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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

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trade facilitation role of modern technology

Trade FacilitationRole 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

what is trade facilitation
Facilitating market access

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 flows

What is Trade Facilitation?

1

lowering transactions costs
Reduced transport costs

Transparent and harmonized regulations

Improved ports facilities and procedures

Efficient and transparent customs procedures

Simplified trade document processing and clearance processes

Lowering Transactions Costs
time is a trade barrier
Trade occurs in physical space and moving goods requires time.

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
time is a trade barrier5
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
time is a trade barrier6
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 :

Process orders

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 replaced

Time is a Trade Barrier
time is a trade barrier what gains
Port efficiency improvements (from 75th 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 case

Time is a Trade Barrier: What Gains?
trade transaction is a complex process
Many documents

Many players

A typical trade transaction can take as many as 150 different documents to complete

Raw material and component supplier

Manufacturer/assembler

Customs agents/brokers

Customs authorities

Government authorities- export promotion/approval/stat.

Local transport and warehousing companies

Container handlers

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
slide9

IMPORT

Pay Taxes

Clear Customs

Release Goods

MANUFACTURING/ VALUE ADD

EXPORT

/Dues

Air, Sea, Land

International

Transport

DOMESTIC

SUPPLY CHAIN

Customs

Storage

Port

Raw Materials

Packaging

Transport

Storage

  • Port Processes
  • Internal Transport
  • Storage
  • Container Handling
  • Loading

Ship’s

Documents

“Informal

Processes”

IMPORTER

  • Manifest
  • Bills of Lading
  • Sea/AW Bill
  • Container Plans
  • Quotations
  • P.O.s
  • Delivery Notes
  • Con. Notes
  • Invoices
  • Statements
  • Invoice
  • Packing List
  • Declaration
  • Delivery Note
  • Payments
  • Remittance
  • Advice

Book/Confirm Transport

Shipping

Documents

Pay Taxes

Clear Customs

Release to Port

/Dues

Foreign

Chambers

Commerce

  • Certificates
  • Of Origin

MANUFACTURER

Port

Port

Customs

Customs

  • P.O.
  • Contract Terms
  • Delivery Instructions
  • L.O.C.

Informal

Processes

  • Invoice
  • Packing List
  • Declaration
  • Delivery Note

Receive

Goods

Overseas

Embassies

  • “Legal
  • Invoices”

EXPORTER

FOREIGN

BUYER

Post/

Courier

  • Certificates
  • Of Origin
  • Form A
  • EUR.1

Chamber of

Commerce

Finance

Ministry

Pay

Bank

Bank

  • Licenses
  • Certificates
  • Government
  • Approvals
  • Licenses
  • Certificates
  • Government
  • Approvals

Government

Departments

L.O.C.

Packing List

Invoice

LOC Approval

LOC Courier

role of ict in trade facilitation
Automated Processing

Standard processing of declarations and other governmental applications

Enhance risk management

Efficient flow of information

Automated routing / sharing

Role of ICT in Trade Facilitation
ict reduces time and increases efficiency exapmles
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
single window
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”
models of single window
Single Authority (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”
models of single window15
Single automated 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 above

Models of “Single Window”
models of single window18
Automated information transactions system (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 account

Models of “Single Window”
slide20

TUNISIE TRADENET Services

  • Formation
  • Assistance Technique
  • Ingénierie informatique
  • Intermédiation documentaire électronique
  • Titre de Commerce Extérieur
  • Document de Contrôle
  • Technique (AMC/APE)
  • Déclaration en Détail des
  • Marchandise
  • Paiement électronique des
  • droits et taxes douaniers
  • EDIFACT
  • Messagerie X400
  • Web
e government and trade facilitation the application of ict to trade document flows in tunisia

E-Government and Trade FacilitationThe Application of ICT to Trade Document Flows in Tunisia

Hamid Alavi

Middle East and North Africa Region, World Bank

Prepared for

January , 2004

slide24

Activities Before TradeNet After TradeNet

Electronic Transmission

Common Electronic

document

System-assisted

Semi-Automated

3 days

15 minutes

Physical delivery

Separate Documents

for different govt. bodies

Individuals

Manual

8 days

2 days

Present documents

Codification

Verification

Import clearance time

Declaration processing

steps
Steps
  • Simplification / elimination of procedures
  • Standardization of information that responds to needs
  • of different operators
  • – Single Administrative Document
  • Facilitating exchange of information
  • - Common and intelligent network
implementation approach
Phased Approach

Complexity

Quick wins to secure confidence

International Standards (UN EDIFACT, etc.)

International information exchange requires standards

Pilot users

Surveys / evaluation / fine –tune

Implementing body

Implementation Approach
software system requirements
Sector specific software

Declarants / Freight forwarders (Declaration)

Shipping agents (manifest – sea / air)

Customs

EDI server

Software / System Requirements
issues
Trade Processes - Chain effect

As good as weakest link in the chain

Benefits only visible when everything works

Complex

Many details that must fit together

Resistance to change

Organizational

Shift from paper to electronic processes

Prepare to manage project risks

-Multiple activities / issues to address

Inter-institutional dependencies

Issues
success factors
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
success factors30
Commitment at the highest level of government

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
players in the trade value chain
Importer/Exporter

Trade Professionals

Customs Broker

Freight Forwarder

Shipping Agent

Container Terminal

Ports and Harbours

Storage

Transport

Shippers

Customs

Revenue

Technical Controls

PIAs

Cert. of Origin

PSI

“Legal Invoices”

Banks

Insurers

etc.

Players in the Trade Value Chain