EDICOM 2012Experience of Trade Facilitation initiatives in Japan by JASTPRO as the focal point for UN/CEFACT to disseminate the standards and recommendations by UN/CEFACT

Kazumi Hirai

Ex. Director

JASTPRO

1

JapanAssociation forStandardization andTrade PROcedures

Kazumi Hirai

How Japan could have succeeded in developing it as a Trading Nation

Development

Nationality

Culture

History & Gegraphy

2012/11/222

Our Success thus far has been based upon:

which are different from your economy by nature

Kazumi Hirai

For rapid industrialization the “CARD” is not one

Innovation of productivity

Development of Quality Control

Development of Infrastructure

Computerization (e-XXX)

Standardization

2012/11/22

3

Japan succeeded in it, as we did them continuously

Kazumi Hirai 4

Agenda

1. About JASTPRO – What/how we did

2. First Period of JASTPRO’s activities

3. Second Period of JASTPRO’s activities

4. Third Period of JASTPRO’s activities

5. Personal consideration on standardization

6. Comparison of National Strategy taken by EU, USA, and Japan

2012/11/22

Kazumi Hirai

The Foundation of JASTPRO in 1974

In 1974 the Ministry of Finance (Customs Bureau), the Ministry of Industry, and the Ministry of Transport (*1) had taken the initiative to establish the organization named JASTPRO (Japan Association for Standardization and Trade Procedures), according to the ECE recommendation No. 4 issued in 1974.

2012/11/22

5

*1 : The name of those three Ministries are older names at that time

Kazumi Hirai

The ECE Recommendation No.4 published in 1974

The Governments of countries Members of UNECE, in accordance with their national regulations, encourage the implementation of recommendations on facilitation of international trade procedures through setting up national organizations or committees, or by administrative or other suitable means.

To draw the attention of the Economic and Social Council and the other United Nations Regional Economic Commissions to the desirability of establishing national committees on facilitation of international trade procedures, in countries not members of the Economic Commission for Europe, where they do not exist.

2012/11/22

6

Kazumi Hirai

The Economies which implemented the Rec. 4 as of 1995 are 58 to establish their “PRO” organization (FALCOM)

ECE members (26): Austria, Belgium, Bulgaria, Switzerland, Czech, Germany, Denmark, Estonia, Spain, Finland, France, United Kingdom, Hungary, Ireland, Israel, Iceland, Italy, Netherlands, Norway, Poland, Romania, Russian Federation, Sweden, Slovakia, Turkey, USA

Asia Pacific (15): Afghanistan, Australia, Bangladesh, China, HK, India, Korea, Sri Lanka, Malaysia, Pakistan, New Zealand, Philippines, Singapore, Thailand, Chinese Taipei

Latin America (9): Brazil, Colombia, Costa Rica, Dominica, Guatemala, Honduras, Panama, Paraguay, El Salvador,

Africa (8): Gabon, Kenya, Morocco, Nigeria, Senegal, Tanzania, South Africa, Zambia

2012/11/22

7

Kazumi Hirai

JASTPRO was founded by PPP

Under the initiative by three Ministries the following organization donated the fund to establish JASTPRO as a Public-Private-Partnership:

Japan Foreign Trade Council, Inc. Japanese Ship-owners’ Association The General Insurance Association of Japan Japanese Bankers Association Japan Customs Brokers Association The Japan Warehousing Association Inc. Japan Airlines International Co., Ltd. Japan Keirin Association Japan Ship Promotion Association

(Note: All the above names of organization are at the point of donation in 1974.) 2012/11/22

8

Kazumi Hirai

So many stakeholders exist in international trade lane PPP with Consultation and Communication are indispensable when an economy seek trade facilitation

BUY

• Exporter/Importer• Government

Authorities• Insurance

Companies• Chamber of

Commerce• Trade agency,

trading cos.• Banks for trade

finance• Trade Facilitation

Org.

SHIP

• Customs• Freight

Forwarders• Customs Brokers• Shipping Cos.

Airlines• Surface

transporters• Inspection

authorities• Quarantine

Services• Other

Intermediates

PAY

• Banks• Trade agency• Trading

companies

9

Without appropriate cooperation by those stakeholders, the performance of international trade procedures cannot be improved. That is why the Recommendation No.4 was issued

2012/11/22

Kazumi Hirai

What JASTPRO did till now 　First Period ( Its advent / early 1980s)

When all the business had been done manually by paper To standardize paper format and to simplify items to write in

To build awareness on the ECE Recommendations and standards set out by WP.4, JASTPRO had organized local committees inviting both public and private sectors

Second Period ( late 1980s / late 1990s)On the basis of using large sized electronic computers, represented by IBM’s machines, and leased line and/or VAN services between organizations, to promote UN/EDIFACT, the first generation International EDI standard

Third Period (early 2000s / Now)To enjoy the economy by the ICT innovation using personal computers and Internet, to develop and promote EDI in XML (Extended Markup Language)

102012/11/22

Kazumi Hirai

What is consistent from the beginning till now

Throughout these three periods, as the authorized focal point in Japan for UN/CEFACT and AFACT, we JASTPRO has promoted reengineering of business process by means of tools which was regarded the best as available at respective age, under PPP

2012/11/22

11

Kazumi Hirai 12

Agenda

1. About JASTPRO – What/how we did

2. First Period of JASTPRO’s activities

3. Second Period of JASTPRO’s activities

4. Third Period of JASTPRO’s activities

5. Personal consideration on standardization

6. Comparison of National Strategy taken by EU, USA, and Japan

2012/11/22

Kazumi Hirai

By standardization of paper format, we can streamline the process to handle the business documents, also we can minimize errors made during the course of works to set out documents

Firstly JASTPRO had promoted the implementation of the UNECE Recommendation No.1, i.e. United Nations Layout Key for Trade Documents (First release in 1973, revised one in 1981) ） and its successive Recommendations

2012/11/22

13

1. In the First Period, what JASTPRO did – The Basics of JASTPRO’s activities Standardization of paper format

2012/11/22

Kazumi Hirai 14

Concept of United Nations Layout Key for Trade Documents

Data items in general to be used across Industries (mainly for commercial purpose

Data items particularly specific to an industry such as commodity, invoice details etc. …

Data items relevant to the function of a document, i.e. signature etc. (columns for free entry) A4 size in vertical, line pitch is 1/6

Inch(4.24mm), character pitch 1/10 inch (2.54mm),

Standardization and Simplification (S & S) of paper format are not an older story, but are valid and effective measure even after the implementation of electronic documents (EDI) till now

S & S of entry items can cut man-hours to set out documents

(In case of public documents) Enforcement of S & S can check arbitrary addition of entry items by a public authority

In combination with the implementation of standard code sets, S & S can cut man-hours to convert codes, and rationalize the database maintenance works

S & S can cut the works to compile definitions of entry data items as manuals for users, every time to set out them

S & S facilitate the development of packaged software at more economical cost

2012/11/22

Kazumi Hirai 15Legibility and readability are very essential to avoid miss understanding

Kazumi Hirai

UN/ECE Recommendation No. 6 in 1983: “Aligned Invoice Layout Key for International Trade”

The Recommendation No. 11 issued in 1978: “Standardization of format and simplification of trade procedures for transportation of Dangerous goods”

The Recommendation No.12 issued in 1979: “Measures to Facilitate Maritime Transport Documents Procedures”

2012/11/22

16

1. In the First Period (continued)– The Basics of JASTPRO’s activities Standardization of paper format (#2)

Kazumi Hirai

The Recommendation No.13 issued in 1979: “Facilitation of Identified Legal Problems in Import Clearance Procedures”

The Recommendation No.18 issued in 1981: “Facilitation Measures related to International Trade Procedures”

The Recommendation No. 22 issued in 1989: “Layout Key for Standard Consignment Instructions”

2012/11/22

17

1. In the First Period (continued)– The Basics of JASTPRO’s activities Standardization of paper format

Kazumi Hirai

Development of Japanese version of standard formats based on the ECE Recommendations

JASTPRO Format No.1 published in 1978• Commercial Invoice, Packing List, Certificate of

Origin, Shipping Instruction, Maritime Insurance policies

JASTPRO Format No.2 published in 1979• Dangerous Goods Application

JASTPRO Format No.3 published in 1979• Dispatch Order

2012/11/22

18

JASTPRO had organized local committees to invite stakeholders in order to set out Japanese version of standard formats, which are fitted with customary business procedures in Japan, keeping conformity with the ECE Recommendations

Kazumi Hirai 19

Agenda

1. About JASTPRO – What/how we did

2. First Period of JASTPRO’s activities

3. Second Period of JASTPRO’s activities

4. Third Period of JASTPRO’s activities

5. Personal consideration on standardization

6. Comparison of National Strategy taken by EU, USA, and Japan

2012/11/22

Kazumi Hirai

2. In the Second Period, what JASTPRO did to promote the implementation of standards and recommendations of Electronic Data Interchange (EDI) by UN/CEFACT

2012/11/22

20

The Recommendation No. 14 issued in 1979: “Authentication of Trade Documents by Means Other than Signature”

The Recommendation No.25 issued in 1995: “Use of the United Nations Electronic Data Interchange for Administration, Commerce and Transport Standard (UN/EDIFACT) ”

The Recommendation No.26 issued in 1995: “Commercial Use of Interchange Agreements for EDI”

The Recommendation No.31 issued in 2000: “Electronic Commerce Agreement”

Kazumi Hirai

2. In the Second Period, JASTPRO also propagated the Recommendations on unified code

The Recommendation No. 3 issued in 1974: “Code for the Representation of Names of Countries” ISO3166

The Recommendation No. 5 issued in 1974: “Abbreviations of INCOTERMS”

The Recommendation No. 7 issued in 1975: “Numerical Representation of Dates, Time and Periods of Time”

The Recommendation No. 9 issued in 1996: “Alphabetic Code for the Representation of Currencies” ISO4217

The Recommendation No. 16 issued in 1980: LOCODE - Code for Trade and Transport Locations

The Recommendation No. 17 issued in 1982: PAYTERMS - Abbreviations for Terms of Payment

2012/11/22

21

Kazumi Hirai 22

For example

Recommendation No. 3 to use ISO 3166Country code

Iran = IR Japan = JP

Recommendation No.16 UN/LOCODE

Tehran = IRTHR Tokyo=JPTKY

Recommendation No. 7

21st November 2012 2012/11/21

Recommendation No. 9

US$ = USD Japanese Yen = JPY

2012/11/22

Kazumi Hirai

The Recommendation No. 19 issued in 1981: “Code for Modes of Transport “

The Recommendation No. 20 issued in 1985: “Codes for Units of Measure Used in International Trade”

The Recommendation No. 21 issued in 1986: “Codes for Passengers, Types of Cargo, Packages and Packaging

Materials”

The Recommendation No. 23 issued in 1990: “Freight Cost Code – FCC”

The Recommendation No. 24 issued in 1995: “Trade and Transport Status Codes”

The Recommendation No. 28 issued in 2000: “Codes for Types of Means of Transport”2012/11/22

23

2. In the Second Period, JASTPRO also propagated the Recommendations on unified code

2012/11/22

Kazumi Hirai 24

Rec. No. 19Mode of transport

Rec. No. 16UN Location code

ISO Country code

Rec. No. 17 Terms of payment

Rec. No. 9Currency code

Rec. No. 20 Units of measure

Rec. No. 28Means of transport

Commodity code

Rec. No. 21Package code

Kazumi Hirai

2. In the Second Period, JASTPRO didextra works to disseminate UN/EDIFACT related Standards and Recommendations

JASTPRO had organized local committees to translate and compile the following publications in Japanese such as:

1. UN/EDIFACT Guide Book Japanese version

2. UN/EDIFACT Syntax Rule Version 4 Japanese version

3. UN/EDIFACT Message Design Guideline Japanese version

2012/11/22

25

Kazumi Hirai

2. In the Second Period, in 1991, JASTPRO had co-organized Asia EDIFACT Board

In 1991, Korea, Singapore, Chinese Taipei, and Japan had established Asia EDIFACT Board in order to facilitate the UN/CEFACT Rapporteur for ASIA, whose mission is;

(a) Promote UN/CEFACT’s interests and activities among Governments,

intergovernmental organizations, relevant trade associations and business and trade facilitation organizations;

(b) Encourage the participation of experts in UN/CEFACT’s work program and stimulate the implementation of UN/CEFACT’s standards, recommendations and other deliverables;

(c) Coordinate UN/CEFACT’s activities in the region.

2012/11/22

26

Kazumi Hirai 27

Agenda

1. About JASTPRO – What/how we did

2. First Period of JASTPRO’s activities

3. Second Period of JASTPRO’s activities

4. Third Period of JASTPRO’s activities

5. Personal consideration on standardization

6. Comparison of National Strategy taken by EU, USA, and Japan

2012/11/22

Kazumi Hirai

3. In the Third Period, JASTPRO has continued collaboration with UN/CEFACT, which has developed ebXML with OASIS

The latest formation of UN/CEFACT Japan Committee for PPP to disseminate UN/CEFAC Standards and Recommendations

2012/11/22

28

UN/CEFACT Japan Committee (JEC)

JASTRPO as Secretariat

JEC Steering Committee

Japan Committee for UN/CEFACT

Standards (JUS)

Supply chain Information

Platform Study WG (SIPS)

AFACT Travel Tourism WG

UN/CEFACT

AFACT

Kazumi Hirai 29

Recent activities of Japan in UN/CEFACT through JASTPRO, and Implementation of UN/CEFACT Standards & Recommendation

Implementation of National Single Window by 6th Generation NACCS system

Development of business standard for eTendering, Small Scale Lodging House Information exchange

Implementation of e-CERT by Animal Quarantine Services under the Ministry of Agriculture, Forestry and Fisheries

2012/11/22

Kazumi Hirai 30

2012/11/22

Standing State of Diversity in Standardization

Kazumi Hirai

WHY: The Cost of EDI become enormous when parties to join increases without EDI standards

2012/11/22

31

A & Co.

B & Co.

C & Co. D & Co.

E & Co.

Five (5) parties demands 4! = 24 combinationsTen (10) parties demands 9! = 362880 combinations

Emerging Gap

2012/11/22

Kazumi Hirai 32

Reality and Needs in the business field in International trade

Solution to be provided by the Standards and Recommendations by UN/CEFACT and any other Standard Organizations

Kazumi Hirai 33

Agenda

1. About JASTPRO – What/how we did

2. First Period of JASTPRO’s activities

3. Second Period of JASTPRO’s activities

4. Third Period of JASTPRO’s activities

5. Personal consideration on standardization

6. Comparison of National Strategy taken by EU, USA, and Japan

2012/11/22

Kazumi Hirai

Standards are foundation for market competition to result in economy for consumers

Based on standards as the common platform, companies in private sectors engage market competition in price, quality, reliability of products and services, for their survival

2012/11/22

34

Economy for consumers

Market Competition

(International) Standards

Kazumi Hirai

What is important to remember is that standards are not neutral nor given to you.

When a company can take a leadership in developing a national and/or international standard, it can have an advantage for the market competition.

Even if a company has a candidate for a new standard, it may become worthless unless it failed in working to enroll a national and/or an international standard

2012/11/22

35

National awareness and strategy are essential

Kazumi Hirai 36

Agenda

1. About JASTPRO – What/how we did

2. First Period of JASTPRO’s activities

3. Second Period of JASTPRO’s activities

4. Third Period of JASTPRO’s activities

5. Personal consideration on standardization

6. Comparison of National Strategy taken by EU, USA, and Japan

2012/11/22

Kazumi Hirai

The Strategy on standardization taken by EU Europe 2020Standardization is regarded as an essential tool for developing a Single Market among EU 27 countries.

Under common standards in EU, any company can have a business chance to sell their products and services in the single market by same specification

Consumers and SMEs in EU 27 can enjoy Economy of Large Scale and market competition to give them better products and services at cheaper price for consumers

2012/11/22

37

To develop a

Single Market

SEPA: Single Euro

Payment Area

Harmo-nized

standardization in

EU27

Stronger Competiveness

Kazumi Hirai

EU standards shall not be confined in EU, but to be extended to international standards in order to let EU private companies have stronger competitiveness gained in a single market in EU27.

To market EU standards in Asia, African and Latin America, they shall take the advantage of the former colonial power in an appropriate manner, to make EU standards international one.2012/11/22

38

The Strategy on standardization taken by EU Europe 2020

Kazumi Hirai

Strategy on Standardization taken by U.S.A.

The Government shall be a smaller one, which should not administrate standardization of private sectors, but to facilitate innovation for them. Standardization does not make any sense unless it facilitate innovations.

Research and Development by Governmental agencies which create procurement of US$55 Billion. Patents as the deliverables of R&D have been given as non-exclusive license to private companies.

Governmental Procurement shall implement standards developed by standards developing organizations (SDOs) in private sector.

Government shall facilitate SDOs to develop international standards in order to enhance competiveness of private companies.

2012/11/22

39

Consequently, US companies have taken the leadership in ICT innovation, which has resulted in international standards.

2012/11/22

Kazumi Hirai 40

Domestic Standards

International Standards

Domestic =>Inter-

national std.

Strategy taken by EUStrategy taken by Japan

Outreach to Asia, Africa,

Latin America

Applicable

only in Japan

Standardization to enlarge the Market

To be used

in case of

international trade

Consideration on the standardization in Japan

Vicious Circle of Japan in respect of standardization

Living in Islands

Lack of National

Strategy on International

Standardization

Lower engagement

in International

Standard Organization

Standardization led by EU

and USA

Poor deliverables for Japan

Lower evaluation on International

Standard Development

2012/11/22

Kazumi Hirai 41

Japan as a Galapagos in Far East

Kazumi Hirai 42

Thank you

Question?

2012/11/22