Negotiations on trade facilitation

at the World Trade Organization

Draft agreement

Draft Text
Three presentations
1) Linking global trends and what
happens at the WTO
2) Trade Facilitation: An Introduction
3) Trade Facilitation at the WTO
Jan.Hoffmann@UNCTAD.org
Geneva, April 2011
Three presentations
1) Linking global trends and what
happens at the WTO
2) Trade Facilitation: An Introduction
3) Trade Facilitation at the WTO
Jan.Hoffmann@UNCTAD.org
Geneva, April 2011
10 global trends
Trade facilitation
measures
Implications for
development
Trade Facilitation: Linking global
trends and what happens at the WTO
10 global trends
Trade facilitation
measures
Implications for
development
Trade Facilitation: Linking global
trends and what happens at the WTO
Loooong term
1.
Exports of manufactured goods
Today 80% of developing
countries exports are
manufactured goods,
up from only 20%
two decades ago
2.
Globalized production
About 1/3 of global trade is
intra-company trade
Around 30% of trade is
trade in components and
unfinished goods
Trade in intermediate goods
Source: WTO, ITS, 2009
3.
Increased security concerns
Security measures along
the entire supply chain
4.
New Geography of Trade
Especially the share of South-South trade
has doubled since 1990
5.
Regional integration
Increased regional and
transit trade
6.
Within Logistics expenditure
inventory holding
decreases, and
Transport
expenditure
increases
0%
20%
40%
60%
80%
100%
Admin.
Transport
I nventory
Admin. 4% 4% 4% 4% 4% 4%
Transport 47% 53% 53% 57% 59% 63%
Inventory 49% 44% 43% 39% 37% 33%
1980 1985 1990 1995 2000 2005
Data for USA, via DOT
7.
Technologies
Containerization, shipping networks
Use of computers and Internet
8.
Privatizations / concessions
Ports, Shipping lines, Railways, Airlines, Airports
9.
Tariff reductions
For most developing countries exports,
international transport costs are 2 to 3
times higher
than Customs
tariffs on imports
in developed
countries.
Source: Miccio/ Perez 2002
10.
Negotiations on trade facilitation
at the World Trade Organization
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
10 global trends
Trade facilitation
measures
Implications for
development
Trade Facilitation: Linking global
trends and what happens at the WTO
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
advance ruling
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
authorized traders
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
Risk analysis


3. Security concerns

1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
Internet publication
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography

1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations




5. Regional integration





Regional approaches
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
Separate release from
clearance
Waiting trucks at a border
0%
20%
40%
60%
80%
100%
Admin.
Transport
I nventory
Admin. 4% 4% 4% 4% 4% 4%
Transport 47% 53% 53% 57% 59% 63%
Inventory 49% 44% 43% 39% 37% 33%
1980 1985 1990 1995 2000 2005
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations






7. Technologies



Automated payments,
Electronic documents
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
Customs to accept
commercial information,
information platforms
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
Transport costs and trade
facilitation more important
than tariffs !
1. Manufactured goods
2. Globalized production
3. Security concerns
4. Trade geography
5. Regional integration
6. Logistics
7. Technologies
8. Privatizations
9. Tariff reductions
10. WTO negotiations
a response to trends in
international trade,
transport, logistics and
technologies !
10 global trends
Trade facilitation
measures
Implications for
development
Trade Facilitation: Linking global
trends and what happens at the WTO
Aid for Trade
Trade and Transport Facilitation is not
only good for trade but also has other
positive side effects
The introduction of
ICTs by Customs
may encourage
smaller companies
to also connect to
the internet.
Trade and Transport Facilitation is not
only good for trade but also has other
positive side effects (cont.)
Capacity building
raises the
countrys
overall human
capital.
Trade and Transport Facilitation is not
only good for trade but also has other
positive side effects (cont.)
A framework for
bank guarantees
for transit trade
may also generally
improve the
financial system.
Trade and Transport Facilitation is not
only good for trade but also has other
positive side effects (cont.)
A single window experience for trade
may help to introduce single windows
elsewhere.
Trade and Transport Facilitation is not
only good for trade but also has other
positive side effects (cont.)
Reforms of legal regimes that
facilitate the use of electronic
documents may also
modernize other business
practices.
Trade and Transport Facilitation is not
only good for trade but also has other
positive side effects (cont.)
Mechanisms to consult
with stake holders may
be beneficial for other
policy decisions as well.
Trade and Transport Facilitation is not
only good for trade but also has other
positive side effects (cont.)
Increased transparency is good for
good governance in general.
Trade and Transport Facilitation is not
only good for trade but also has other
positive side effects (cont.)
Are poor countries poor
because of red tape?
OR
Is red tape the result
of a lack of development?
ANSWER: It is both
More income to finance trade
facilitation
-> Better trade facilitation
-> More Trade
-> More income to finance trade
facilitation
Lower Transport Costs
-> More trade
-> Economies of scale
-> Lower Transport Costs
Better services
-> More trade
-> More income to
finance infrastructure
-> Better services
The tipping point: Start with
Trade and transport facilitation
Trade and transport facilitation is good
for trade and for development

Development is good for trade
and for trade and transport facilitation
10 global trends
Trade facilitation
measures
Implications for
development
Trade Facilitation: Linking global
trends and what happens at the WTO
Three presentations
1) Linking global trends and what
happens at the WTO
2) Trade Facilitation: An Introduction
3) Trade Facilitation at the WTO
Jan.Hoffmann@UNCTAD.org
Geneva, April 2011
Scope of Trade
facilitation
Traders main
concerns
At the border
Key areas of work
Trade Facilitation: An Introduction
Scope of Trade
facilitation
Traders main
concerns
At the border
Key areas of work
Trade Facilitation: An Introduction
TRADE FACILITATION
Process of eliminating
all unnecessary
elements and
duplications in
formalities, processes
and procedures
Simplification Harmonisation
Alignment of national
procedures, operations
and documents with
international
conventions, standards
and practices.
Standardisation
Process of developing
internationally agreed
formats for practices
and procedures,
documents and
information.
TRADE FACILITATION
Standardisation
Process of developing
internationally agreed
formats for practices
and procedures,
documents and
information.
International rules and standards
IMO
ISO
UN-CEFACT
WCO
WTO
UN Lay-out Key
(UNECE Rec.#1)
TRADE FACILITATION
Process of eliminating
all unnecessary
elements and
duplications in
formalities, processes
and procedures
Simplification Harmonisation
Alignment of national
procedures, operations
and documents with
international
conventions, standards
and practices.
Standardisation
Process of developing
internationally agreed
formats for practices
and procedures,
documents and
information.
TRADE FACILITATION
Harmonisation
Alignment of national
procedures, operations
and documents with
international
conventions, standards
and practices.
TRADE FACILITATION
Process of eliminating
all unnecessary
elements and
duplications in
formalities, processes
and procedures
Simplification Harmonisation
Alignment of national
procedures, operations
and documents with
international
conventions, standards
and practices.
Standardisation
Process of developing
internationally agreed
formats for practices
and procedures,
documents and
information.
TRADE FACILITATION
Process of eliminating
all unnecessary
elements and
duplications in
formalities, processes
and procedures
Simplification
Scope of Trade
facilitation
Traders main
concerns
At the border
Key areas of work
Trade Facilitation: An Introduction
GOODS
PAYMENT
The Trade Transaction
S B
INFORMATION
Manufacturer Supplier
Retailers
Wholesalers Customer
P
r
o
d
u
c
t



C
o
m
p
a
n
y

A


C
o
m
p
a
n
y

B

What do traders want ?
Simple and smooth processing of formalities
Means to allow goods to proceed promptly to
their final destination. No longer itineraries,
no unpacking, no delays
A single control point for all public services
Standard forms, assembled into a single
bunch of documents, compatible with trade
documents and transport contracts
Predictable and transparent rules and
procedures

Arrival Notice
Letter of
Instruction
Invoice, PO
Importers
Bank
Ocean Carrier
Customs House
Broker
Line of Credit
Proforma Invoice
Shipping & funding detail
Cargo
Status
Vessel Booking Request
Cargo
Status
Shipping & Funding Detail
Exporters
Bank
Importer Exporter
Vessel Booking Confirmation
Bill of Lading
Rated Bill of Lading
Dock Receipt
Freight Forwarder /
NVOCC
Purchase Order
LC
Confirmation
AES
Dock receipt
Pick-up & Delivery Order
Vessel Manifest
Dock receipt
Release/Approval
Demurrage
guarantee &
payment
Inland
Carrier
Manifest
Pick-up &
Delivery Order
Importer Notice
Converted Vessel
Manifest
Customs (Export)
Port
Customs ( Import )
Original B/L,
Invoice, PO,
Packing List
Inland
Carrier
Marine
Insurance
Company
Fund Transfer
Confirmed Line of Credit

Release/Hold
Notice
Purchase Exportation Importation
Import
Terminal
Operator
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 exchange
in International Trade
Too many documents
Enquiry
Order
Despatch advice
Collection order
Payment order
Documentary credit
Forwarding instructions
Forwarder's invoice
Goods receipt
Air waybill
Road consignment note
Rail consignment note
Bill of lading
Freight invoice
Cargo manifest
Export licence
Exchange control doc.
Phytosanitary certificate
Veterinary certificate
Certificate of origin
Consular invoice
Dangerous goods
declaration
Import licence
Customs delivery note
TIR carnet
PRE-ARRIVAL & ARRIVAL INFORMATION
Pre-Arrival
Vessels characteristics or ships particulars, kind and tonnage of cargo, vessels ETA and masters requests must be notified to
the Harbour Master Department every 48hrs, 24hrs or at least six hours prior to vessels arrival at the ports anchorage areas.
Arrival
The component of the committee that performs vessel clearance consists of 10 members from Harbour Master Department,
Department of Customs and Excise, Immigration Police, National Shipping Agency and Broker, and Quarantine Authorities.
Ten copies of cargo manifest are required to be provided to the Department of Customs and Excise.
Entry permit (arranged by official shipping agency),
Last port clearance certificate,
15 lists of last port of call (at least 10 last ports),
5 declarations of vessels arrival,
10 import cargo manifests,
3 bills of loading,
2 transit cargo manifests,
7 crew lists,
7 passenger lists,
3 lists of vessels provisions,
3 lists of crew personal effects,
1 copy of health declaration certificate,
1 copy of vaccination list,
1 copy of drugs and narcotic list,
1 copy of fresh water origin,
3 cargo plans,
1 copy of valid original ships certificates,
Certificate of vessel's registration,
International load line certificate,
International tonnage certificate,
International oil pollution prevention certificate,
Cargo vessel safety equipment certificate,
Cargo vessel safety construction certificate,
Cargo vessel safety radio certificate,
Minimum safe manning certificate.
Exemption Certificate
(to be inspected by quarantine officers ).
Scope of Trade
facilitation
Traders main
concerns
At the border
Key areas of work
Trade Facilitation: An Introduction
Crossing the
Country Destination
BORDER
Commercial regulations
and practices
Traffic regulations
and operational practices
Vehicle standards
and regulations
Design, construction,
maintenance and inter-operability
Country Origin
SERVICES
OPERATIONS
VEHICLES
INFRASTRUCTURE
GOODS
Products conformity,
standards & regulations
Infrastructure
Operations
Services
Vehicles
Goods
Scope of Trade
facilitation
Traders main
concerns
At the border
Key areas of work
Trade Facilitation: An Introduction
Role assigned to Customs
Revenue Collection of import taxes (duties & excise)
Protection of society <health, safety>
(drug trafficking, firearms, environment, counterfeit etc.)
Economic development <trade,
investment> (trade facilitation)
Protection of Economic Interests
(domestic production & services industry)
Security <terrorism>
(shifting focus to supply chain)
C
U
S
T
O
M
S
F
U
N
C
T
I
O
N
Functional linkages
Customs
Automation
Customs
Time Release
Risk
Assessment
Single
Window
Post-audit
Controls
Adapted
H.S.
Standardized
documentation
Sequencing
ID
Linkages between
Trade Facilitation measures
Q2 05
27.3
1 Standardization and simplification
2
Introduction of single administrative
document (SAD)
3
Computerization and automation of Customs
procedures
4
Risk management, pre-arrival processing and
post-clearance audit
5
Customs-related judicial or administrative
measures
Q4 04
13.2 2.1 30.1 16.1 10.4 6.2
Q1 05
20.2 7.11 3.4 6.3 5.12 9.1 27.2 13.3 20.3 23.1
Cooperation at the national level
Between the government institutions
concerned by foreign trade:
Finance, Commerce, Transport
With the trading community: importers
and exporters
With service providers:
transport operators, banks, insurance
companies
Cooperation at the regional level
BORDER
Country A
Government
Authorities
Min. Trade,
Finances (Customs),
Transport, Interior,
Foreign Affairs, etc.
Private sector
Chambers of Commerce,
professional associations,
corridor-based interests
(around projects such as:
ICD, Free Zones, etc.)
NTTFC, Clusters,
Public-Private Partnerships
Country B
Government
Authorities
Min. Trade,
Finances (Customs),
Transport, Interior,
Foreign Affairs, etc.
Private sector
Chambers of Commerce,
professional associations,
corridor-based interests
(around projects such as:
ICD, Free Zones, etc.)
NTTFC, Clusters,
Public-Private Partnerships
Bilateral consultations
on trade & transport issues
Professional networks
Regional
coordination
Cooperation at the international level
Scope of Trade
facilitation
Traders main
concerns
At the border
Key areas of work
Trade Facilitation: An Introduction
Questions?
Three presentations
1) Linking global trends and what
happens at the WTO
2) Trade Facilitation: An Introduction
3) Trade Facilitation at the WTO
Jan.Hoffmann@UNCTAD.org
Geneva, April 2011
From early 70s to 1996
Work of the UNECE and UNCTAD
UNECE Recommendations
UNCTAD FALPRO
UN International Symposium on Trade
Efficiency (UNISTE) in Columbus, Ohio
(1994):
Banking & Insurance;
Customs;
Business Information for Trade;
Transport;
Telecommunications.

Existing non-compulsory
international instruments
and best practices
Internationally-accepted customs and practices,
negotiated by interested Governments through
international organizations and private sector
institutions: WCO, ECE, IMO, ICC-UNCTAD
However: Lack of effective implementation of the
instruments.
Non-binding feature of these commitments.
Existing non-compulsory
international instruments
and best practices
Internationally-accepted customs and practices,
negotiated by interested Governments through
international organizations and private sector
institutions: WCO, ECE, IMO, ICC-UNCTAD
However: Lack of effective implementation of the
instruments.
Non-binding feature of these commitments.
GATT 1994 (i.e. binding WTO)
Article V Freedom of Transit
Article VIII Fees and Formalities connected with
IMP/EXPortation
Article X Publication and Administration of Trade
Procedures
Agreement on the Implementation of Article VII (Customs
Valuation);
Agreement on Preshipment Inspection;
Agreement on Import Licensing Procedures;
Agreement on Rules of Origin;
Agreement on Technical Barriers to Trade;
Agreement on Sanitary and Phytosanitary Measures.

Work on areas of particular interest to
developing countries and LDCs:
Identification of TF needs and priorities
Annex D - Modalities
Priorities
Imports/ Exports
Trade partners
Commodities
Mode of
transport
User / provider
Transit /
land-locked
Trade and Transport Facilitation is
good business for the countries
It tends to have a high rate of return
However, it requires:
Infrastructure
Capacities
Initial investment
... Which developing countries may not
necessarily be able to assume easily
Needs
Capacity
Building
Technologies
Financial
assistance
Institutional
change
Time
Negotiating position
Depends on:
The priorities of my own trade and
service providers
The needs to receive assistance or
special and differential treatment
Taking into account Annex D

Costs of implementation, Needs
Country
priorities

Costs of implementation
Country
priorities
- +
Accomodate
+ -
Active
subj. to.
T.A. , S&D
+ +
Pro-active
- -
Passive
subj. to
S&D

Costs of implementation
Country
priorities
- +
Accomodate
+ -
Active
subj. to.
T.A. , S&D
+ +
Pro-active
- -
Passive
subj. to
S&D
Recent situation
Negotiations in 2 key areas:
Substantive provisions regarding the
Articles
Special & Differential Treatment; and
Technical Assistance & Capacity Building
Draft Agreement in document
TN/TF/W/165
Draft agreement

ARTICLE 1: PUBLICATION AND AVAILABILITY OF INFORMATION
ARTICLE 2: PRIOR PUBLICATION AND CONSULTATION
ARTICLE 3: ADVANCE RULINGS
ARTICLE 4: APPEAL PROCEDURES
ARTICLE 5: OTHER MEASURES TO ENHANCE IMPARTIALITY, NON-
DISCRIMINATION AND TRANSPARENCY
ARTICLE 6: FEES AND CHARGES CONNECTED WITH IMPORTATION AND
EXPORTATION
ARTICLE 7: RELEASE AND CLEARANCE OF GOODS
ARTICLE 8: CONSULARIZATION
ARTICLE 9: BORDER AGENCY COOPERATION
ARTICLE 9 BIS: DECLARATION OF TRANSHIPPED GOODS
ARTICLE 10: FORMALITIES CONNECTED WITH IMPORTATION AND
EXPORTATION
ARTICLE 11: FREEDOM OF TRANSIT
ARTICLE 12: [CUSTOMS] COOPERATION [MECHANISM FOR [TRADE
FACILITATION AND] [[CUSTOMS][TRADE]] COMPLIANCE]
ARTICLE 13: INSTITUTIONAL ARRANGEMENTS
ARTICLE 14: NATIONAL COMMITTEE ON TRADE FACILITATION
ARTICLE 15: PREAMBLE/CROSS-CUTTING MATTERS
TRANSITIONAL / SPECIAL AND DIFFERENTIAL TREATMENT PROVISIONS FOR
DEVELOPING COUNTRY MEMBERS AND LEAST DEVELOPED COUNTRY
MEMBERS

Three presentations
1) Linking global trends and what
happens at the WTO
2) Trade Facilitation: An Introduction
3) Trade Facilitation at the WTO
Jan.Hoffmann@UNCTAD.org
Geneva, April 2011