Trade Facilitation and the Public-Private Partnerships Maria Misovicova, Trade Logistics Branch Division on Technology and Logistics

Trade Facilitation and the Public-Private Partnerships

Maria Misovicova, Trade Logistics BranchDivision on Technology and Logistics

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International Trade Transaction

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DIVISION ON TECHNOLOGY AND LOGISTICS, TRADE LOGISTICS BRANCH, TRADE FACILITATION SECTION

CustomsBanks

Transport OperatorsFreight

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Insurance companies

Other Gov’tAgencies

3DIVISION ON TECHNOLOGY AND LOGISTICS, TRADE LOGISTICS BRANCH, TRADE FACILITATION SECTION

International Trade Transaction Process

BUY SHIP PAY

Prepare For

ExportExport Transport

Prepare For

ImportImport

INVOLVESCommercialProcedures

• 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

Source: UN/CEFACT


Administrative bottlenecks vs. trade transaction costs

Administrative hurdles from cumbersome procedural and documentary requirements can account for up to 75% delay of shipments. Each additional day of delay may reduce trade volume by at least 1% or approximately 7% if the products are agricultural commodity (World Bank);

The costs of paperwork account for 3.5 – 7% of the value of the goods. (OECD) It can be as high as 10 – 15% if there are typing and other error (UNCTAD).

Costs to export & import per region


Source: WB, Doing Business 2010

0

500

1000

1500

2000

2500

East Asia &Pacific

EasternEurope &

Central Asia

LatinAmerica &Caribbean

Middle East& NorthAfrica

OECD South Asia Sub-Saharan

Africa

Costs to export Costs to import


What is trade facilitation?

WTO: the simplification and harmonization of international trade procedures, where trade procedures are the activities, practices, and formalities involved in collecting, presenting, communicating, and processing data and other information required for the movement of goods in international trade.

UN/CEFACT: the simplification, standardization, and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payments


Trade facilitation…

… is a tool to reduce complexity and the costs of international trade, while maximizing its efficiency and effectiveness;

… helps to create a consistent, transparent, and predictable environment for conducting international trade;

… should be a part of the country’s comprehensive trade development strategy, and not a stand alone issue.


Scope of trade facilitation

Narrow - At-the-border: preparation of trade and customs documents, customs clearance procedures, border control, and release of goods.

Broad - Behind-the-border: transport and logistics services, product standards and conformity assessment measures, e-commerce, business facilitation, and trade finance.

Examples of trade facilitation measures


Simplified and standardized trade documents;

Automated customs procedures;

Single window for international trade;

Pre-arrival clearance;

Post-clearance audit; Risk management & Authorized economic operator concept;

Online portals containing all trade-related laws, regulations, procedures, forms ad documents.

Trade facilitation & the public-private partnerships


Government creates a national trade policy framework, regulates, enforces and controls… …while the private sector undertakes most of the trading and faces the day-to-day bottlenecks in trade;

Public-private working relations are vital for trade facilitation reforms to succeed.

Different stakeholders, different interests


Government • Compliance with national regulation to promote legitimate trade, while protecting integrity and security of national borders, national revenues, as well as safety of goods

• Trade and related economic development policy objectives • Compliance with international, regional, and bilateral

commitments.

Executing agencies • Enforcement and compliance of regulations and legislation• Collection of revenue and of statistics

Manufacturers • Streamline production and Lean logistics (Reliability, Timeliness, Safety)

• Costs reduction (Less direct and indirect transaction costs).• Faster access to markets, Secure supply chain, integration of the

supply chain with other systems (Business to Business - B2B, Business to Government - B2G)

Private service providers (e.g. freight forwarders, logistics companies, transport operators, etc)

• Quality of services provided (time, costs, and reliability, security)Inter-operability of electronic systems and messages (B2B, and B2G)

Financial sector (banks and insurance companies)

• Control of the financial risk, Reduction of service costs, Rapid release of guarantees, Data accuracy

Exporters/ Importers • Inter-operability of electronic systems and messages (B2B, and B2G), Profitability (time, cots and reliability)

Consumers • Prices of products, Product quality and safety, Consumer protection

Forms of collaboration between public & private sector in trade facilitation


Trade facilitation platforms

Voluntary & collaborative relationships

National Trade and Transport Facilitation BodiesPro CommitteesCollaborative trade facilitation platforms to support TF negotiations at the WTOCustoms-business partnerships (e.g. AEO schemes)

Public-private partnerships

Sharing risk and investment

Construction & modernization of border postsProvision of automation softwareDevelopment & operation of electronic Single Window and Paperless Trade systems

Collaborative trade facilitation platforms


Collaborative trade facilitation platforms and UNCTAD’s support


Originating in needs self-assessment under the WTO trade facilitation negotiations; No one-size-fits-all formula => different types such as: Institutionalized - national trade and transport facilitation committees (e.g.

in Pakistan, Mongolia, the UK, Nordic countries, South Europe); Ad hoc advisory bodies – national TF task forces (e.g. in West Africa and the Caribbean);

UNCTAD’s support to establishing the national and subregional collaborative task forces in UEMOA and OECS countries;Joint UNCTAD/UNECE Online Repository of Trade Facilitation Task Forces (http://r0.unctad.org/ttl/repository/TFWGintro.htm);

Technical Note No. 18 – used by St Lucia for its communication under the WTO TF negotiations (JOB(09)/11 of 2 March 2009).

Collaborative trade facilitation platforms and UNCTAD’s support (cont’d)


Examples of suggested activities for national TF task forces: Support the negotiation and subsequent implementation of

obligations arising out of the agreement; Act as a liaison between national trade facilitation authorities and the

WTO Trade Facilitation Committee; Monitor the implementation of obligations arising out of other

bilateral agreements; Assist national authorities in determining priorities for donor support; Disseminate information on policy developments in trade facilitation; Provide policy guidance to relevant authorities including the Cabinet

of Ministers; Support public awareness of matters related to trade facilitation; Integrate the concerns of the private sector into the formulation of

policy on trade facilitation.

Steps to establish effective national trade facilitation task force


Based on UNCTAD, Technical Note

No.18

1.Initiate intervention/proposal by the Ministry responsible for international trade and/or Customs

Initial proposal by the Ministry for the establishment or consolidation of the task force into a working group.

2.Identify a leader/National Champion

The identification of a National Champion as opposed to an administrative leader is important to generate momentum for the working group.

3.Identify relevant stakeholders Establish a contact list of all stakeholders: incl. private and public sector, and civil society. Stakeholders should be targeted through established organizations/agencies and also through umbrella bodies and regional agencies, ensure balanced representation.

4.Ensure private sector involvement

Ensure cross-sector private sector participation. This could include e.g., the Chambers of Commerce, manufacturers' associations, small business associations, representatives of traders and SMEs.

5.Prepare Terms of reference ToRs should inform on operational objectives, roles and responsibilities, membership, and procedural arrangements, such as quorum etc.

6.Obtain Cabinet endorsement Cabinet endorsement of the working group and ToRs provides a mandate for the operation of the working group and legitimizes the group as a source of policy guidance on issues relevant to trade facilitation.

7.Define/set work programme A clearly defined work programme should be developed in such manner that supports easy-wins. This work programme should seek to advance the mandate, goals and objectives outlined in the ToRs.

8.Set timetable for regular meetings

Build momentum by ensuring the meetings take place at regular and pre-set intervals.

9.Identify and seek resources Resources for the proper and efficient functioning of the working group should be identified and made available.

Traditional PPPs in trade facilitation: Example of a Single Window for international trade



Single Window is: a one-stop facility to exchange information between traders and government, thereby reducing the complexity, time and costs involved in international trade.

A more precise definition can be found in the UNECE-UN/CEFACT Recommendation No. 33 on Establishing a Single Window for

international trade

Electronic

Agriculture

SingleWindow

TraderTransport

Customs

Health Dept

A 'Single Window' environment

Paper

Single Window concept in international trade


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AUTHORITY

CUSTOMS

CONSIGNOR

CARRIER

HAULIERWHARFINGER

CUSTOMS

BROKER

LINEAGENT

CONSIGNEE

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CONSIGNOR

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Single Window

OGAs

Single Window concept in international trade (cont’d)

PPP-based business models for Single Window

As the implementation of a SW is rather complex, requiring substantial investment, specific technologies, knowledge and skills, governments often seek partnerships with the private sector. PPP offers the potential for the public sector to tap into the private financial resources, management knowledge, technology and skills for the most efficient provision of essential infrastructure for trade.


PPP-based business models for Single Window (cont’d)

The most common public-private partnership business model for a single window is a commercial entity that serves as a ‘special purpose vehicle’ (SPV). SPV: Functions on an investment- and risk-sharing basis as a joint

venture between one or several government sector agencies. Usually builds, operates and maintains/ upgrades the single

window. Provides specific services, incl. value added network services

(VAN), as well as training programmes and operates call centres, which are available to its users 24/7.


Key summary points


Int’l trade is a complex process, involving a large number of actors, regulations, procedures, and documents;

With falling tariffs and quotas under the GATT/WTO and RTAs, improving the efficiency of trade has become essential to enhance trade competitiveness of developing countries;

Trade facilitation is a tool to reduce complexities and costs of trade, thus enhancing countries international trade competitiveness (particular importance for landlocked and least-developed countries);


Government sets policy frameworks, regulates and enforces, while business conduct trade on the ground => need for both to work closely together;

Various forms of public-private working relations to implement TF exist, ranging from collaborative TF platforms to traditional PPPs;

No one-size-fits-all solution, however a well of knowledge and best practice examples available from the int’l community, including UNCTAD.

Key summary points (cont’d)


Thank you!Maria Misovicova

UNCTAD/ DTL Trade Logistics Branch

Trade Facilitation Section Palais des Nations

[email protected]

www.unctad.org/ttlwww.asycuda.org


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Trade Facilitation and the Public-Private Partnerships Maria Misovicova, Trade Logistics Branch Division on Technology and Logistics