Overview of tangible and intangible gains from Cross ... Rama Ha KTNET.pdfCapacity Building Workshop on Cross-border Paperless Trade Facilitation: Gains from implementation 7 Benefits

Capacity Building Workshop on Cross-border Paperless Trade Facilitation: Gains from implementation

Overview of tangible and intangible gains from

Cross-border paperless trade implementation

Rama HA (Sung Heun)

Korea Trade Network

2016.03.25


Benefits of Paperless Trade

Analysis of CBPT cases

Implications to Agreement

Conclusion

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1. Gains from Paperless Trade

Gains of Paperless Trade ○ Common Benefits - (Time) Re-keying times - (Quality) Data error rate - (Cost) Savings on Manpower - (Cost) Savings of documents printed - (Quality) Service quality improvement - (Quality) Increased customer satisfaction ○ SME - (Cost) The proportion of customs clearance outsourcing - (Cost) Changes in customs fees - (Cost) Limit of loans against Cargo Manifest - (Cost) Limit of loans against Bill of Lading - (Time) Number of days for export rebates - (Time) Change in arrival time of the goods at destination - (Cost) Cash flow situation in a firm

I. Benefits of Paperless Trade


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Gains of Paperless Trade ○ Benefits to Large Enterprises - (Cost) The number of staff engaged in customs clearance - (Cost) The number of staff engaged in accounts settlement - (Cost) Business overhead cost - (Time) Lead time from supplier’s acceptance of an order to purchasers’ receipt of the goods - (Time) Key products production preparation cycle - (Time) Import and export processing cycle ○ Benefits to Banks and Insurances - (Cost) The number of employees handling letters of credit (L/C) - (Compliance) The number of frauds - (Time) Time needed to arrange for insurance - (Time) Time needed to prepare for claim settlement



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Gains of Paperless Trade ○ Benefits to Government Authorities - (Quality) Service quality improvement - (Quality) Increased customer satisfaction - (Quality) Reduction in customer request for improved service - (Quality) Reduction of inferior service - (Quality) Complaint Rate - (Convenience) The Visualization proportion of cargo clearance - (Quality) The proportion of the goods to achieve a pre-clearance - (Time) Cargo clearance time - (Time) Time needed for the Customs to check documents - (Time) Time needed for the inspection department to issue certificates - (Time) Approval time of Commerce Department and other departments - (Compliance) The number of Fraud - (Compliance) Compliance rate - (Compliance) Risk Management



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Electronic Visa Information System (ELVIS) Visa system is used to prevent illegal transshipments, and quota fraud to ensure that both government of exporting country and the USA count merchant and charge quotas in the same way so that over-shipment, incorrect quota and embargoes can be avoided In early stage of ELVIS, numbers of country had participated to the ELVIS program: Bangladesh, Cambodia, China, Hong Kong, Indonesia, Republic of Korea, Malaysia, Pakistan, Philippines, Singapore, Sri Lanka, Taiwan, and Thailand. However currently only Haiti and Singapore are applicable for ELVIS due to the release of textile quantity limit to U.S.

II. Analysis of CBPT cases 1. Electronic Visa Information System


Trade Firms

Authorized

Service Provider

② Advice of Visa Issue USA (USVISA)

① Application for Visa Issue US Visa(APPUSV)

Customs

Authorized

Agency


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Benefits of ELVIS ○ Security - ELVIS data move electronically between government systems. Safeguards are in place to protect the integrity and confidentiality of the information. ○ Reduced fraud - There is less opportunity for counterfeit paper documents to be used because the information provided by the importer/broker must match the information transmitted by the foreign government. Paper documents are more susceptible to tampering. ○ Improved compliance - Data discrepancies are decreased because the importer/broker's entry data must match the foreign government's export information. Both governments maintain control over the transmissions and data ○ Improved monitoring - Statistical reporting and tracking of certificates/licenses is enhanced. ELVIS allow the participating governments to monitor document utilization via electronic reports they can request as frequently as necessary. ○ Timeless processing - ELVIS participants are authorized to transmit an electronic request or register a document at any time, seven days a week, 24 hours a day.



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II. Analysis of CBPT cases 2. Single Customs Territory

What is Single Customs Territory (SCT)? A Single Customs Territory is described as a stage towards full attainment of the Customs Union which is achievable by the removal of restrictive regulations and /or minimization internal border controls on goods moving between the Partner States with ultimate realization of free circulation of goods. The EAC SCT covers Partner States namely Burundi, Kenya, Rwanda, Tanzania and Uganda. Objectives • Reduce the cost of doing business • Enhance application of cross boarder Information Communication Technology (ICT) and quality data collection at the regional level. • Enhance capacity and improve coordination of the private and public sector. • Enhance compliance to regional standards and instruments.


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Why SCT was required? - Application of law; difference in application of laws and other instrument - Duplicated Procedures: Multiple Customs declaration at Internal borders - Security Bonds: Multiple Security Bond regimes - Varying valuation: Application of varying valuation approaches - Enforcement: Weak Enforcement Mechanisms - Different and complex procedures and requirements; - Restricted flow of cargo - Congestion at the ports and border stations - Non Tariff Barrier: Multiple road blocks along the transit corridor


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Legal framework? The EAC SCT Model is guided by the fundamental operational Principles of the EAC under Articles 6 and 7 of the Treaty Destination Model? This requires that any Cargo entering the Region must be cleared at the First point of Entry and Taxes paid at Destination before release. Cargo destined to outside the Region is cleared under the Transit Regime. For Local Exports, declaration is made in the importing Country before release by the Exporting Country. Release of both INTER & INTRA is done by the Revenue Authorities Customs Officers of the Destination Country who are now based at the Ports of Entry and Major Cities e.g. Mombasa, Nairobi, Nakuru & Kisumu.



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Benefits

• Reduced cost of doing business by eliminating duplication of processes. • Reduced administrative costs and regulatory requirements. • Realization of economies of scale and optimal use of resources in clearance of goods in EAC. • Enhanced attraction of foreign, domestic and cross border investment. • Enhanced relationship between the private and public sector. • Creation of a mechanism for prevention of smuggling at a regional level. • Reduced risks associated with non-compliance on the transit of goods. • Creation of an efficient mechanism of revenue management. • Enhanced application of information technology (IT) and data collection at the regional level • Increased business turn-around times due to the elimination of duplicated processes along the corridors. • Support of the EAC Common Market and creation of an Internal Single Market • Elimination of Non Tariff Barriers (NTB) to enhance seamless flow of goods within the EAC region.


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2009/2010 2014

Dwell Time in Port 7 3

Cargo Transit time 11 5

Total 18 8

2009 2014

Ocean Freight 1,700 1,900

Trucking Charge 6,050 5,050

Bribes 864 848

Subtotal (cash cost) 9,064 7,798

Opportunity Cost for Truck 5,824 4,732

Extra Inventory for Cargo 3,280 2,460

Subtotal (Hidden Cost) 9,104 7,192

Total 18168 14,990

Benefits An analysis in EAC region has shown that the SCT has reduced the Cost of doing business by about 50% since implementation and the time taken to move cargo across the region from 18 days to 8 days from Mombasa to Kigali.


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Why electronic Certificate of Origin? ○ Path finder project - APEC sets electronic C/O as a Path Finder project of Electronic Commerce Steering Group and Paperless Trade Subgroup ○ Cumbersome, time consuming and expensive paperwork process for the certification ○ One of the most common border-crossing trade document

II. Analysis of CBPT cases 3. Cross-border e-C/O


Exporter

Repository

KTNET

Repository

Trade-Van CO APP

ECO (for view)

Inv, P/L

(specify ECO Number)

Inv, P/L,

Attach

ECO from

repository

Inv, P/L, ECO Importer

CO APPORG

ECO CERTIF

KCCI Customs

Import Declaration ECO confirmed by importer

Import Declaration

Customs Broker

Sign to confirm ECO

Assign Customs Broker

Generate Import Declaration Data

ECO Enquiry on KCCI Website

With ID and Password

Korea Taiwan, Province of China

II. Analysis of CBPT cases

E-C/O Process

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3. Cross-border e-C/O


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Benefits to Exporters and Importers ○ Exporter - (Time and Cost) Save time and costs (courier express US$23) in applying and sending over paper CO - (Time and Cost) Pass over stamping on the CO from Taipei Trade Representative Office in Korea save time (in average 3 days) and costs (US$17 per stamp, transportation cost US$20-40) - (Security) Transmit cross border documents in a secure online environment - (Quality) Better service to their buyers ○ Importer - (Time) Speed up customs clearance process - (Cost) Expedite cargo pick up saving warehouse cost - (Security) Guarantee of authentic CO ○ Government - (Compliance) Guarantee the integrity and authenticity of the cross border documents, reducing possibility of frauds - (Convenience) Reduce effort in paper CO verification - (Time and Quality) Speed up customs clearance process and better service to trader community


Exporter

Importer

China Customs

CO Application

Issuance of CO

①

② ③

④

CO Delivery

By Post

Submission of paper CO

Issuing Body (or Customs)

CO Meta Data exchange

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3. Cross-border e-C/O II. Analysis of CBPT cases

GACC ○ China Customs has implemented projects for the exchange of Preferential CO data with Hong Kong, Macau and Taiwan(China)


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3. Cross-border e-C/O II. Analysis of CBPT cases

China’s Regime on ROO Administration ○ Formulation of ROO: led by GACC

Stake-holders: MOFCOM, AQSIQ, CCPIT, others.

Mechanism: Co-ordination Committee on Administration of ROO

Certification procedures: AQSIQ, CCPIT

Customs procedures:

checks on COs or examination on goods: customs

origin verification:

for imported goods: customs

for exported goods: issuing bodies


Trade and Ind. Department

Hongkong

Electronic Port-China

GACC

Local Customs

Matching of data of CO

and ECO

exporter importer

Issuing bodies

Hongkong

CO CO

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Rationale of ECO certification and verification system under CEPA (HK)


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Benefits of CEPA ECO ○ For business and traders:

initiative to compliance

fast trade flows

less trade and business cost

○ For Customs and other governmental agencies:

fast and effective clearance

accurately and effectively prevent risk of origin frauds

close link and interaction between Customs and related agencies and bodies.



Handling Doc. Per PAX

Short Purchase LT

Usage of Paper Trade Processing Time

25days 5days

17steps 53steps

10K 22K

12weeks 4weeks

620boxes

Employees in Customs Clearance Department

89 43

Purchase Amount per PAX

4Mil.$ 17B$

30boxes

SAMSUNG ELECTRONICS

Benefits of cross-border paperless Trade with global SCM

II. Analysis of CBPT cases 4. CBPT with Global SCM


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II. Analysis of CBPT cases 5. Gains from CBPT

Analysis of CBPT benefits ○ Analysis of 47 CBPT cases - Assuming the primary objectives (expected) gains are achieved - Selection of elements of direct Benefits Time Cost Convenience Quality Security Compliance

Structural elements of Benefits


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Commercial Transaction

(4 cases)

Transportation & Related Services

(18 cases)

Official Control

(17 cases)

Payment (8 cases)

Time Cost Convenience Quality Security Compliance

Composition diagram of major benefits of Cross-border Paperless Trade Project ○ By Trade Procedures

100% 75% 50% 50% 0% 0%

82% 59% 47% 0% 0% 76%

61% 44% 56% 11% 22% 56%

88% 88% 25% 0% 75% 0%

II. Analysis of CBPT cases 5. Gains from CBPT


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B2B (17 cases)

B2G/B2G2G (20 cases)

Time Cost Convenience Quality Security Compliance

5. Gains from CBPT

Composition diagram of major benefits of Cross-border Paperless Trade Project ○ By Transaction Models

85% 75% 40% 5% 0% 80%

94% 76% 52% 11% 35% 5%

G2G (11 cases)

45% 36% 18% 9% 0% 90%



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5. Gains from CBPT

Summary of tangible CBPT benefits ○ Direct ‘Time’ saving is the most common benefit of CBPT ○ Commercial transaction puts service ‘Quality’ improvement higher than other process ○ Payment process emphasis on enhanced ‘Security’ ○ Transportation and official control processes emphasis on higher ‘Compliance’ to government regulations ○ CB-G2G transaction focuses mostly on higher ‘Compliance’ while CB-B2G transaction brings direct ‘Time’ and ‘Cost’ savings as well

Summary of intangible CBPT benefits ○ Enhancing regional economic integration using CBPT ○ Mutual recognition and exchange of electronic messages can establish trusted environment for trade ○ CBPT leads to a close cooperation between public and private sector



• Legal framework of CBPT project shall not bind itself to a specific technology Technology

neutrality

• Life cycle (Creation, transmit, storage and disuse)of electronic documents shall be the same as paper document

•Replacement of paper submission by electronic means

Functional equivalence

•CB-B2G and CB-G2G transactions require interoperability among Paperless Trade systems of different government and private sectors

Promotion of interoperability;

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III. Implications to Agreement 1. CBPT and general principles

CBPT and general principles of the agreement


•CB-B2G/G2G aims higher compliance

•CB-B2G/G2G can streamline the process Improved trade facilitation and regulatory compliance

•Acceptance of electronic means in CB-B2G/G2G

•Replacement of paper submission by electronic means

Non-discrimination of the use of

electronic communications

•CB-G2G does not require intervention from private sector

•However, CB-B2G requires close cooperation btw them Cooperation between the public and private sectors

• Successful CBPT projects are implemented upon mutual trust (confidence in authenticity) in the exchange of electronic documents and data

Improving transboundary trust environment

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III. Implications to Agreement 1. CBPT and general principles

CBPT and general principles of the agreement


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IV. Conclusion

Promotion of CBPT could bring a lot of benefits to trade community of ESCAP region, with huge ‘Time’ saving, direct/indirect ‘Cost’ saving, enhanced ‘Convenience’, improving service ‘Quality’ and level of ‘Security’ and higher ‘Compliance’ to regulations, all resulting in trade facilitation and trusted environment in the region. In this regard, ‘the Framework Agreement for the facilitation of CBPT’ could be a key to a strong economic integration for ESCAP member states


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Documents

Overview of tangible and intangible gains from Cross ... Rama Ha KTNET.pdfCapacity Building Workshop on Cross-border Paperless Trade Facilitation: Gains from implementation 7 Benefits