Trade Facilitation and WTO

Negotiations on trade facilitation Negotiations on trade facilitation at the World Trade Organizationat the World Trade Organization

Draft agreementDraft agreement

Draft TextDraft Text

Three presentationsThree presentations

1) Linking global trends and what happens at the WTO

2) Trade Facilitation: An Introduction3) Trade Facilitation at the WTO

[email protected] Geneva, April 2011





10 global trendsTrade facilitation

measuresImplications for

development

Trade Facilitation: Linking global trends and what happens at the WTO



development


Loooong term

1.1.Exports of manufactured goodsExports of manufactured goods• Today 80% of developing

countries’ exports are manufactured goods, up from only 20% two decades ago

2.2.Globalized productionGlobalized production• About 1/3 of global trade is

intra-company trade• Around 30% of trade is

trade in components and unfinished goods

Trade in intermediate goodsTrade in intermediate goods

Source: WTO, ITS, 2009

3.3.Increased security concernsIncreased security concerns• Security measures along

the entire supply chain

4.4.New Geography of TradeNew Geography of Trade• Especially the share of South-South

trade has doubled since 1990

5.5. Regional integration Regional integration • Increased regional and

transit trade

6.6.Within Logistics expenditureWithin Logistics expenditure…inventory

holding decreases, and Transport expenditure increases

Data for USA, via DOT

7.7.TechnologiesTechnologies• Containerization, shipping networks• Use of computers and Internet

8.8.Privatizations / concessionsPrivatizations / concessionsPorts, Shipping lines, Railways, Airlines,

Airports

9.9.Tariff reductionsTariff reductions• For most developing countries’

exports, international transport costs are 2 to 3 times higher than Customs tariffs on imports in developed countries. Aver age

Ar gentina

Ur uguay

Par aguay

Br azil

Chile

Bolivia

Per u

Ecuador

Sur inameVenezuela

Colombia

Tr inidad and Tobago

Bar bados

Gr enada

St Vincent and the Gr enadines

St Lucia

Dominica

Antigua and Bar buda

St Kitts and Nevis

Dominican Republic

Haiti

JamaicaBahamas

Panama

Costa Rica

Nicar aguaHondur as

El Salvador

Belize

Guatemala

Mexico

0%

2%

4%

6%

8%

10%

12%

14%

0% 2% 4% 6% 8% 10% 12% 14%

TARIFF/CUST

International freight

Import Customs duties USA

Source: Miccio/ Perez 2002

10.10.Negotiations on trade facilitation Negotiations on trade facilitation at the World Trade Organizationat the World Trade Organization

1. Manufactured goods 2. Globalized

production 3. Security concerns 4. Trade geography 5. Regional integration 6. Logistics 7. Technologies 8. Privatizations 9. Tariff reductions10. WTO negotiations



development




1. Manufactured goods 2. Globalized production 3. Security concerns 4. Trade geography 5. Regional integration 6. Logistics 7. Technologies 8. Privatizations 9. Tariff reductions10. WTO negotiations

advance ruling


authorized traders


Risk analysis

3. Security concerns


Internet publication

1. Manufactured goods 2. Globalized production 3. Security concerns 4. Trade geography


5. Regional

integration

“Regional approaches”


Separate release from clearance

Waiting trucks at a border

0%

20%

40%

60%

80%

100%

Admin.Transport

Inventory

Admin. 4% 4% 4% 4% 4% 4%Transport 47% 53% 53% 57% 59% 63%Inventory 49% 44% 43% 39% 37% 33%

1980 1985 1990 1995 2000 2005


7. Technologies

Automated payments,Electronic documents


Customs to accept commercial information, information platforms


Transport costs and trade facilitation more important than tariffs !



… a response to trends in international trade, transport, logistics and technologies !



development


““Aid for Trade” Aid for Trade”

Trade and Transport Facilitation is not Trade and Transport Facilitation is not only good for trade but also has other only good for trade but also has other

positive side effectspositive side effects The introduction

of ICTs by Customs may encourage smaller companies to also connect to the internet.


positive side effects (cont.)positive side effects (cont.) Capacity

building raises the country’s overall human capital.


positive side effects (cont.)positive side effects (cont.) A framework for

bank guarantees for transit trade may also generally improve the financial system.


positive side effects (cont.)positive side effects (cont.) A single window experience for

trade may help to introduce single windows elsewhere.


positive side effects (cont.)positive side effects (cont.) Reforms of legal regimes

that facilitate the use of electronic documents may also modernize other business practices.


positive side effects (cont.)positive side effects (cont.)

Mechanisms to consult with stake holders may be beneficial for other policy decisions as well.


positive side effects (cont.)positive side effects (cont.) Increased transparency is good for

good governance in general.


positive side effects (cont.)positive side effects (cont.) Are poor countries poor

because of red tape?OR

Is red tape the result of a lack of development?

ANSWER: It is both

More income to finance trade facilitation

-> Better trade facilitation-> More Trade-> More income to finance

trade facilitation

Lower Transport Costs-> More trade-> Economies of scale-> Lower Transport Costs

Better services-> More trade-> More income to

finance infrastructure-> Better services

The “tipping point”: Start with The “tipping point”: Start with Trade and transport facilitationTrade and transport facilitation

Trade and transport facilitation is good

for trade and for development

Development is good for trade and for trade and transport

facilitation



development


Questions?Questions?



2) Trade Facilitation: An Introduction

3) Trade Facilitation at the WTO


• Scope of Trade facilitation

• Traders’ main concerns

• At the border• Key areas of work

Trade Facilitation: An Introduction





TRADE FACILITATION

Process of eliminating all unnecessary elements and duplications in formalities, processes and procedures

Simplification Harmonisation

Alignment of national procedures, operations and documents with international conventions, standards and practices.

Standardisation

Process of developing internationally agreed formats for practices and procedures, documents and information.

TRADE FACILITATION

Standardisation


International rules and standardsInternational rules and standards

• IMO

• ISO

• UN-CEFACT

• WCO

• WTO

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UN Lay-out Key(UNECE Rec.#1)

TRADE FACILITATION




Standardisation


TRADE FACILITATION

Harmonisation


TRADE FACILITATION




Standardisation


TRADE FACILITATION


Simplification


• Traders main concerns



GOODS

PAYMENT

The Trade Transaction

S BINFORMATION

ManufacturerSupplier RetailersWholesalers Customer

Prod

uct

Com

pany

A

Com

pany

B

What do traders want ?What do traders want ?• Simple and smooth processing of formalities• Means to allow goods to proceed promptly

to their final destination. No longer itineraries, no unpacking, no delays

• A single control point for all public services• Standard forms, assembled into a ‘single

bunch of documents’, compatible with trade documents and transport contracts

• Predictable and transparent rules and procedures

Arrival Notice

Letter of InstructionInvoice, PO

Importer’s Bank

Ocean Carrier

Customs House Broker

Line of CreditProforma Invoice

Shipping & funding detail

Cargo Status

Vessel Booking Request

CargoStatus

Shipping & Funding Detail

Exporter’s Bank

Importer Exporter

Vessel Booking ConfirmationBill of Lading

Rated Bill of Lading

Dock Receipt

Freight Forwarder / NVOCC

Purchase Order

LCConfirmation

AES

Dock receipt

Pick-up & Delivery Order

Vessel Manifest

Dock receipt

Release/Approval

Demurrage guarantee & payment

Inland Carrier

Manifest

Pick-up & Delivery Order

Importer Notice

Converted VesselManifestCustoms (Export)

Port

Customs ( Import )

Original B/L, Invoice, PO, Packing List

Inland Carrier

Marine Insurance Company

Fund Transfer

Confirmed Line of Credit

Release/HoldNotice

Purchase Exportation Importation

ImportTerminalOperator

Proforma Invoice

Export Declaration

Export Declaration

Bill of lading, Documentation

Import Docs

Export Terminal Operator

• 20 actors;• > 200 data

elements;• Manual procedures;• Multiple data

systems;• > 30 documents or

messages.

Data exchangeData exchangein International Tradein International Trade

Too many documents…Too many documents…• Enquiry• Order• Despatch advice• Collection order• Payment order• Documentary credit• Forwarding instructions• Forwarder's invoice• Goods receipt• Air waybill• Road consignment note• Rail consignment note• Bill of lading

• Freight invoice• Cargo manifest• Export licence• Exchange control doc.• Phytosanitary certificate• Veterinary certificate• Certificate of origin• Consular invoice• Dangerous goods

declaration• Import licence• Customs delivery note• TIR carnet

PRE-ARRIVAL & ARRIVAL INFORMATIONPre-Arrival• Vessel’s characteristics or ship’s particulars, kind and tonnage of cargo, vessel’s ETA and master’s requests must

be notified to the Harbour Master Department every 48hrs, 24hrs or at least six hours prior to vessel’s arrival at the port’s anchorage areas.

Arrival• The component of the committee that performs vessel clearance consists of 10 members from Harbour Master

Department, Department of Customs and Excise, Immigration Police, National Shipping Agency and Broker, and Quarantine Authorities. Ten copies of cargo manifest are required to be provided to the Department of Customs and Excise.

• Entry permit (arranged by official shipping agency), • Last port clearance certificate, • 15 lists of last port of call (at least 10 last ports), • 5 declarations of vessel’s arrival, • 10 import cargo manifests, • 3 bills of loading, • 2 transit cargo manifests, • 7 crew lists, • 7 passenger lists, • 3 lists of vessel’s provisions, • 3 lists of crew personal effects, • 1 copy of health declaration certificate, • 1 copy of vaccination list, • 1 copy of drugs and narcotic list, • 1 copy of fresh water origin, • 3 cargo plans, • 1 copy of valid original ship’s certificates, • Certificate of vessel's registration,

– International load line certificate, – International tonnage certificate, – International oil pollution prevention certificate, – Cargo vessel safety equipment certificate, – Cargo vessel safety construction certificate, – Cargo vessel safety radio certificate, – Minimum safe manning certificate.

• Exemption Certificate (to be inspected by quarantine officers ).





Crossing theCrossing the

Country Destination

BORDER

Commercial regulationsand practices

Traffic regulationsand operational practices

Vehicle standardsand regulations

Design, construction,maintenance and inter-operability

Country Origin

SERVICES

OPERATIONS

VEHICLES

INFRASTRUCTURE

GOODS Products conformity,standards & regulations

Infrastructure

Operations

Services

Vehicles

Goods

Fina

nces

Custo

ms

Comm

erce

Indu

stry

Inter

ior

Trans

port

Fore

ign A

ffairs

Cham

bers

of C

om.





Role assigned to CustomsRole assigned to CustomsRevenue Collection of import taxes (duties & excise)

Protection of society <health, safety> (drug trafficking, firearms, environment, counterfeit etc.)

Economic development <trade, investment> (trade facilitation)

Protection of Economic Interests (domestic production & services industry)

Security <terrorism>(shifting focus to supply chain)

CCUUSSTTOOMMS S FFUUNNCCTTIIOONN

Functional linkagesFunctional linkages

CustomsCustomsAutomationAutomation

CustomsCustomsTime ReleaseTime Release

RiskRiskAssessmentAssessment

SingleSingleWindowWindow

Post-auditPost-auditControlsControls

AdaptedAdaptedH.S.H.S.

StandardizedStandardizeddocumentationdocumentation

SequencingSequencing

ID Linkages betweenTrade Facilitation measures

Q2 05

27.3

1 Standardization and simplification

2 Introduction of single administrativedocument (SAD)

3 Computerization and automation of Customsprocedures

4 Risk management, pre-arrival processing andpost-clearance audit

5 Customs-related judicial or administrativemeasures

Q4 04

13.22.1 30.116.1 10.46.2

Q1 05

20.27.11 3.46.35.12 9.1 27.2 13.3 20.323.1

Cooperation at the Cooperation at the national national levellevel

• Between the government institutions concerned by foreign trade: Finance, Commerce, Transport

• With the trading community: importers and exporters

• With service providers: transport operators, banks, insurance companies…

Cooperation at the Cooperation at the regionalregional levellevelBORDERCountry A

GovernmentAuthorities

Min. Trade,Finances (Customs),Transport, Interior,

Foreign Affairs, etc.

Private sectorChambers of Commerce,professional associations,corridor-based interests

(around projects such as:ICD, Free Zones, etc.)

NTTFC, Clusters,Public-Private Partnerships

Country BGovernmentAuthorities

Min. Trade,Finances (Customs),Transport, Interior,Foreign Affairs, etc.

Private sectorChambers of Commerce,professional associations,corridor-based interests

(around projects such as:ICD, Free Zones, etc.)

NTTFC, Clusters,Public-Private Partnerships

Bilateral consultationson trade & transport issues

Professional networks

Regionalcoordination

Cooperation at the Cooperation at the internationalinternational levellevel





Questions?Questions?





From early 70’s to 1996…From early 70’s to 1996…• Work of the UNECE and UNCTAD

– UNECE Recommendations– UNCTAD FALPRO

• UN International Symposium on Trade Efficiency (UNISTE) in Columbus, Ohio (1994):– Banking & Insurance;– Customs;– Business Information for Trade;– Transport;– Telecommunications.

Existing non-compulsory Existing non-compulsory international instrumentsinternational instruments

and best practicesand best practices• Internationally-accepted customs and practices,

negotiated by interested Governments through international organizations and private sector institutions: WCO, ECE, IMO, ICC-UNCTAD …

• However: Lack of effective implementation of the instruments.

• Non-binding feature of these commitments.

Existing non-compulsory Existing non-compulsory international instrumentsinternational instruments

and best practicesand best practices• Internationally-accepted customs and practices,

negotiated by interested Governments through international organizations and private sector institutions: WCO, ECE, IMO, ICC-UNCTAD …

• However: Lack of effective implementation of the instruments.

• Non-binding feature of these Non-binding feature of these commitments.commitments.

GATT 1994 (i.e. binding WTO)GATT 1994 (i.e. binding WTO) Article V Freedom of Transit Article VIII Fees and Formalities connected with

IMP/EXPortation Article X Publication and Administration of Trade Procedures Agreement on the Implementation of Article VII (Customs

Valuation); Agreement on Preshipment Inspection; Agreement on Import Licensing Procedures; Agreement on Rules of Origin; Agreement on Technical Barriers to Trade; Agreement on Sanitary and Phytosanitary Measures.

• Work on areas of particular interest to developing countries and LDCs:Identification of TF needs and priorities

““Annex D” - ModalitiesAnnex D” - Modalities

PrioritiesPriorities• Imports/ Exports• Trade partners• Commodities• Mode of

transport• User / provider• Transit /

land-locked

Trade and Transport Facilitation is Trade and Transport Facilitation is “good business” for the countries“good business” for the countries

• It tends to have a high rate of return• However, it requires:

– Infrastructure– Capacities– Initial investment... Which developing countries may

not necessarily be able to assume easily

NeedsNeeds• Capacity

Building• Technologies• Financial

assistance• Institutional

change • Time

Negotiating positionNegotiating position

Depends on: • The prioritiespriorities of my own trade and

service providers• The needsneeds to receive assistance or

special and differential treatment

Taking into account Annex DTaking into account Annex D

Costs of implementation, Needs

Country priorities

Costs of implementation

Country priorities

- +- +AccomodateAccomodate

+ -+ -ActiveActive

subj. to.subj. to.T.A. , S&DT.A. , S&D

+ ++ +Pro-activePro-active

- -- -PassivePassivesubj. to subj. to

S&DS&D

Costs of implementation

Country priorities

- +- +AccomodateAccomodate

+ -+ -ActiveActive

subj. to.subj. to.T.A. , S&DT.A. , S&D

+ ++ +Pro-activePro-active

- -- -PassivePassivesubj. to subj. to

S&DS&D

Recent situationRecent situation

• Negotiations in 2 key areas:– Substantive provisions regarding the

Articles– Special & Differential Treatment; and

Technical Assistance & Capacity Building

• Draft Agreement in document TN/TF/W/165

Draft agreementDraft agreement

ARTICLE 1: PUBLICATION AND AVAILABILITY OF INFORMATIONARTICLE 2: PRIOR PUBLICATION AND CONSULTATIONARTICLE 3: ADVANCE RULINGSARTICLE 4: APPEAL PROCEDURESARTICLE 5: OTHER MEASURES TO ENHANCE IMPARTIALITY, NON-

DISCRIMINATION AND TRANSPARENCYARTICLE 6: FEES AND CHARGES CONNECTED WITH IMPORTATION AND

EXPORTATIONARTICLE 7: RELEASE AND CLEARANCE OF GOODSARTICLE 8: CONSULARIZATIONARTICLE 9: BORDER AGENCY COOPERATIONARTICLE 9 BIS: DECLARATION OF TRANSHIPPED GOODSARTICLE 10: FORMALITIES CONNECTED WITH IMPORTATION AND

EXPORTATIONARTICLE 11: FREEDOM OF TRANSITARTICLE 12: [CUSTOMS] COOPERATION [MECHANISM FOR [TRADE

FACILITATION AND] [[CUSTOMS][TRADE]] COMPLIANCE]ARTICLE 13: INSTITUTIONAL ARRANGEMENTSARTICLE 14: NATIONAL COMMITTEE ON TRADE FACILITATIONARTICLE 15: PREAMBLE/CROSS-CUTTING MATTERSTRANSITIONAL / SPECIAL AND DIFFERENTIAL TREATMENT PROVISIONS FOR

DEVELOPING COUNTRY MEMBERS AND LEAST DEVELOPED COUNTRY MEMBERS




[email protected] Geneva, April 2011Thank You!

Thank You!

Trade Facilitation and WTO

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