Globalization and Trade: International perspectives on e-trade

Experience from the UNECE region: using international standards and tools for international business
ario APOSTOLOV, Regional Adviser, UNECE
mario.apostolov@unece.org

In this presentation:
Globalization and its challenges UNECE and e-business standards success story in Eastern Europe

Globalization and its challenges

Globalization the removal of barriers to free trade and the closer integration of national economies can be a force for good that has the potential to enrich everyone in the world, particularly the poor, but the way it has been managed (especially the international trade agreements) needs to be rethought. Joseph Stiglitz Globalization has been misgoverned. John K. Galbraith

UNECE
UNECE is setting standards (incl. for e-business)
e.g. UN/EDIFACT the only global EDI standard

Disparity of economic development in UNECEs region E-business helps address development priorities: Reduce poverty and provide opportunities Accelerate economic growth Decrease social stratification Attract foreign investment Build a service economy Help regional integration

e-business and international cooperation

e-business has definite advantages, but it may not take off, if it is left to purely market forces. Same is true about the use of international standards for e-business. A driving force for implementation is needed: States, international organizations and the business community should work together. Example - electronic invoicing: Everyone knows it is useful, but no one wants to pay to develop a system for all. Kareltek (Finish company) developed and sold e-invoices for 6 months in 2005: 1.5m investment > 50m return from saving costs
Finland (5m population) as a whole > 4b savings from e-invoicing EU (445m population) > potentially can save 36b.

electronic invoicing for all ICT platforms will ensure inclusiveness of the benefits of ICT. UNECE supports international standards, e.g. for e-invoicing with the support of public (ICC, IATA, Governments) and private (Microsoft, SAP) sectors.

Rough idea of e-Invoices used in each sector

Increasing the competitiveness:

POTENTIAL IMPACT IN FINLAND

40.000 (80 %) Man-years from Support Functions to Client Service and Production
organisations 225500 500 226'000 117 1 1 54 Invoices Effort in Man-years Saving in

(20/eDoc)

SMEs Big companies eB2B total eGovernment State treasury Customs declarations Cities/comm. Health care eB2G total

220'000'000 4'000'000 52'000 3'000'000 7'000'000 1'500'000 15'552'000

48'000 4'400'000'000 933 12 1'632 350 3'000 51'000 80'000'000 1'040'000 60'000'000 140'000'000 30'000'000

Source: Kari Korpela variation +/- 10%

Integrated Management of International Trade Information Flows

Harmonized (electronic) trade + documents, e.g.UNeDocs Advance filing of trade information Single Window Advance exchange of information across borders

Results:

more efficient trade: less bureaucracy (the goal of trade facilitation) -> lower cost more security through better supply chain management inside and among countries > better risk analysis integration with Europe [e.g. EUs Single Administrative Document (SAD) based on the UN Layout Key in use in SEE, TRACECA]

Single Window
(one of the models: single authority)
3-a: 'Single Authority'
Trader (incl. Transport)
Authority 1

Electronic

Single Authority

Authority 2

Authority 3

Paper

Authority 4

Potential first step: gather all documents and required procedures in one place: the German experience: Formular Server: www.zoll.de

Need to build electronic platforms

Community networks in ASEAN: Singapore TradeNet, Malaysia DagangNet; Korea KTNET, Hong Kong DTTN, Tunisia TradeNet, etc. Single Windows in: ports: Hamburg, DE (Dakosy), Felixtowe, UK airports: Schiphol, NL based on Customs: Sweden, Senegal.

Community network for e-business and a eSingle Window: DTTN, Kong Kong, China
Sellers Buyers Freight Forwarders
Carriers / Portals (Inttra, GTNexus)

V alu e A d d in g S ervice P ro vid ers

DTTN Core Messaging Infrastructure

Communications Gateway Security Services Web Services

e.g. Tradelink

Banks & Financial Institutions

R eg io n al/ G lo b al S ervice P ro vid ers

Document Customer Exchange & Management Transformation

Support & Operations Management

Government & Agencies

Inspection Agencies

Insurance Institutions

Terminals

Data harmonization
Business Process Analysis
Data Element Questionnaire

___UN/TDED___ WCO Data Model

User assessment

Data harmonization

Standard Data Set

Implementation
Implementation carries technology and market risks. Paperless trade projects require the integration of: cross-sector business requirements and different e-business technologies, e.g. UN/EDIFACT, UNeDocs, business modeling, constantly evolving technologies. Project management requires: user orientation (concrete needs of the national economy); high level of ICT expertise; good understanding of e-business standards; partners with relevant project and technology expertise. Accept and deal with setbacks. Further development: UN/CEFACT Working Group Forum, one of the next meetings will be in Egypt. Need to build trust between public and private entities (gaps in positions and interests of stakeholders persist).

A Success Story: Estonia

Low starting point: weak, centrally planned Very fast expansion of ICTs (24% of Estonian exports now ICT products and appliances) Dedicated young, dynamic, technically educated politicians Neighbours helped: Finland saw Estonia as an extension of its ICT market; Sweden oversees the banking sector Predisposition to ICT communications in a country where most people live separately in houses and farms (like all Nordics) Now slowdown (?) or others are catching up

E-Government Index
Country Rank Singapore Finland Iceland Sweden Estonia Canada Hong Kong SAR Taiwan Denmark United States United Kingtom Norway Netherlands Austria Australia Brazil Ireland Korea France e-Government 5, 43 5, 40 5, 35 5, 10 4, 95 4, 93 4, 90 4, 90 4, 88 4, 88 4, 83 4, 70 4, 65 4, 63 4, 58 4, 58 4, 58 4, 38 4, 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Active position of Government to involve the broad public Public projects to enhance access: for
schools, local government, libraries Privatization and liberalization of telecoms Public Private Partnerships: Look@world project - private initiative to bring people online Common use of authentication services: Joint PKI development; Estonian ID-card can and is used as authentication tool for eservices and digital signature + predisposition of the population

Some conclusions
Globalization is potentially positive, but needs better management: well-designed rules Important to position e-trade in a broader context of economic development, socio-economic culture in the country, and engineering growth The immediate international environment also plays a role (in terms of partnerships) consequently, look for the right partnerships from a distance too

Thank you !
Mario Apostolov Regional Adviser, UNECE Trade
tel.: +41 22 9171134, fax: +41 22 9170037, e-mail: mario.apostolov@unece.org