Trade
facilitation Related
FAQ's
What
is Trade Facilitation?
Trade
facilitation can be thought of as reducing the economic frictions
that interfere with trading across borders. A formal definition
is:
"The
harmonization, simplification and automation of procedures for
importers, exporters and Customs through the systematic rationalisation
of controls and documentation for international traders and
administrative agencies in order to facilitate the international
transaction process"
It
is not about abolishing justifiable regulatory controls, but
achieving their better enforcement. Experience shows that clarification
of procedures increases the detection rates of fraudulent declarations,
while high-cost, complicated customs regimes encourage an environment
in which corruption can flourish. Such an enhancement of the
climate is proven to stimulate trade, leading to higher volumes
on which duties can be collected.
Background
Trade
volumes have increased twenty fold since 1950, and indeed have
doubled over the last decade, which must result in either an
increase in administrative resources or the rationalisation,
simplification or automation of procedures. Without such recourse,
national development will be inhibited.
In
the UK, HM Customs and Excise have extensively rationalised
domestic procedures, in conjunction with the EU Single Market
Programme, including the introduction of simplified procedures
for non-EU freight. Meanwhile the UK is committed to continuing
to simplify and rationalise its own procedures by drawing on
the expertise of SITPRO
Ltd, the UK's public interface on trade facilitation.
The
Government is working on a proof of concept for a ‘Single Window’
experiment, which would provide a single point of entry, through
which traders could clear all their UK import or export formalities.
Customs
and Excise have also contributed substantially to the work of
the World Customs
Organization (WCO) particularly in the revision of the 1973
Kyoto Convention. The revised Convention – known as the "International
Convention on the Simplification and Harmonization of Customs
Procedures (as amended)" - was agreed by the WCO Council in
June 1999 and will come into force once it is ratified by at
least forty WCO members. We are hoping that the European Union
will do so in the near future.
Other
international organizations have contributed to trade facilitation
initiatives, including UN/ECE,
UNCTAD
and The International Chamber of Commerce (www.iccwbo.org)
UK
Position
The
UK fully supports the case that the European Commission has
made for a discrete Trade Facilitation Agreement, to be finalised
in the current Doha Development Round. Central to these negotiations
is the conviction that proper account should be taken of the
needs and constraints of developing countries, incorporating
staged implementation and technical assistance/capacity building.
The agreement should add value to what has already been accomplished,
by integrating the various elements and filling any gaps.
Why
is Trade Facilitation important?
- Inefficient
procedures impact on each and every consignment and transaction
comprising the day to day international trading of goods.
A Trade Facilitation Agreement will generate substantial benefits
which the European Commission estimates to be more than €300
billion in savings per annum. The current, non-binding
approach stretching back over 40 years has failed to address
the problems satisfactorily
- Proportionately,
developing countries (and SMEs) stand to gain most
from the rationalising of inefficient procedures which by
their very nature act as a fixed cost overhead on trade. 40%
of developing country manufactured exports are to other developing
countries. 30% of agricultural trade is "South-South".
Trade Facilitation is therefore not only of importance for
developing countries in terms of market access to developed
country markets, but also in encouraging intra-regional trade.
In addition, trade facilitation measures have been shown to
significantly boost customs duty collection in spite
of falling tariffs and combined with lower operating costs,
providing much needed public revenue for other public policy
goals
- As
tariffs have fallen under successive multilateral rounds,
and NTBs start to be dismantled, the significance of procedural
barriers to trade has become more acute, and there is some
evidence that their incidence has also increased
- It
will give potential foreign investors the security they need
to justify expenditure and investment, therefore encouraging
FDI
- Trade
facilitation reduces scope for illegal trafficking, corruption
and fraud. At best inefficient procedures act as a hidden
tax (but with no public benefit) on the honest trader
- Trade
facilitation is a paradigm of good governance: transparency,
better regulation, due process, and government-private sector
working together
- Trade
facilitation can offer wider benefits. For example,
a port-facility may be improved by faster throughput instead
of by costly and environmentally-undesirable expansion
Why
are WTO rules necessary?
- The
non-rules approach, pursued with increasing momentum by many
countries over the last 50 years, has failed to unlock the
estimated annual savings of €300 billion which
(the EC estimates) trade facilitation has to offer
- The
WTO is uniquely placed to set and implement fair and
transparent rules
- Action
on procedural barriers complements WTO liberalisation of
tariff and non-tariff barriers whose potential will not
be reached if inefficient border procedures are not dealt
with
- It
fits squarely within trade policy rather than just
being a matter for customs. An agreement will necessarily
build on many existing GATT provisions;
- A
rules-framework can incorporate provision of capacity building
and technical assistance, and should maximise its availability
by giving donors (and private-sector participants) the necessary
assurance of their investment being realised
- The
challenges of increased security are best met through
a trade facilitation approach. Clear and robust rules, reflecting
risk-based assessment techniques, on border formalities, will
give assurance of the adequacy and proportionality of security
controls and will enable a forum for guarding against arbitrary
and conflicting national measures
- Rules
will also encourage other bodies, whether private sector or
international agencies, to ensure a trade facilitatory approach
- Multilaterally
agreed rules ensure a level playing field for all countries
Contact:
Simon Collingwood
Tel: 020 7215 4572
Fax 020 7215 4499
E-mail: simon.collingwood@dti.gov.uk
Last
updated 26 August 2003
