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The WTO Negotiations on Trade Facilitation 24 March 2009

The WTO Negotiations on Trade Facilitation 24 March 2009. Birgit Viohl, Trade Facilitation Section, UNCTAD, birgit.viohl@UNCTAD.org Geneva, March 2009. Agenda. Introduction to Trade Facilitation TF Negotiating Process at the WTO. Agenda. Introduction to Trade Facilitation

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The WTO Negotiations on Trade Facilitation 24 March 2009

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  1. The WTO Negotiations on Trade Facilitation24 March 2009 Birgit Viohl, Trade Facilitation Section, UNCTAD, birgit.viohl@UNCTAD.org Geneva, March 2009

  2. Agenda • Introduction to Trade Facilitation • TF Negotiating Process at the WTO

  3. Agenda • Introduction to Trade Facilitation • TF Negotiating Process at the WTO

  4. S B INFORMATION The Trade Transaction GOODS PAYMENT

  5. Purchase Exportation Importation Bill of lading, Documentation Vessel Booking Request Confirmed Line of Credit Vessel Booking Confirmation Release/Approval Exporter’s Bank Importer’s Bank Bill of Lading Rated Bill of Lading Arrival Notice Original B/L, Invoice, PO, Packing List ImportTerminalOperator Fund Transfer Ocean Carrier Dock Receipt Demurrage guarantee & payment Line of CreditProforma Invoice Cargo Status LCConfirmation Export Terminal Operator Purchase Order Customs House Broker Exporter Importer Dock receipt Pick-up & Delivery Order Import Docs Proforma Invoice Pick-up & Delivery Order Release/HoldNotice Letter of InstructionInvoice, PO Inland Carrier Cargo Status Freight Forwarder / NVOCC Inland Carrier Manifest Customs ( Import ) Shipping & Funding Detail Dock receipt Export Declaration Marine Insurance Company Vessel Manifest Shipping & funding detail AES Export Declaration Port Converted Vessel Manifest Customs (Export) Importer Notice Data exchangein International Trade • 20 actors; • > 200 data elements; • Manual procedures; • Multiple data systems; • > 30 documents or messages.

  6. INTERNATIONAL TRADE TRANSACTION PROCESS SHIP PAY BUY Prepare For Export Prepare For Import Export Transport Import INVOLVES • Commercial • Procedures • Establish Contract • Order Goods • Advise On Delivery • Request Payment • Transport • Procedures • Establish Transport Contract • Collect,Transport and Deliver Goods • Provide Waybills, Goods Receipts Status reports • Regulatory • Procudures • Obtain Import/Export Licences etc • Provide Customs Declarations • Provide Cargo Declaration • Apply Trade Security Procedures • Clear Goods for Export/Import • Financial Procedures • Provide Credit Rating • Provide Insurance • Provide Credit • Execute Payment • Issue Statements

  7. Days to complete each stage of importing Source: World Bank Doing business 2006

  8. What is Trade Facilitation? • No clear definition of trade facilitation • Facilitate: To make easy or easier • Set of actions by public and private sector to create a trade environment which is more predictable, secure and cost efficient

  9. How to achieve trade facilitation • Simplification, Standardisation & Harmonization of trade documents, procedures • Improving logistics services • Improving infrastructure (transport: intermodal & interconnected!)

  10. Trade Facilitation(revision …) Trade Facilitation Definition: “The simplification, standardization and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payment “

  11. TRADE FACILITATION Simplification Harmonisation Standardisation Process of eliminating all unnecessary elements and duplications in formalities, processes and procedures Alignment of national procedures, operations and documents with international conventions, standards and practices. Process of developing internationally agreed formats for practices and procedures, documents and information.

  12. UN Lay-out Key (UNECE Rec.#1)

  13. Rec:19 Mode of Transport Rec:16 UN/Locode Rec: 17 Payment Terms ISO Country Code Rec:9 Currency Code Commodity Code Rec: 28 Means of Transport Rec: 21 Package Codes Rec:20 Units of Measurement

  14. United Nations Standards for Trade Documents… SAD

  15. Trade facilitation reform • On-going reform process • Adapted to each country’s development context • Different level of trade facilitation reform is possible • Advanced stages (E-docs, Automated processing, Pre-arrival processing)

  16. Step by Step Implementation Based on International Standards Single Window Rec 33, 34,35 Cross Border Data Exchange UNeDocs + WCO DM = CBRDM National Data Harmonization UNTDED, Core Component Library, UN LOCODE and code lists, UNeDocs, Rec 34 Document Simplification and Standardization UN Layout Key, Master Document, UNTDED, TF Toolkit and Forms Repository Process Analysis and Simplification Business/Political Process - Collaboration Between Trader and Government (UN/CEFACT Rec. 4, Rec. 18), UN/CEFACT International Supply Chain Reference model, Unified Modeling Methodology (UMM), Global Facilitation Partnership for Trade and Transport (GFP) Audit Methodology

  17. What are the Benefits • Estimates vary from 1-15% of total trade transaction costs are due to procedures and formalities • Even if only 1%, OECD estimates total gains to world economy of US$40, billion • APEC estimates gains of US$46 billion from trade facilitation measures - adopted TF as key policy target.

  18. Benefits …micro level • Predictability, cost and speed • Less direct and indirect transaction costs for private sector • Big implementers of trade facilitation are on top of the world competitiveness index • Investment dimension • Security dimension (advance information etc) • Increased public efficiency

  19. UN Millennium Development Goals • UN`s work in Trade Facilitation supports UN Millennium Development Goal 8 “develop further an open trading and financial system that is rule-based, predictable and non-discriminatory and includes a commitment to good governance, development and poverty reduction – both nationally and internationally”

  20. But ….. • Implementation weak in many developing countries

  21. Political Economy of TF • Benefits are split over a large group of beneficients • Private sector: Service provider, Producer (service users) • Consumer • Public sector • Ohlson: Collective Action. Too large a group of beneficients to have one group take an action • Reform resistance bcs of entrenched interests

  22. Role assigned to Customs Revenue Collection of import taxes(duties & excise) CUS TOMS F UNC T I ON Protection of Economic Interests (domestic production & services industry) Protection of society <health, safety> (drug trafficking, firearms, environment, counterfeit etc.) Economic development<trade, investment> (trade facilitation) Security <terrorism> (shifting focus to supply chain)

  23. Trade Facilitation involves .. Many different ministries and executive agencies Ministry of Transport, Ministry of Finance, Ministry of Trade, Ministry of Health, Customs, Bureau of Standards, Veterinary services, Laboratories Private sector Commercial banks Freight forwarders, Im-exporters Customs Brokers

  24. Duties; Taxes; Fees Revenue Generation Quotas; Dumping Entry Controls Patent; Trademark; Copyright Intellectual Property Drugs, narcotics; Pornography;Money laundering; Fraud Prohibited Transactions Vehicle safety Health and Safety Insect/pest control;Toxic wastes;Production processes;Manufacturing emissions;Endangered species Environmental Protection Health and Safety Food; Consumer goods;Animal disease;Plant disease;Generic safety Entry Controls Immigration Anti-terrorism; Gun controls;Arm trafficking;Weapons of mass destruction International Security Finances,Commerce Transport Health,Agriculture,Industry Interior Army

  25. Public sector requirements Application of trade regulations, Protection of society, Collection of fiscal revenue Make Buy Ship Pay • Private sector requirements • Predictable, simple and transparent laws and procedures; • Facilitation - let low risk cargo flow freely Integrated model Customer Supplier Source Trade Facilitation Supply-chain management and processes

  26. Questions ?

  27. Trade Facilitation is • Is an urgent need • A challenge • An opportunity

  28. Cooperation at the internationallevel

  29. Agenda • Introduction to Trade Facilitation • TF Negotiating Process at the WTO

  30. Why multilateral rules?

  31. TF work before WTO – from early 60’s to 1996… • Work of the UNECE and UNCTAD • UNECE Recommendations (UNLK, UN/EDIFACT, LOCODE, etc) • UNCTAD FALPRO • UN International Symposium on Trade Efficiency (UNISTE) in Columbus, Ohio (1994): • Banking & Insurance; • Customs; • Business Information for Trade; • Transport; • Telecommunications.

  32. Why multilateral rules? 1) Lack of effective implementation of the instruments • Non-binding feature of these instruments • Lack of political will for implementation • Not only own reform efforts but trading partners‘ efforts are important

  33. Why multilateral rules? 2) Gains to trade through trade facilitation reform potentially higher than through tariff reductions • Major increase in tariff reduction achieved in the Uruguay Round 3) Changing nature of trade • From access to time reliability, trade competitiveness • Reduce distance to markets

  34. Inventory holding decreases Securing supply chain

  35. Why multilateral rules? • International Standards

  36. Rec:19 Mode of Transport Rec:16 UN/Locode Rec: 17 Payment Terms ISO Country Code Rec:9 Currency Code Commodity Code Rec: 28 Means of Transport Rec: 21 Package Codes Rec:20 Units of Measurement

  37. Summary why multilateral rules? • Commitment to implement reform • Binding rules and standards • Gains to trade through reduction of transaction costs • Preparation for participation in „safer“ trade • Wide ranging standardisation

  38. Focus on WTO negotiation process ...but • WTO negotiation process is important • Creating harmonised rules system • Awareness • Political will and financial support for implementation • However, TF is a broader policy issue and effective trade facilitation reform requires more than compliance with rules. • Trade facilitation is embedded in national development strategies, regional integration process • Countries‘ trade facilitation needs and priorities and implementation capcity have to be seen in this context • WTO process complements and supports • Implementation resources

  39. « Trade And » Issues • GATT provisions are negative provisions (agreement not to do something, not to discriminate against foreign products or producers) • Developed countries pushed for Positive  provisions to address domestic regulatory issues. Singapore Issues were: • Investment and related regimes • Competition Policy • Policy related to Government procurement • Trade related procedures = Trade Facilitation

  40. History of TF in the WTO Singapore Issues 200x 1996 1. WTO Ministerial Conference

  41. History of TF in the WTO Singapore Issues 1996 2001 1. WTO Ministerial Conference

  42. Doha Declaration (2001) 27. Recognizing the case for further expediting the movement, release and clearance of goods including goods in transit and the need for enhanced technical assistance and capacity building in this area, we agree that negotiations will take place after the Fifth Session of the Ministerial Conference on the basis of a decision, by explicit consensus, at that Session on modalities of negotiations. In the period until the Fifth Session, the Council for Trade in Goods shall review and as appropriate, clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 and identify the trade facilitation needs and priorities of Members, in particular developing and least-developed countries. We commit ourselves to ensuring adequate technical assistance and support for capacity building in this area. (WT/MIN(01)/DEC/W/1, 14 November 2001)

  43. Timeline of TF at WTO Singapore Issues 200x 1996 2001 2003 1. WTO Ministerial Conference

  44. Singapore Issues vs. Cancun At the Ministerial Conference 2003 in Cancun a coalition of developing countries refused to open negotiations on new topics • Government Procurement (§26 DD) • Investment (§20-22 DD) • Competition (§23-25 DD) • Trade Facilitation

  45. Timeline of TF at WTO Singapore Issues July Package 200x 1996 2001 2003 2004 1. WTO Ministerial Conference

  46. « July Package » 2004 • On 1 August 2004, Members of the WTO General Council agreed on a Doha Work Programme (WT/L/579); a framework and agreements for the negotiations. Contains 4 Annexes • The General Council decided to commence negotiations on TF on the basis of the modalities set out in Annex D. Trade Facilitation negotiations part of the Single Undertaking • Annex D becomes the modalities text of the TF negotiations

  47. Anned D Modalities:Scope of negotiations • Clarify and improve relevant aspects of Art V, VIII and X od GATT 1994 • GATT Art.V Freedom of Transit • GATT Art.VIIIFees and Formalities connected with Importation and Exportation • GATT Art.X Publication and Administration of Trade Regulations • Border Agency Coordination • Enhance Technical Assistance Delivery

  48. Summary • Negotiations since 2004 • Part of the Single Undertaking • Modalities text „Annex D July Package • Scope : GATT Articles V, VIII, X

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