Including the private sector voice in trade facilitation reforms
Speed and efficiency are of the essence in modern goods production and trade. Cumbersome customs procedures and outdated border infrastructure raise trading costs and times, negatively affecting businesses’ ability to plug into international value chains.
Fixed costs arising from border delays and compliance with export and import procedures weigh disproportionately on micro, small and medium-sized enterprises (MSMEs), which by definition have fewer resources and scale economies than their larger competitors. These effects can be particularly strong in developing and least developed countries, where the business environment is often less conducive to cross-border trade in the first place.
Border inefficiencies discourage trade among neighbours even as diplomats pursue regional economic integration, damping the potential for companies to form regional value chains and prosper in new markets.
The World Trade Organization (WTO) Trade Facilitation Agreement (TFA), which entered into force in February 2017, promises to slash border delays and costs by making border procedures simpler and more transparent. The accord includes novel provisions promising developing and least-developed countries technical and financial assistance to implement their future TFA obligations. While necessary, such assistance is an insufficient condition for trade facilitating reforms to have the greatest possible effect. It is the private sector that accounts for the bulk of trade and that consequently encounters border delays in practice. Too frequently, however, it is excluded from the reform process, limiting policymakers’ understanding of the practical burdens traders face in cross-border operations.
ITC works to bridge the gap between traders and border agencies to ensure the inclusion of private-sector views in the design, formulation, implementation and monitoring of reforms. It builds the capacity of exporters, importers, freight forwarders and shipping agents to understand the cost of cross-border inefficiencies; the legal obligations set out in the TFA; and best practices with regard to cross-border trade procedures.
ITC works to bridge the gap between traders and border agencies to ensure the inclusion of private-sector views in the design, formulation, implementation and monitoring of reforms to comply with the WTO Trade Facilitation Agreement.
An important component of ITC’s activities has been to support the inclusion of private sector voices in the institutionalized platforms for trade facilitation planning and monitoring that the TFA requires WTO members to establish.
In 2017, ITC held two-day interactive training sessions on the TFA for over 450 businesses in 19 countries including Argentina, Myanmar, Papua New Guinea, Saudi Arabia and the United Republic of Tanzania. A key aim of the short course was to equip the business community to understand the requirements and potential benefits arising from the TFA, as well as to be able to engage constructively with policymakers on the domestic implementation process. Participants, mainly small traders and officials from border agencies, took part in exercises based on real-life examples. Special attention was paid to enabling businesses to understand technical issues and advocate for concrete policy recommendations that reflect the border issues they deal with on the ground.
In Sri Lanka, ITC created an eight-module e-learning course aimed at helping food, spice and garment exporters improve their export management practices. The course gathers in a single digital platform all of the step-by-step regulations and procedures, as well as institutions, involved in exporting from Sri Lanka to regional and European markets.
With a view to enhancing the effectiveness of the course, customs authorities were interviewed to identify the most common mistakes made by traders when exporting. Their technical feedback has been incorporated into the e-learning course material. Trainees report that the course, which will be housed in the National Institute of Exports, provided a clear view of the whole exporting process and equipped them to avoid costly mistakes related to regulatory and procedural requirements when exporting.
As a result of ITC support, the Sri Lankan private sector has been closely involved in the government’s determination of how best to sequence its reforms to implement the TFA.
At an October 2017 workshop where ITC facilitated discussions on how to prioritize TFA measures based on complexity and impact, 14 business representatives shared the sector’s priorities with officials from the government. This discussion helped inform the content of the Sri Lankan Government’s formal notification to the WTO of its remaining TFA commitments.
ITC’s TFA-related training work for the private sector has had a discernible impact on businesses’ capacity to organize and pursue their interests. For example, during the workshop in Kenya in November 2017, participating businesses submitted suggestions to the national authorities on how to improve the newly established National Trade Facilitation Portal (itself the product of a joint project by ITC and the UN Conference on Trade and Development). The portal, which responds to transparency requirements set out in the TFA, is a digital platform describing the step-by-step procedures to import and export specific commodities, along with costs, waiting times and legal sources for each. The businesses asked for the portal to track additional commodities and add new functionalities to better respond to their needs.
As part of a broader initiative to boost trade within the West African Economic and Monetary Union (WAEMU, also known as UEMOA), ITC supported embedding public-private engagement in a ground-breaking region-wide (as opposed to national) trade facilitation committee.
Looking ahead, ITC remains committed to supporting the TFA implementation. ITC will continue to support national and regional trade facilitation committees to work with the private sector in TFA implementation and monitoring. In the East African Community, ITC will support the improvement of national and region-wide trade facilitation portals. In addition, ITC will assist some West African and Arab states to implement specific TFA requirements such as those for pre-arrival processing and the electronic exchange of certificates of origin. ITC is also developing an e-learning course designed for MSMEs.