle) At least 24 hours before commencement of loading at
the port of loading.
(Short sea shipping) Before departure at the port of loading
(Bulk) At least 4 hours before arrival at the port of entry
Export (Principle) At least 24 hours before commencement of loading
(Short sea shipping) Prior to loading, 30 minutes before departure
(Bulk, Transit cargo) Before departure
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AIR Import (Principle) At least 4 hours before arrival
(Short haul) Before departure at the airport of loading (more
specifically, at time of “wheels up” of aircraft)
(Express Cargo) At least 1 hour before arrival
Export Prior to loading, 30 minutes before departure
* “Wheels up” is the moment when an airplane’s wheels reach its body after takeoff
The scope of short-haul-flight areas is limited to China, Taiwan, Hong Kong, Japan, and Far-Eastern Russia. In case of export sea cargo, the Philippines,
Vietnam, Cambodia, Thailand, Indonesia, Malaysia, and Singapore are also regarded as short-sea-shipping areas.
Process flow
(a) Import process
Despite the Advance Manifest System introduction announcement made by KCS in 2012, the AMS has not been implemented to maritime cargo until
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now. But still current regulation requires carriers to consolidate House Manifest into Master Manifest and submit them to KCS 24 hours before arrival
of vessel. In the beginning, the purpose of development of MFCS was more on the cargo control rather than security. So, through the whole customs
clearance chain, all the logistics stakeholders can view cargo information and submit related information or report based on the shared Manifest
information in MFCS inherited from the original information that carriers and forwarders provided.
E-Manifest filing process:
① The carriers transmit Master Manifest data to MFCS and Forwards submit House Manifest based on the House Bill of Lading
information they received from overseas partner to MFCS. MFCS consolidate Master and House Manifest automatically. The
carrier must transmit consolidated e-manifest data to KCS 24 hours before vessel arrival for a long-distance cargo while it is
before arrival of vessel for a short distance cargo.
② Based on the Manifest submitted, KCS selects cargo to be inspected. In fact, as received Manifest does not contain as much
valuable information as import declaration for risk management, most of dangerous or suspicious cargo selection occur after the
declaration submission process.
③ Carrier transmit unloading report with unloading place in it to KCS based on Master Manifest.
④ If the cargo is selected at the cargo selection process, after unloading from the vessel, the cargo is moved to inspection area and
inspected
⑤ Once the cargo moves into and out of bonded warehouse, the warehouse reports the cargo carry-in and carry-out with Manifest
reference number and Bill of Lading number.
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Figure 12 e-Manifest filing flow for import to Korea
(b) Export process
Because of the strong government policy for the export promotion, the regulatory control of export process is very much simplified compared to
that of import process. Unlike Manifest filing process for inbound cargo, in case of outbound cargo, customs export declaration must be submitted
before the outbound Manifest filing. And this difference makes a different point of cargo selection to be inspected. Export customs declaration can
be applied one month before the loading of cargo and this period can be extended to one year. In practice, sometimes the declaration is made even
before the production of exported item.
Manifest filing process for outbound cargo
① The exporter or authorized customs broker requests export declaration of a cargo and get an acceptance from KCS.
② Carrier submits electronic Master Manifest to MFCS and Forwarder (or NVOCC) submits electronic House Manifest to MFCS each.
The outbound Manifest must contain the export clearance reference number in it. Electronic Manifest must be submitted 24 hours
before loading for a long-distance cargo and 30 minutes before loading for a short distance cargo. In case of a bulk cargo and a
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transshipment cargo, due time is before departure.
③ The risk management system of KCS validate the information and selects cargoes to be inspected by utilizing the declaration
information of cargoes.
④ If a cargo is selected to be inspected, exporter can notify KCS when the cargo can be inspected. On the day, a cargo shall be moved to
a bonded inspection area by exporter or its authorized agent and KCS conducts physical inspection.
⑤ When all the inspection is over or if no inspection is required, all the subsequent House Manifests are consolidated under one Master
Manifest and consolidated Manifest is filed to KCS system by MFCS.
⑥ Once the Manifest is accepted, carrier load the cargo.
Figure 13 e-Manifest filing flow for export from Korea
MRA was introduced as a tool for trade facilitate the trade, increasing the market accessibility, and eliminating or reducing the Non-Tariff Barrier
(NTB) and often misinterpreted that it may require to unify Standards or Technical Regulations. Then what is MRA and how does 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. Now, 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.
The most important thing in establishing and maintaining the mutual recognition scheme is how to manage the trust in the mutual recognition
arrangement. The best known worldwide mutual recognition scheme is Multilateral Recognition Arrangement (MLA) of the International Accreditation
Forum (IAF). The IAF is the world association of conformity assessment Accreditation Bodies. Its primary function is to develop a single worldwide
program of conformity assessment which reduces risk for business and its customers by assuring them that accredited certificates may be relied
upon14. The IAF ensures that Accredited Bodies follow the framework of accreditation and its rules to maintain the consistent level of deliverables.
Basic scheme in maintaining the minimum level of credibility is to use peer evaluation to ISO/IEC 17011: 2004 (General Requirements for
Accreditation Bodies Accrediting Conformity Assessment Bodies) on Accreditation Bodies and ISO/IEC Guide 65 or ISO 17021-1 2015 (Conformity
assessment -- Requirements for bodies providing audit and certification of management systems) on Certification Bodies which are accredited by
Accreditation Bodies. Below figure illustrate how the multilateral recognition scheme works in conformity assessment across the borders.
14 Certification and Accreditation Framework, Global Food Safety Initiative
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Figure 14 General Multilateral Recognition Arrangement of Conformity Assessment
In implementing MRA on conformity assessment, there are two phases; (a) Recognition of laboratories and its test result and (b) Recognition of
certification of recognized laboratories. Most regulatory transactions have traditionally involved testing and certification of imported product in the
importing country. First phase MRA provides for the mutual recognition of test results, which allows testing to be done in the exporting country and
having it recognized in the importing country. Second phase provides for the mutual recognition of certification, allowing certification to be
undertaken in the exporting country and having it recognized in the importing country.
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Figure 15 Comparison of 'Before MRA procedures' and 'After MRA procedures'
Cases of MRA
(a) APEC TEL MRA (Mutual Recognition Arrangement)
In June 1998, the APEC1 Telecommunications and Information Ministers agreed to update APEC-wide processes for the testing and type-approval of
telecommunications equipment. This landmark Arrangement, the Mutual Recognition Arrangement for Conformity Assessment of
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Telecommunications Equipment (APEC TEL MRA15), was the first multilateral agreement of its type in the world. It reduces a significant barrier to what
is projected to be a US$60 billion industry by 2010.16 This Arrangement was expected to streamline the Conformity Assessment Procedures for
telecommunications and telecommunications-related equipment and facilitate trade among the APEC member economies.
15 http://www.apectel.org
16 A Guide For Conformity Assessment Bodies to the APEC TEL Mutual Recognition Arrangement, APEC
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Figure 16 APEC TEL MRA status
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Figure 17 Sample Test Report issued by Testing Laboratory accredited by APEC TEL MRA CAB
In case of Korean government, they have entered into MRA with Canada, Chile and Viet Nam
governments. So, when Korean exporter exports telecommunications equipment to Canada, exporter
applies for laboratory test at Korean laboratory institute accredited by Korean Conformity
Assessment Body (CAB) and the report will be sent to the counterpart laboratory also accredited by
Canadian CAB. The test result is sent via e-mail, online application of the Canadian laboratory
institute or by courier (the transmit measures are case sensitive). The importer in Canada contacts
the institute and applies for certification. The Canadian laboratory institute review the test result and
once confirmed, it issues Certificate to the product. However, even with the introduction of MRA, the
harmonization of the test result and Certificate is far to realize though most of them are with similar
forms.
(b) OECD MAD (Mutual Acceptance of Data)
The OECD Mutual Acceptance of Data (MAD) system is a multilateral agreement among OECD
members on the harmonization of chemical control by reducing duplicative testing. The concept of MAD was adopted by OCED council in 1981. A
further Council Act was adopted in 1989 to provide assurance that the data are indeed developed in compliance with the Principles of GLP. This
Council Decision-Recommendation on Compliance with GLP establishes procedures for monitoring GLP compliance through government inspections
and study audits as well as a framework for international liaison among monitoring and data-receiving authorities In 1997, OECD Council made a
electrical and electronic components, equipment and products. There are 60 member countries 22 association member countries under IECEE
umbrella.
Initially MRA has been initiated by private sector. ILAC (The International Laboratory Accreditation Cooperation) is the international body leading the
MRA among private laboratories. In APLAC MRA, 71 laboratories from 58 countries has joined.
Achievement and Limitations
Mutual recognition of Certificates or other regulatory documents provides huge benefits to traders as well as regulatory bodies as it prevents
unnecessary redundancy procedures at importing side. For example, it is estimated that MAD saves governments and chemical industry over
EUR 150 million every year by allowing the results of a variety of safety tests done on chemicals and chemical products such as industrial chemicals
and pesticides to be shared across OECD18.
18 OECD’s Mutual Acceptance of Data (MAD) system, OECD ENVIRONMENT, HEALTH AND SAFETY BRIEFS
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Table 12 Estimated annual costs and savings of the OECD’s EHS Programme
The survey conducted by Dutch Ministry of Trade and Industry tells that simplification of process can bring more benefits than process
automation. The Ministry surveyed traders on the type of trade facilitation measures that would make a direct impact on their daily operations.
Three of the most common answers related to measures do not require automation. First, a central enquiry point would increase transparency
and anticipation. Second, a move towards mutual recognition of inspection certificates would greatly facilitate trade, especially a removal of
double SPS inspection procedures. Third, traders (and customs authorities) would save on administrative work if customs authorities
minimised the requirement of nonstandard documents.19
19 THE ROLE OF AUTOMATION IN TRADE FACILITATION”, OECD TRADE POLICY WORKING PAPERS, NO. 22, OECD PUBLISHING
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But until now, the online transaction of certificates or test result by MRA is mostly depending on the capacity of accreditation body and no
standardization of the digitized MRA certificates and test results have been found.
4.7 Cross-Border exchange of e-Certificate of Origin20
Background
Among other cross-border shipping documents, Certificate of Origin has been identified as a key document to be harmonized and circulated
through online system for seamless paperless trade transactions. And to solve the issues at the international level, various regional or international
cooperation frameworks have been discussed and prepared by international bodies such as UN, APEC and WCO. For instance, World Chambers
Federation set up a Task Force to develop an International Certificate of Origin Guideline which is including the adaption of electronic Certificate of
Origin21.
Another important approach is the case of APEC. APEC Paperless Trading Subgroup under E-Commerce Steering Group has initiated several
Pathfinder projects, as part of APEC’s Strategies and Actions towards a Cross-Border Paperless Trading Environment. The Pathfinder projects (and
country who proposed it) of APEC PTS are as below:
20 This case study is adapted from the other study of the author
Unlike e-SPS whose issuance and final recipient are the same kind of inspection agencies, Certificate of Origin has difficult changes as it has different
stakeholders at its issuing and receiving sides and this difference makes higher barrier in its implementation across borders.
In Korea, KTNET has been providing EDI based Certificate of Origin service with Korea Chamber of Commerce and Industry since 2000. But as the
C/O need to be submit to Customs in overseas, the C/O should be delivered in paper form for many years. To make matters worse, some overseas
Customs require authenticated C/O which is being registered and stamped at the embassy in exporting countries and it has been a setback in
establishing a cross-border e-C/O exchange attempt. In 2004, KTNET proposed e-C/O project to Trade-Van of Chinese Taipei with their web-based e-
C/O system. However, it was impossible to conduct the project without the participation of both Governments. By utilizing the APEC PTS meeting,
they could initiate Private-Public Partnership Meeting. The Government of both economies come to an agreement to have annual bilateral meeting
for paperless trade with private sectors. In 2005, Korea had its first PPP meeting with Chinese Taipei and proposed e-C/O project. And a series of
Korea and Chinese Taipei Private-Public Partnership Meeting for Paperless trade was held thereafter. Regular participants are MKE, Korea Chamber of
22 The Australian Quarantine and Inspection Service has forwarded the Japanese Ministries of Health and Welfare and Agriculture, Forestry and
Fisheries annually 38,000 electronic health certificates for meat exports to Japan (Australian DFAT, 2001).
23 It was estimated that the application and transmission of electronic certificates of origin to buyers, banks
and the relevant regulatory agencies would reduce the entire process from 4-7 days to just a few minutes
via Internet, and ensure direct savings about SGD 2.9 million per year for Singapore traders (APEC 2002b).
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Commerce and Industry and KTNET from Korea and Bureau of Foreign Trade, Customs and Trade-Van from Chinese Taipei.
Operation model/arrangement
Both governments agreed on the PAA framework for the secure exchange of e-C/O. MOU on the exchange of e-C/O was signed by the mission
offices of each economy in 2009. In 2010, finally the first transaction of e-C/O was made from Korea to Chinese Taipei. Now Korean exporters does
not have to visit Chinese Taipei mission office in Seoul or Busan for the certification of paper C/O any more.
Korea-Chinese Taipei e-C/O exchange scenario is as below:
① Korean exporter uses the KTNET uTradeHub (uTH), the Korean Single Window for paperless trade, to complete the CO application
form over the Internet, and send it KCCI. This online ECO application system is operated by KTNET
② Korean exporter uses the KTNET uTradeHub (uTH), the Korean Single Window for paperless trade, to complete the CO application
form over the Internet, and send it KCCI. This online ECO application system is operated by KTNET
③ KCCI, as the CO issuing authority, reviews and approves the ECO application using its own legacy system and sends a confirmation
to the Exporter through KTNET. Exporters can have an access to the ECO database for inquiry according to the ECO code issued or
download the ECO message to its legacy system.
④ The Exporter, sends the approved ECO to the Importer with the uTH of KTNET which is interconnected with Trade-Van’s online
ECO service. Before the ECO is being delivered to Trade-Van, KTNET signs the approved ECO on behalf of KCCI and exporter by
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the PKI mutual recognition framework of Pan Asian e-Commerce Alliance: an organization for cross-border paperless trade service.
It is no longer necessary for exporters to take the paper CO to the Chinese Taipei Mission Office in Seoul for authentication, as the
digital signature technology provides more than sufficient assurance to Chinese Taipei Customs on the origin, authenticity and
integrity of the ECO. In the meantime, the goods are being shipped to Chinese Taipei from Korea, which takes about 3 days
⑤ The ECO system of Chinese Taipei will remind the importer with an email notification that the ECO has been received from the
exporter.
⑥ The importer or customs broker will submit customs import declaration electronically quoting the relevant electronic e-CO reference.
If necessary, Customs of Taiwan province of China can visit the ECO database website of KCCI for inquiry. After inquiry and taxation, Customs will
grant a release to the goods. A customs broker or an importer will then arrange to pick up the goods from the terminal or holding area and delivers
them to the importer’s warehouse or required location.
Achievements and Limitations
This service has been renowned as the best practice on paperless trade through APEC. The APEC Case Study of Electronic Certificate of Origin (e-CO)
shows that significant tangible benefits in terms of costs reductions have been experienced for both importers and exporters from the application of
electronic CO between Chinese Taipei and Korea.
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The savings for an exporter includes the following components:
• Time administrative savings of 4 hours 20 minutes (equivalent to US$74 at US$ 17 per hour);
• Direct expenses saving of US$143.50; and
• Reduction in processing time by two days on the export side of the process.
While the savings for an importer includes the following:
• Time administrative savings of 7 hours 15 minutes (equivalent to US$ 58 at US$ 8 per hour);
• Direct expenses saving of US$ 147;
• Reduction in processing time by three days on the import side of the process, and time saved from avoiding the need to send the paper CO
to Chinese Taipei.
Now Korea is proposing e-Phyto Certificate exchange project to Taiwan province of China. And other PAA members such as InterCommerce
of Philippines are joining the initiative.
However, despite the success of cross-border e-C/O project, there are limitations and important lessons to be observed. In the first place,
what took the most of its time to realize the e-C/O exchange was entering into bilateral agreement, not the technical specifications. From its
beginning of the dialogue between two economies, it took almost 5 years to come up with an MOU.
Secondly, as the e-C/O project was framed with PAA framework, except the e-C/O standard document, this model restricts itself within PAA
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member’s economies.
Lastly, traders need to exchange not only C/O but also other trading documents in electronic forms to enjoy the true benefit of e-C/O as exporters
are still sending the other trading documents in paper forms. Even if the C/O is a key document, without making all documents in electronic forms
and without covering the whole global supply chain with these electronic forms, the benefits will be limited.
It seems that currently, it is inevitable for each country to go for bilateral approaches to realize a mutual recognition of cross-border electronic
document and data with the absence of international framework. As it is proven in many cases that cross-border exchange of trade documents and
data can bring huge benefits in global supply chain, it is necessary to have a regional or international level of legal framework for the recognition of
trade related documents and data.
4.8 Trade financing service case (SWIFT TSU and BPO)24
Background
Recent globalization of industries has expanded supply chain into a global sourcing and it has given impact to the payment method of international
trade. The portion of T/T and open account transaction is increasing while the portion of Documentary Credit transaction; so, called traditional trade
transaction, is decreasing. However, the absolute value of traditional trade instruments continues to grow and they remain a key element of bank
service portfolios even though they represent a falling percentage of global trade. Market demands for individual aspects of traditional trade services,
24 Most of information are quoted from SWIFT web site (http://www.swift.com) and its publication
For a BPO transaction, the bank will be involved in all stages of an open account transaction, starting from the initial baseline submission and it will
reduce the overall operational cost associated with the trade transaction. Banks can also offer value-added services like financing, cash forecasting,
liquidity and working capital management to their corporate clients based on underlying trade transactions and reporting. Large banks can also offer
white label processing tools for the banks that would not like to build their own BPO processing tool.
BPO can also benefit corporates operationally as there is no manual processing like document creation, verification, validation, tracking and reporting.
It will also result in significant cost savings for the corporate through:
• Early access to pre and post shipment finance needs
• Risk mitigation, as the undertaking is between buyer and a seller bank.
• No need to reissue the document in case the shipment happens at a different location, due to external factors such as natural disasters.
• No banking fees on document discrepancy handling and tracking (only if TSU is applied)
• No verification and amendments charges
• Early liquidity/working capital management due to faster transaction processing and settlement for the exporters
• Importer can access the goods early, as he/she will receive the documents quickly
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Figure 21 Mitigation of the payment default or delay by payment assurance
In the first half of 2014 there were 340 new transactions (249 for the first half of 2013). As of July 2014, while 58 banks have adopted the BPO
including 18 of the top 20 Trade banks and there are over 30 corporates live on BPO/TSU (including companies like VALE, Omron, BP, and 7Eleven)
volumes are still very small.
Some barriers include banks’ implementation cost and requirements for paper trade documents by regulatory administrators. Banks that are willing
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to offer BPO services need to invest in technology infrastructure/system capable of supporting and communicating with ISO20022 compliant
messages as well as the Transaction Matching Application. Else, they may not be able to provide BPO services to their clients. And paper trade
documents are also required to release of cargoes from customs in most of countries under local legislation.