Facilitating Trade: An Asia-Pacific Perspective

1. Expert Group Meeting on Trade & Transport Facilitation, Dubai, 10-11 April 2013 Facilitating Trade: An Asia-Pacific Perspective Yann Duval Chief, Trade Facilitation, Trade and Investment Division, United Nations Economic and Social Commission for Asia and the Pacific

2. Table of Contents Introduction I Trade costs in Asia-Pacific and key policy drivers II III What have Asian countries done to facilitate trade? Way forward in Asia-Pacific and Lessons learned IV VI

3. Trade Facilitation (TF)? - Definition • “the simplification and harmonization of international trade procedures” • “increasing the cost effectiveness of international trade transactions”

4. Trade Facilitation?  Definition

5. International trade costs in developing regions* Asia-Pacific region as a whole doing relatively well... *based on ESCAP-World Bank International Trade Cost Database

6. Intra- and Inter-regional trade costsof Asia and the Pacific subregions* *Based on ESCAP-World Bank trade cost database, excluding tariff costs. Percentage changes in trade cost between 2001-2004 and 2007-2010 are in parentheses.

7. Tariff Trade Costs 0-10%* Direct Behind- & At-the border Trade Costs 1% 60-90%* 6-7% Availability/use of ICT Services 6-7% Business (Regulatory) Environment Policy-Related Non-Tariff Trade Costs Maritime Connectivity/Services 16-18% • Other Trade Costs • Indirect cost of trade procedure • Currency fluctuation • Other non-tariff barriers 52-57% 10-30%* Natural Trade Costs (Geographical and Cultural Factors) Key factors in lowering trade costs –Asia-Pacific Perspective Contribution of natural barriers, behind-the border facilitation and trade-related practice to trade costs * Illustrative based on casual observation of the data only. Natural trade costs for landlocked countries may be outside the range shown for natural trade costs.

8. Table of Contents Introduction I Trade costs in Asia-Pacific and key policy drivers II III What have Asian countries done to facilitate trade? Way forward in Asia-Pacific and Lessons learned IV VI

9. Trade facilitation & paperless trade implementation in Asia – APTFF Survey 2012 Figure 1. Trade Facilitation and paperless trade implementation scores of selected Asian countries Surveys were completed by participants to the APTFF 2012 involved in trade facilitation in their own countries, as well as other selected experts. Following consistency checks and collection of additional and complementary data by ESCAP after the Forum, a dataset of trade facilitation implementation in 26 Asian countries was finalized for the year 2012. The Survey questionnaire and the data set are available at: http://www.unescap.org/tid/projects/tfforum12-survey.asp

10. Trade facilitation & paperless trade implementation in Asia – APTFF Survey 2012 Trade Facilitation strategies in Asian countries National Trade Facilitation Bodies/Committees in Asian countries

11. Trade facilitation & paperless trade implementation in Asia – APTFF Survey 2012 Implementation of WTO-related trade facilitation measures by Asian countries

12. Trade facilitation & paperless trade implementation in Asia – APTFF Survey 2012 Availability of electronic/automated customs systems in Asian countries Development of National Single Window system in Asian countries

13. Bilateral/regional trade agreements with trade facilitation provisions involving Asia-Pacific countries Source: Duval (2011)

14. Trade facilitation: case of ASEAN • ASEAN: most integrated subregion in Asia • 10 member countries; 25% intraregional trade • Major trade facilitation measures: • Customs administration • ASEAN Harmonized Tariff Nomenclature (AHTN) • Harmonization of practices in customs valuation • Post-Clearance Audit System and Green Lanes for CEPT products • Harmonized Customs Declaration Document • Cargo Processing • Standards & conformance • Adoption/direct use of international standards of ISO/ IEC/ ITU • Sectoral approach  mutual recognition of conformance procedures • Transport facilitation • Multimodal transport linkages • Transit facilitation framework • Single window for submission and processing of trade-related data and documents

15. National Single Window (SW)? ‘’A facility that allows parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfill all import, export, and transit-related regulatory requirements.’’ UN/CEFACT Recommendation 33

16. ASEAN Single Window Concept: connecting national single windows so that relevant trade data and information is automatically available to authorities in both the importing and exporting country, avoiding any delays and inconsistencies. “deadline for implementation”: 2015

17. Way Forward for trade facilitation in Asia-Pacific: cross-border paperless trade ESCAP Resolution 68/3: “Enabling paperless trade and the cross-border recognition of electronic data and documents for inclusive and sustainable intraregional trade facilitation” • Paperless trade: the use of electronic instead of paper documents in trade transactions • Adopted by ESCAP Member countries in May 2012 • Sponsored / co-sponsored by: Indonesia, Nepal, Republic of Korea, Sri Lanka, and Thailand • Res. 68/3 requests ESCAP Secretariat to support and facilitate the process for the development of regional arrangements on the facilitation of cross-border paperless trade

18. Lessons learned from Asian experience • Trade facilitation begins at home • Strong political will a must • Institutionalize trade facilitation / assign a lead agency • Regular stakeholder consultations • Consult and systematically involve the private sector • Set ambitious (long-term) targets • National/regional paperless trade • Apply information and communication technologies (ICT) • Don’t forget the legal framework • Take a holistic approach to trade facilitation in order to identify bottlenecks along the entire supply/transaction chain • Services and behind the border measures often key to efficiency • Measure progress & update strategy accordingly

19. Business Process Analysis (BPA) for Trade Facilitation Trade in Electronics from CHINA to THAILAND Number of parties: 11 on export side; 12 on import side Number of documents: 17 on export side; 44 on import side

20. For more information, visit the United Nations Network of Experts for Paperless Trade in Asia and The Pacific www.unescap.org\unnext\ The next Asia-Pacific Trade Facilitation Forum (APTFF) will be held this year on 10-11 September 2013 in China. You are all welcome! Thank You! (duvaly@un.org)

21. ANNEX

22. Establishment of Single Window and Paperless Trading Environment Document Simplification and Data Harmonization Business Process Simplification Business Process Analysis (BPA) BPA as a first step to single window and paperless trading environment

23. ESCAP-WB Trade Cost Database : Definition • Our measure of ad valorem trade costs: • where • τij denotes geometric average trade costs between country i and country j • tij denotes international trade costs from country i to country j • tji denotes international trade costs from country j to country i • tii denotes intranational trade costs of country i • tjj denotes intranational trade costs of country j • Xij denotes international trade flows from country i to country j • Xji denotes international trade flows from country j to country i • Xii denotes intranational trade of country i • Xjj denotes intranational trade of country j • σ denotes intra-sectoral elasticity of substitution (which is set = 8)

24. How to Access Trade Cost Data http://www.unescap.org/tid/artnet/trade-costs.asp 24

25. How to Access Trade Cost Data http://data.worldbank.org/data-catalog/trade-costs-dataset 25

26. United Nations Network of Experts for Paperless Trade in Asia and the Pacific “an ongoing community of knowledge and practice to facilitate the implementation of single window and paperless trade in the Asia-Pacific region” … As part of ESCAP’s effort to enhance regional connectivity and integration in cooperation with UNECE

27. UNNExT Institutional Structure

28. UNNExT Activities: Implemented • Business Process Analysis (BPA) Guide (Dec 2009) • Data Harmonization Guide (Jan 2012) • Legal Guide (Sep 2012) • Single Window Planning & Implementation Guide (Sep 2012) Tools & Guides Development • National Workshop on SW& BPA, Mongolia (Sep. - Dec.09) • Workshop on TF & BPA Training, Cambodia (Jun. – Jul. 2010) • National Workshop on SW, Nepal (Feb. 2011) • Workshop on SW planning & Implementation (Apr. 2012) Capacity Building • UNNExT Brief Series • Online Working Groups & Databases • Asia Pacific Trade Facilitation Forum Knowledge Sharing Regional Advisory Service • Mongolia Single Window Master Plan Peer Review (Oct. 2010) • Nepal: Towards Single Window Environment (2011) • Study visits to Single Window Facilities (Apr. 2012) • Regional Study on Improving Trade Procedures (2011) (Using BPA Guide) • Cooperation with ARTNeT (www.artnetontrade.org) Research & Analysis

29. Step by Step Approach to Paperless TradeFacilitation and UNNExT Guides

30. Measuring performance is important From ADB-ESCAP Reference Book on “Designing and Implementing Trade Facilitation in Asia and the Pacific”, available at: http://www.unescap.org/tid/projects/tfforum_adbescapbook.pdf

31. ESCAP’s Initiative on Business Process Analysis (BPA) for Trade Facilitation BPA? Analysis, including mapping, timing and costing of a process (e.g., moving goods from factory to deck of ship) Why? Necessary first step to improving a process • Part of ESCAP’s support to paperless trade • United Nations Network of Experts for Paperless Trade in Asia and the Pacific (UNNExT) • www.unescap.org/unnext/ • UNNExT Business Process Analysis Guide for the Simplification of Trade Procedures

32. Output of a UNNExT Business Process Analysis (1) Use Case Diagram Activity Diagrams Define scope of analysis, stakeholders involved, Activities to be studied Based on Universal Modeling Language (UML) 32

33. Output of a UNNExT Business Process Analysis (2)The time-procedure chart* *Frozen shrimp exports; Data collected by Institute for IT Innovation, Kasetsart University (2007)

34. Some findings from the BPA studies • Document preparation takes most time, followed by transport/ handling issues • “Basic” trade facilitation measures not always in place • Procedures between private parties are a very big part of the overall trade process • Different countries require different documents and information for a same export product • Harmonization of procedures and documentary requirements crucial • Importance of port logistics confirmed • … • Large variations in time and cost across products (or product usage), transport routes, destination, firm size,…

35. Policy Recommendations from BPA (1) • Full and inclusive representation of the private sector in trade facilitation initiatives is essential. • Implementation of basic trade facilitation measures should be consistently enforced and re-enforced nation-wide. • Paperless trade, including development of national and regional single windows, needs to be prioritized for trade facilitation. • Physical inspections should be minimized whenever possible, in particular through adoption of risk management techniques by all organizations involved in the trade process.

36. Policy Recommendations from BPA (2) • Healthy competition among transport, logistics and other trade-related service providers should be encouraged • Reviewing payment systems and their efficiency may reveal new opportunities for improving trade facilitation performance. • Industry-specific trade facilitation programmes should be considered, in particular for agricultural products. • Harmonization of documentary requirements across countries should beactivelypursued. • Bilateral and regional free trade agreements should systematically addresstrade facilitation issues.