UNNExT Workshops on Trade Facilitation - UN ESCAP

UNNExT Workshops on Trade Facilitation

Almaty, Kazakhstan 4-6 May 2015

UNNExT Workshop on Paperless Trade Facilitation for Small and Medium-Sized Entreprises

Paperless trade facilitation for SMEs

Mark GOHPrepared for UNNExT workshop on paperless trade facilitation for SMEs4-6 May 2015, Almaty, Kazakhstan

Paperless trade facilitation2

Agenda

• Overview

– Key issues in TF in Asia

– SMEs and their challenges

• Priority bottlenecks

• ICT as the response

• ICT applications

– Pros

– Cons

3Paperless trade facilitation

Issues in TF

• What would the world be like without TF?– Cost, time, cross/ mutual recognition of products,

services, cash-to-cash cycle times

• How should policy look at these issues– Deal with them directly

– Let the business community deal with it (MNCs)

– Adopt PPP approach

• Are they important to warrant attention– Economic development, GDP, …

Paperless trade facilitation 4

Duval’s presentation (2012) …


18.75

4.75/23.5= 20% preparing for physical transport; 80% - preparing for trade - cf Pareto’s Law


18.75

4.75/23.5= 20% physical transport; 80% - preparing for trade - cf Pareto’s Law

1. Time non value added,

2. time is cost and loss in cash conversion,

3. cost translates to lost competitiveness

Trade Facilitation (TF) in Asia and the Pacific

• On average, it still takes 30 days to move goods from factory to deck-of-ship at the nearest seaport

– South Asia: 30 days, 6 days

– South-East Asia: 20 days, 4 days

– Developed economies: 10 days, 2 days?

à Improvements in TF could bring $250 billion in additional trade for Asia and the Pacific

So where is the paper? – look at key International Paper Forms

• Key International paper forms– Negotiable Bill of Lading– Insurance Certificate– Consular Invoice– Import/Export Licences– Letter of Credit– Cargo Declarations– Certificates of Origin, Phytosanitary

UNeDOCs recommends a single data modelling approach for:• Paper documents (>70% paper)• Electronic documents which are simply equivalent to paper

documents• Structured electronic documents UN/EDIFACT, Cargoimp, VDA,

XML etc.• Process driven mini messages, e.g. Web/Service Orientated

eTransactions

UNeDocs: Holistic Information Framework for Single Window

GOODS

PAYMENT

WTO’s perspective of Trade Transaction

S BINFORMATION

Is it really that simple???



GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

Ctry A Ctry B

Ctry C

Ctry D


GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

Ctry A Ctry B

Ctry C

Ctry D

High degree of convolution, challenge in recognition – harmonized system, Customs open hand in interpretation, longer than desired delays at borders, opportunities for informal facilitation, affects cashflow

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 Confirmation

Bill 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

Demurrageguarantee &payment

Inland Carrier

Manifest

Pick-up &Delivery Order

Importer Notice

Converted VesselManifest

Customs (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 exchangein International Trade

Qn: Where should policy intervene?


Who are the stakeholders in TF?• Many different ministries and executive agencies

–Ministry of Transport, Ministry of Finance, Ministry of Trade, Ministry of Health, –Customs, Bureau of Standards, Veterinary services, Laboratories

• Private sector–Commercial banks–Freight forwarders, Importers-exporters–Customs Brokers– Shippers (MNCs & SMEs)


INTERNATIONAL TRADE TRANSACTION PROCESS

CommercialProcedures

• Establish Contract

• Order Goods• Advise On

Delivery• Request Payment

TransportProcedures

• Establish Transport Contract

• Collect,Transport and Deliver Goods

• Provide Waybills, Goods Receipts Status reports

RegulatoryProcudures

• Obtain Import/Export Licences etc

• Provide Customs Declarations

• Provide Cargo Declaration

• Apply Trade Security Procedures

• Clear Goods for Export/Import

Financial Procedures

• Provide Credit Rating

• Provide Insurance

• Provide Credit• Execute Payment• Issue Statements

INVOLVES

Prepare For

ExportExport Transport Import

SHIPBUY PAY

Prepare For

Import

Qn: steps in each block, cost involved, expertise needed, transaction security especially $Paperless trade facilitation 16

• We want to address the what, where, how, and why, when(?) of TF for SMEs


What should be objective of TF from policy makers’ perspective


What should be objective of TF from policy makers’ perspective

• Nurture trade environment, regional or global that is

– predictable (in terms cost and time at the borders),

– secure (no concerns for shippers on transport and claims)

– cost efficient (open book, completely transparent and visible to users)


How to achieve trade facilitation

• Simplification, Standardisation & Systemisation (Harmonization) of trade documents, procedures, practices

• Improving cross border logistics services

• Improving infrastructure (transport: intermodal & connectivity)

• Qn: how does each one speak to the SME??


TRADE FACILITATION

Steps to remove all unnecessary elements and duplications in formalities, processes and procedures

Simplification Systemisation

Align national procedures, operations & documentation with international practices, conventions & standards.

Standardisation

Process to develop internationally agreed formats for practices & procedures, documents & information.


TRADE FACILITATION

Steps to remove all unnecessary elements and duplications in formalities, processes and procedures

Simplification Systemisation

Align national procedures, operations & documentation with international practices, conventions & standards.

Standardisation

Process to develop internationally agreed formats for practices & procedures, documents & information.

Too many steps in process, not enough manpower, time consuming, lacking language and technical knowledge

Not well informed of national procedures, lacks access to platform to update and operate seamlessly

No knowledge of good provider to provide cost effective solution, lack of capability & capacity building (expertise & tech) –5M’s

SME


Rec:19Mode of

Transport

Rec:16UN/Locode ISO Country

Code

Rec: 17Payment

Terms

Rec:9Currency Code

Rec:20 Units of Measurement

Rec: 28Means of Transport

Commodity Code

Rec: 21Package CodesPaperless trade facilitation 23

Look at framework for implementation


Focus of Trade Facilitation Provisions based on TAs

(Bin and Misovicova, 2008)

Process Analysis and Simplification

National Data Harmonization

Cross Border Data Exchange

Single WindowSingle Window

Business/Political Process - Collaboration Between Trader and Government (UN/CEFACT Rec. 4, Rec. 18), UN/CEFACT International Supply Chain Reference model, Unified Modeling Methodology (UMM), Global Facilitation Partnership for Trade andTransport (GFP) Audit Methodology

UN Layout Key, Master Document,

UNTDED, TF Toolkit and Forms Repository

UNTDED, Core Component Library, UN LOCODE and code lists, UNeDocs, Rec 34

UNeDocs + WCO DM = CBRDM

Rec 33, 34,35

Document Simplification and Standardization

Step by Step ImplementationStep by Step ImplementationBased on International StandardsBased on International Standards


Where do we begin

• Advanced stages (E-docs, Automated processing, Pre-arrival processing)

• IATA e-freight case

• Take a phased approach

• Clearly identify issues with SMEs that are predominantly involved in export market


Concerns of SMEs

• Understanding technical regulations & standards

• Fees and protocol for using platform

• Assurance of security in trade (payment) and transit (T&L)

• Assurance of predictability - SMEs want predictability as it reduces need for inventory

• Transparency in release and clearance of goods, of laws and regulations

• Assurance in ICT and eCommerce


Bottlenecks


Priority bottlenecks

Bottleneck Priority to SME Good practice

1 Processing/ clearance delays at BCPs *** Bangladesh 72 hrs (1999) -> 3 hrs (2009)

2 Lack of transit and transport agreement *** Green lane

3 Compliance with SPS * Philippines

4 Technical barriers to trade ** Thailand

5 Weak logistics systems ** Thailand

6 Poor infrastructure ** Laos

7 High admin fees, storage & handling costs *** Singapore

8 Limited IT usage *** Korea

9 Lack of accreditation facilities * Singapore

10 Excessive documentation *** IATA (efreight)

11 Lack of cooperation and coordination among trade supporting organisations

*** Virtual 1-stop shop


Other SME TF Bottlenecks...

• Limited information about overseas markets and marketing consumers goods

• Additional market entry barriers

• Lack of attention behind and between borders

• Absence of comprehensive Aid for Trade Agenda

• Barriers to the international markets of goods and procedures at and around the borders

• Skilled human resources and technology

• Cost of trading remains high-prevents potential exporters competing in the global and regional markets


Trade Facilitation Bottlenecks

• Among the 39 Measures some of the provisions have partially been addressed but some provisions are very difficult to implement eg Detention, Test Procedures, Pre arrival processing, Establish and publication of average release time, Border agency cooperation, Use of international standards, Single window, Customs cooperation - these need more time.

• Issues of Advance Ruling, Risk management are similarly important but require time


Summary

Imperatives for successful TF framework:

Østrong political will;

Øclear strategic plan;

Øclose co-operation with business community;

Øwell-funded and long-term technical assistance program based on partnership & trust


UNNExT Workshops on Trade Facilitation - UN ESCAP

Documents

Transcript of UNNExT Workshops on Trade Facilitation - UN ESCAP