Trade Facilitation Role of Modern Technology Hamid Alavi Regional Trade Facilitation Coordinator Middle East and North Africa Region, World Bank Prepared for E-Government BBL October 14, 2004 Facilitating market access Quality standards and lowering technical barriers
Regional Trade Facilitation Coordinator
Middle East and North Africa Region, World Bank
October 14, 2004
Quality standards and lowering technical barriers
Market access schemes
Access to export finance and insurance
Lowering transaction costs through
Improved transport and trade logistics
Enhanced information flowsWhat is Trade Facilitation?
Transparent and harmonized regulations
Improved ports facilities and procedures
Efficient and transparent customs procedures
Simplified trade document processing and clearance processesLowering Transactions Costs
Trade logistics costs are as important as tariffs
Each day saved is equivalent to 0.5% tariff (Hummels)
7% of value of world trade is cost of administration of trade logistics (UNCTAD)
Time becomes even more important in multi-stage production (global supply chain)
% of vertical specialization in trade (use of imported inputs for exports) has grown 30% in the past 20 yrs and accts for half of overall trade growth.
Willingness to pay to save time:
Share of airfreight in US grew from 7% in 65 to 30% in 98
Airfreight 7 times as expensive as ocean shipping.Time is a Trade Barrier
Imagine if the contents of a ship can be processed in half a day instead of a day …
Infrastructure capacity effectively doubled
Twice the cargo
Twice the # of ships
Twice the number of containers
Increased harbor duties, excise and revenue
Considerably lower cost to traders
…even more benefits:
These efficiencies offer wider attraction to trading partners
Efficiency in vessel turnaround attracts new trading, market center, distribution business.Time is a Trade Barrier
A wide-body jet can carry fresh produce from supplier in one hemisphere to the buyer in the other hemisphere on the same or next day.
BUT it can take 10 days (in Yemen) to :
Obtain customs and TC approvals
Book and schedule transport and distribution
Obtain payment approvals
Complete the transaction
This means removing 10 days from the selling season, revenue that cannot be replacedTime is a Trade Barrier
Port efficiency improvements (from 75 hemisphere to the buyer in the other hemisphere on the same or next day.th to 25th percentile) could reduce transport costs for a country as much as shortening it distance from its trading partners by 9,000 km (IDB 2000)
$100 million could be saved each year through the application of ICT (UNCTAD)
Singapore gained 1% of GDP
Tunisia caseTime is a Trade Barrier: What Gains?
Many hemisphere to the buyer in the other hemisphere on the same or next day.documents
A typical trade transaction can take as many as 150 different documents to complete
Raw material and component supplier
Government authorities- export promotion/approval/stat.
Local transport and warehousing companies
Port and harbor authorities
Shippers (sea, air, road, rail, canal, …)
Bank and insurance companies
Each have own set of paper forms and interactions with other organizations (incl. counterparts in importing countries)…Take a look ….!!Trade transaction is a complex process
IMPORT hemisphere to the buyer in the other hemisphere on the same or next day.
MANUFACTURING/ VALUE ADD
Air, Sea, Land
Release to Port
Automated Processing hemisphere to the buyer in the other hemisphere on the same or next day.
Standard processing of declarations and other governmental applications
Enhance risk management
Efficient flow of information
Automated routing / sharingRole of ICT in Trade Facilitation
Mauritius Trade Net has reduced average clearance times of goods from 4 hours to 15 minutes
Tunisie Trade Net (TTN) has reduced processing times of trade documents from max of 18 to 7 (3.5 days in cases not requiring technical controls).
Time savings in Singapore (STN) translate into 1% of GDP per year.ICT reduces Time and Increases Efficiency - Exapmles
Systems built around different agencies goods from 4 hours to 15 minutes
Single windowsDifferent ways to use ICT for TF
A facility providing standardized information and documents with a single body to fulfill requirements for import, export and transit regulations and clearance.
Expedite and simplify information flows between trading community and the government“Single Window”
Single Authority ( with a single body to fulfill requirements for import, export and transit regulations and clearance.Swedish Single Window)
Receives information, disseminates to relevant authorities, coordinates controls to prevent undue hindrance in logistics chain.
In Sweden case, the customs performs selected tasks on behalf of other government agencies.Models of “Single Window”
Single automated with a single body to fulfill requirements for import, export and transit regulations and clearance.system for the collection and dissemination of information
Integrated system: data is processed through the system (Mauritius)
Interfaced system: data is sent to the agency for processing (Tunisia)
Combination of the aboveModels of “Single Window”
Automated information transactions system ( with a single body to fulfill requirements for import, export and transit regulations and clearance.Singapore, Tunisia)
Trader can submit electronic declarations to various authorities for processing and approval in one single application.
Approval transmitted electronically from authorities to the trader’s computer.
Fees, taxes and duties are computed automatically and deducted from the trader’s bank accountModels of “Single Window”
TUNISIE TRADENET Services with a single body to fulfill requirements for import, export and transit regulations and clearance.
Middle East and North Africa Region, World Bank
January , 2004
Activities Before TradeNet After TradeNet with a single body to fulfill requirements for import, export and transit regulations and clearance.
for different govt. bodies
Import clearance time
Phased Approach with a single body to fulfill requirements for import, export and transit regulations and clearance.
Quick wins to secure confidence
International Standards (UN EDIFACT, etc.)
International information exchange requires standards
Surveys / evaluation / fine –tune
Implementing bodyImplementation Approach
Sector specific software with a single body to fulfill requirements for import, export and transit regulations and clearance.
Declarants / Freight forwarders (Declaration)
Shipping agents (manifest – sea / air)
EDI serverSoftware / System Requirements
Trade Processes - Chain effect with a single body to fulfill requirements for import, export and transit regulations and clearance.
As good as weakest link in the chain
Benefits only visible when everything works
Many details that must fit together
Resistance to change
Shift from paper to electronic processes
Prepare to manage project risks
-Multiple activities / issues to address
There is potential dramatic improvements that can be made in trade clearing process when administrative and political commitment joins forces with advances in information technology.
But there is much more involved than simply applying information technology to trade documents.Success Factors
Commitment at the highest level of government trade clearing process when administrative and political commitment joins forces with advances in information technology.
Cooperation among private sector operators and various government stakeholders at all stages of the process
adoption of a regulatory framework that allowed for electronic processing and signature
simplification of customs requirements
extension of electronic processing to all import and export administration and other agencies involved in trade transactions
adoption of internationally recognized standards and codes in order to ensure a common language among different users and in different countries
aligning the relative costs of processing paper documentation and on-line processing.Success Factors
Importer/Exporter trade clearing process when administrative and political commitment joins forces with advances in information technology.
Ports and Harbours
Cert. of Origin
etc.Players in the Trade Value Chain