South Africa and Zimbabwe sign milestone Customs Mutual Assistance Agreement

robertmugabejacobzuma2015govtza_SnapseedSouth Africa and Zimbabwe have elevated bilateral relations with the signing of five agreements set to benefit both countries. The agreements were signed on Wednesday during President Robert Mugabe’s state visit to South Africa at the invitation of President Jacob Zuma. An agreement regarding mutual assistance between customs administrations between the two countries was also signed, which will further cooperation towards the establishment of a one-stop border post. This is viewed as a crucial milestone.

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WCO News – February 2015 Edition

WCO News - Coordinated Border Management Feb 2015Check out the latest WCO News – per usual a wealth of interesting customs and supply chain information:

  • WCO launches IRIS, an application exploiting open source information
  • Harmonized System amendments effective from 1 January 2017
  • Beginning the CBM process: the Botswana experience
  • Inter-institutionality – a distinctive feature of the Colombian AEO model
  • WCO Data Model: the bridgehead to connectivity in international trade
  • Implementing New Zealand’s Joint Border Management System

and a whole lot more…

Source: WCO

Coordinated Border Management – An inclusive approach for connecting stakeholders

WCO Customs Theme 2015The WCO is dedicating 2015 to promoting Coordinated Border Management (CBM) under the slogan “Coordinated Border Management – An inclusive approach for connecting stakeholders”.

WCO Members will have the opportunity to promote the enhanced coordination practices and mechanisms that they have implemented within their administrations and with other Customs administrations and government agencies, as well as with economic operators involved in cross-border trade.

The term Coordinated Border Management (CBM) refers to a coordinated approach by border control agencies, both at the national and international level, in the context of seeking greater efficiencies over managing trade and travel flows, while maintaining a balance with compliance requirements.

CBM can result in more effective service delivery, less duplication, cost-savings through economies of scale, enhanced risk management with fewer but better targeted interventions, cheaper transport costs, less waiting times, lower infrastructure improvement costs, more wider sharing of information and intelligence, and strengthened connections among all border stakeholders. Source: WCO

 

State-of-Art Port Control Centre opens in Cape Town

Inter-Departmental CooperationSouth Africa’s first maritime port of entry control centre represents a milestone in the country’s journey to secure, modernise and control its borders, Finance Minister Pravin Gordhan said at the opening of the centre at Cowrie Port in Cape Town harbour last week on Friday.

The centre puts all the government departments and agencies involved in immigration and border control under one roof. These include the departments of home affairs, health, agriculture and fisheries, the SA Police Service (border police and crime intelligence), and the SA Revenue Service (Customs). The state-of-the-art centre would not only improve security and immigration issues, but would also serve to enhance trade and South Africa’s status as a logistical gateway to Africa, Gordhan said.

Trade

The rationale behind the centre was in line with the National Development Plan, the minister said. Among other things, the NDP aims to stimulate growth by lowering the cost of doing business in South Africa, improving the country’s competitiveness and exports, and linking local products with other emerging markets. Gordhan said the fast-growing markets of Africa represented important new markets, and the NDP was committed to increasing South Africa’s trade with its regional neighbours from 15% to 30%.

‘Complex borders’

Home Affairs Minister Naledi Pandor, also speaking at Friday’s opening, said the centre had been designed “to accommodate in one spot not only customs, excise and immigration, but also health, safety and intelligence.

“Ports are complex borders to manage. Cowrie Place will provide the space and facilities to manage passengers and cargoes more efficiently than before.” Pandor said the government hoped to establish a border management agency by the end of 2016, taking advantage of the lessons learnt from Cowrie Place. A flagship feature of Cowrie Place is the co-ordination monitoring centre, where the data and information will be fed, assimilated and made available to all government department and agencies involved in the maritime border management.

“For the bona fide tourist or member of the trade community, this will mean better service,” Gordhan said. “For those who intend to challenge the laws of our country, be warned, as we intend to raise the bar of compliance by an order of magnitude.”

Important port

Cape Town’s port is oldest in South Africa, but despite changes to its maritime culture brought by air travel and containerisation, it is still an important point of entry. The port processes more than 870 000 containers as well as nearly 730 000 tons of dry bulk per annum, Pandor said.

A total of 6 173 commercial vessels and 55 passenger vessels entered and/or left the port in 2013, while more than 62 000 people entered and/or departed from Cape Town harbour. Pandor said E-berth at the harbour would be developed into a fully fledged passenger liner terminal to complement Cowrie Place.

Landmark East and Southern African Customs forum focuses on modernisation

WCO ESA_Snapseed

Participants from all 24 members of the WCO’s Eastern and South African region attended the forum. [SARS]

Customs officials from 24 eastern and southern African countries met in Pretoria this week to share knowledge and experience with regard to the successful modernisation of Customs administrations.

Opening the three-day forum, Erich Kieck, the World Customs Organisation’s Director for Capacity Building hailed it as a record breaking event.

“This is the first forum where all 24 members of the Eastern and Southern African region (ESA) of the WCO were all in attendance,” he noted. Also attending were officials from the WCO, SACU, the African Development Bank, Finland, the East African Community and the UK’s Department for International Development (DFID).

Michael Keen in the 2003 publication “Changing Customs: Challenges and Strategies for the Reform of Customs Administrations” said – “the point of modernisation is to reduce impediments to trade – manifested in the costs of both administration incurred by government and compliance incurred by business – to the minimum consistent with the policy objectives that the customs administration is called on to implement, ensuring that the rules of the trade game are enforced with minimum further disruption”

The three-day event witnessed several case studies on Customs modernisation in the region, interspersed with robust discussion amongst members. The conference also received a keynote addressed by Mr. Xavier Carim, SA Representative to World Trade Organisation (WTO), which provided first hand insight to delegates on recent events at Bali and more specifically the WTO’s Agreement on Trade Facilitation.

The WCO’s Capacity Building Directorate will be publishing a compendium of case studies on Customs Modernisation in the ESA region during the course of 2014.

WCO ESA members – Angola, Botswana, Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Somalia, South Sudan, Swaziland, South Africa, Tanzania, Uganda, Zambia and Zimbabwe.

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Source: SARS

Operation “Warehouse” – Joint Customs Operation prevents losses to the EU States

OLAFAlmost 45 million smuggled cigarettes, nearly 140.000 litres of diesel fuel and about 14.000 litres of vodka were seized during a major Joint Customs Operation (JCO). The Operation code-named “Warehouse” was carried-out in October 2013 by the Lithuanian Customs Service and the Lithuanian Tax Inspectorate in close cooperation with the European Anti-Fraud Office (OLAF), and with the participation of all 28 EU member states. As a result of Operation “Warehouse”, a significant potential loss to the budgets of the European Union and its Member States was prevented. According to preliminary estimates, this would have amounted to about € 9 million in the form of evaded customs duties and taxes. The final results of the Operation were discussed by the participants last week at a debriefing meeting in Vilnius and were made public today across Europe.

Algirdas Šemeta, Commissioner for taxation, customs, anti-fraud and audit, welcomed the very good results of the operation. “The fight against the smuggling of excise goods is one of our political priorities and we have launched a number of initiatives to better equip Europe against such harmful practices being run by organised criminal networks. JCO Warehouse is a good example of how the EU and Member States’ authorities can cooperate effectively to protect their revenue. Joint Customs Operations safeguard the EU’s financial interests and also protect our citizens and legitimate businesses”, he said. “Such Operations also highlight the added-value of OLAF in helping facilitate the exchange of information between our partners across Europe and in providing effective operational support.”

Operation “Warehouse” focused on cargo movement by road transport. It targeted the smuggling and other forms of illegal trade of excise goods such as mineral oil, tobacco products and alcohol throughout Europe. By using several complex scenarios in multiple EU Member States, fraudsters lawfully import goods into the EU but request a VAT and excise exemption by declaring the goods as subject to tax and duty exemption regimes (e.g. declaring the goods to be in transit). The trace of the goods is then lost through the fictitious disappearance of the traders or through a fictitious export. Fraudsters avoid paying VAT and excise duties, but the goods remain in the internal market, causing a substantial loss to the EU’s and Member States’ revenues.

JCO “Warehouse” was the first Operation carried-out in close cooperation with tax authorities to target excise and VAT fraud specifically, besides customs fraud. For the first time, customs and tax authorities cooperated on a European scale in a JCO. This is a significant achievement since the different competences and legal regimes applicable at national and EU level make it difficult to address complex fraud schemes with uniform measures. In this Operation, customs and tax authorities joined their expertise, resources and shared intelligence to prevent losses to the EU’s and Member States’ budget.

Eight seizures were made during the Operation. Among these, authorities seized 6.617.400 cigarettes in Sweden and Lithuania; 135.831 litres of diesel in Poland and the United Kingdom, and 14.025,6 litres of vodka in United Kingdom alone. Overall, 44.957.160 cigarettes were seized.

During the entire Operation “Warehouse”, OLAF provided organisational, logistical, financial and technical support to allow for an exchange of information and intelligence in real-time. This was coordinated from the Physical Operational Coordination Unit (P-OCU) at the OLAF premises in Brussels which facilitated direct communication with the national contact points. A group of liaison officers from some Member States representing all the participating 28 EU countries, worked from here during the Operation and experts from the Commission’s Directorate-General for Taxation and Customs Union provided support.

EUROPOL participated as an observer in the Operation. A representative of the office was present at the P-OCU during the operational phase of the operation. It was also possible to make direct cross-checks of suspect individuals and companies appearing during the JCO with EUROPOL via a secure internet connection. Source: EU Commission

Border Management in Southern Africa: Lessons with respect to Policy and Institutional Reforms

The folk at Tralac have provided some welcomed insight to the challenges and the pains in regard to ‘regionalisation’. No doubt readers in Member States will be familiar with these issues but powerless within themselves to do anything due to conflict with national imperatives or agendas. Much of this is obvious, especially the ‘buzzwords’ – globally networked customs, one stop border post, single window, cloud computing, and the plethora of WCO standards, guidelines and principles – yet, the devil always lies in the details. While the academics have walked-the-talk, it remains to be seen if the continent’s governments have the commitment to talk-the-walk!

Regional integration is a key element of the African strategy to deal with problems of underdevelopment, small markets, a fragmented continent and the absence of economies of scale. The agreements concluded to anchor such inter-state arrangements cover mainly trade in goods; meaning that trade administration focuses primarily on the physical movement of merchandise across borders. The services aspects of cross-border trade are neglected. And there are specific local needs such as the wide-spread extent of informal trading across borders.

Defragmenting Africa WBThis state of affairs calls for specific governance and policy reforms. Effective border procedures and the identification of non-tariff barriers will bring major cost benefits and unlock huge opportunities for cross-border trade in Africa. The costs of trading remain high, which prevents potential exporters from competing in global and regional markets. The cross-border production networks which are a salient feature of development in especially East Asia have yet to materialise in Africa.

Policy makers have started paying more attention to trade-discouraging non-tariff barriers, but why does the overall picture still show little progress? The 2012 World Bank publication De-Fragmenting Africa – Deepening Regional Trade Integration in Goods and Services shows that one aspect needs to be singled out in particular:  that trade facilitation measures have become a key instrument to create a better trading environment.

The main messages of this WB study are:

  • Effective regional integration is more than simply removing tariffs – it is about addressing on-the-ground constraints that paralyze the daily operations of ordinary producers and traders.
  • This calls for regulatory reform and, equally important, for capacity building among the institutions that are charged with enforcing the regulations.
  • The integration agenda must cover services as well as goods……services are critical, job-creating inputs into the competitive edge of almost all other activities.
  • Simultaneous action is required at both the supra-national and national levels. Regional communities can provide the framework for reform, for example, by bringing together regulators to define harmonised standards or to agree on mutual      recognition of the qualification of professionals……. but responsibility for implementation lies with each member country.

African governments are still reluctant to implement the reforms needed to address these issues. They are sensitive about loss of ‘sovereign policy space’ and are not keen to establish supra-national institutions. They are also opposed to relaxing immigration controls. The result is that border control functions have been exercised along traditional lines and not with sufficient emphasis on trade facilitation benefits. This is changing but specific technical and governance issues remain unresolved, despite the fact that the improved border management entails various technical aspects which are not politically sensitive.

The required reforms involve domestic as well as regional dimensions. Regional integration is a continental priority but implementation is compounded by legal and institutional uncertainties and burdens caused by overlapping membership of Regional Economic Communities (RECs). The monitoring of compliance remains a specific challenge. Continue reading →

Rwanda-Burundi Establish Second One-Stop Border Post

Rwanad-Burundi OSBPA one stop border post has been established at Ruhwa in Rusizi District order to reduce the amount of time spent by traders clearing goods at the Rwanda-Burundi border. The one-stop border post is also expected to bolster trade between the two countries and see an infrastructure overhaul at the border area, according to the Minister of State for Transport, Dr Alexis Nzahabwanimana.

Under the one border post, travellers will access services at one spot unlike in the past when documents were processed at two locations – one in Rwanda and the other across the Burundi border. The process will now take about five minutes as opposed to 30.

With the new system, immigration, emigration and customs officials from the two countries share offices to ease the clearance procedures for travellers entering or departing either country.

Dr Nzahabwanimana observed that the post is an indication of existing good relations between the two countries and that it will “strengthen brotherhood between our peoples and boost trade between our two countries.”

“The post will ease the movement of people and goods,” Nzahabwanimana on Wednesday. “It will also reduce delays that people incurred while clearing at the border in the past.”

He urged employees to seize the opportunity and improve on the quality of services they provide. He also advised them to exploit modern technologies if they want to make a difference in what they do.

Burundi’s Minister of Transport and Public Works, Deogratias Rurimunzu described the move as “another step forward in the cooperation and friendship” between Rwanda and Burundi. He observed that the border will promote bilateral trade and cooperation abetween both countries.

“Work diligently, use your skills, pto provide better services and put these infrastructures to good use for them to benefit our population,” Rurimunzu told employees at the border post.

About the project

The idea to establish the one-stop border post was first floated in 2009. It is part of a larger project which comprises border infrastructures including administrative blocks, staff quarters, a warehouse, a weighbridge, social facilities, street lighting and water sources, among others.

The project also comprised the renovation of a 50.6 kilometre road between Nyamitanga and Ruhwa on the Burundian side as well as the construction of Ntendezi-Mwityazo Road on the Rwandan side.

The project was sponsored by the African Development Bank (AfDB), at a cost of about Rwf32billion on either side of the border. Ruhwa one stop border post is the second shared between Rwanda and Burundi following the establishment of the Gasenyi-Nemba border post in Bugesera district in 2011. Source: The New Times, Rwanda

Study into the cooperation of border management agencies in Zimbabwe

tralacZimbabwe is a landlocked developing country with a population of 14 million, sharing common borders with Botswana, Mozambique, South Africa and Zambia. Zimbabwe has 14 border posts, varying in size in accordance with the volume of traffic passing through them. Beitbridge, the only border post with South Africa, is the largest and busiest, owing to the fact that it is the gateway to the sea for most countries along the North-South Corridor. Zimbabwe thus provides a critical trade link between several countries in the southern African regions. The need for the country, especially its border posts, to play a trade facilitative role can therefore not be over-emphasised.

Trade facilitation has become an important issue on the multilateral, regional and Zimbabwean trade agendas, and with it, border management efficiency. Border management concerns the administration of borders. Border agencies are responsible for the processing of people and goods at points of entry and exit, as well as for the detection and regulation of people and goods attempting to cross borders illegally. Efficient border management requires the cooperation of all border management agencies and such cooperation can only be achieved if proper coordination mechanisms, legal framework and institutions are established.

This study explores how border agencies in Zimbabwe operate and cooperate in border management. The objectives of the study were to:

  • Identify agencies involved in border management in Zimbabwe;
  • Analyse the scope of their role/involvement in border management; and
  • Review domestic policy and legislation (statutes of these agencies) specifically to identify the legal provisions that facilitate cooperation among them.

Visit the Tralac Trade Law website to download the study.

Source: TRALAC

Home Affairs announces plans for Border Management Agency

safrica1Minister for Home Affairs, Naledi Pandor, in her recent budget debate  (click hyperlink to view full speech) to parliment, made brief allusion to the establishment of a Border Management Agency (BMA) in South Africa. The Agency will ensure coordination of and co-operation among the departments operating at South African points of entry and along our borders. The BMA will be led by the Department of Home Affairs and will involve SARS, SANDF, SAPS, Health and Agriculture. At present, focused attention is being paid to improving the management, capacity, and infrastructure at ports of entry. Last year over R110 million was allocated to ports of entry infrastructure via the Public Works budget. This year over R130 million is being made available in the DHA budget. A number of our ports of entry have been equipped with the enhanced movement control system (EMCS) while introducing the advanced passenger processing system (APP) for airlines. Source: Info.gov.za

SARS Customs launches its Water Wing

SARS Customs Waterwing

SARS plans to operate jet skis (such as pictured above) along its vast river borders. [Picture – SARS]

Last week four Customs officers received their qualifications from the South African Maritime Safety Authority (SAMSA) after having successfully completed their written and practical examinations. The officers who hail from the Northern Cape region will commence active patrol and enforcement operations along the northern border between South Africa and Namibia.

The SARS Water Wing skippers received their SAMSA category R certificates after completing a four-day training course at the Van Rhyn Dam in Benoni.

The officers will from next week begin patrolling the Orange River, the border between South Africa and Namibia, where there are suspected illegal trans-border transactions taking place, especially in abalone, diamonds, narcotics and rhino horn.

“These officials are now qualified skippers with category R licences which will enable them to patrol inland waters such as rivers, dams and harbours. The success of this pilot programme now enables us to actively assist in enforcing the Customs and Excise Act without being totally dependent on other departments,” said Hugo Taljaard, Senior Manager: Detector Dog Unit (Oversight).

He said that although the two jet skis will mostly be used in the Nakop area, they will also be utilised as far as Cape Town harbour in the small craft side of the harbour. There are plans to expand the unit. Customs’ first water wing boat is currently being constructed and more details about its deployment will be communicated in due course.  The jet skippers all agreed that it was quite exciting to be part of this pilot programme. “I never in my wildest dreams thought that one day I would be doing something like this,” remarked one candidate.  “Having jet skis will increase our visibility and this will serve as a deterrent to illegal trans-border traders,” added another.

Over the last 6 years SARS has steadily been increasing its visible policing and enforcement capability across the country’s vast land and sea borders. The hugely successful Detector Dog programme has attracted much national and regional attention. SARS also has plans to increase its existing non-intrusive inspection (NII) capability. Currently Durban, South Africa’s sole CSI port, is the only port with a dedicated X-ray scanning facility. Source: SARS Communications Division and self.

Bribery along the corridor

Notwithstanding efforts to minimize collusion, bribery and corruption through increased use of technology, the underlying fact remains that human intervention cannot be completely removed from nodes within the supply chain.Identifying the causes and parties involved in such activity is only the start (yet minuscule) aspect of a problem entrenched in the distrust of government officials and border authorities in particular. Integrity is based on trust. If trust is the placement of hordes of incompetence in public jobs to secure votes, then you will not need to look very far to understand that “the bribe” epitomizes the ultimate enterprise of individuals either bent on extortion, or to avail their services (like prostitutes  to the crooked trader. The following article “Bribery as a non-tariff barrier to trade” (click hyperlink to download) takes account of a wide-spread of role players as to their views and attitudes on the matter. In my view it is a template for what actually occurs at every border across the continent. 

Transparency International (Kenya) and Trade Mark (East Africa) have collaborated in the publication of a review on the subject of bribery in the EAC region. The executive summary elucidates the context – 

The East African Common Market Protocol that came into force in 2010 provides for the free flow of goods, labour, services and capital across the EAC bloc. To achieve this, members undertook to remove all tariff and non-tariff barriers to trade. While progress has been made on the removal of the former, doing away with the Non-tariff barriers along the main transport corridors of the region has remained a challenge.

Taking cognizance of this, Transparency International-Kenya, Uganda, Rwanda and Burundi in conjunction with the Transparency Forum in Tanzania conducted a survey along EAC‘s main corridors — the Northern and Central corridors- that form a vital trade link in the region between August and November 2011. The survey objectives were to measure the impact of bribery practices and create public awareness on the vice.

In determining the size of bribe payable, negotiations came top. The value of consignment and the urgency were some of the other factors sighted by the respondents. According to the survey, truck drivers have devised various means of accounting for bribery expenses to their employers. The most common is road trip expense’. These are anticipated regular amounts given prior to the start of a journey and ad hoc miscellaneous expenses. In the transporters’ books of accounts, the bribes are normally disguised either as anticipated regular amounts or as ad hoc miscellaneous expenses. Source: Transparency International and Trade Mark

Reform by Numbers – a reference work on Customs reform

The word ‘reform’ is a constant in the daily life of a customs officer. No customs administration among the 177 members of the World Customs Organization has not had a reform program in progress or planned. This is ultimately quite normal.A new World Bank publication “Reform by Numbers” will no doubt appeal to customs and tax reform experts and change agents.

It was written in the context of new and innovative policies for customs and tax administration reform. Eight chapters describe how measurement and various quantification techniques may be used to fight against corruption, improve cross-border celerity, boost revenue collection, and optimize the use of public resources. More than presenting ‘best practices’ and due to the association of academics and practitioners, the case studies explore the conditions under which measurement has been introduced and the effects on the administrative structure, and its relations with the political authority and the users. By analyzing the introduction of measurement to counter corruption and improve revenue collection in Cameroon, two chapters describe to which extent the professional culture has changed and what effects have been noted or not on the public accountability of fiscal administrations. Two other chapters present experiments of uses of quantification to develop risk analysis in Cameroon and Senegal.

By using mirror analysis on the one hand and data mining on the other hand, these two examples highlight the importance of automated customs clearance systems which collect daily extensive data on users, commodities flows and officials. One chapter develops the idea of measuring smuggling to improve the use of human and material resources in Algeria and nurture the questioning on the adaptation of a legal framework to the social context of populations living near borders. Finally, two examples of measurement policies, in France and in South Korea, enlighten the diversity of measurement, the specificities of developing countries and the convergences between developing and developed countries on common stakes such as trade facilitation and better use of public funds.

The “gaming effect” is well known in literature about performance measurement and contracts performance, because there is a risk of reduced performance where targets do not apply, which is detrimental to the overall reform. It is crucial to keep in mind that, by themselves, indicators “provide an incomplete and inaccurate picture” and therefore cannot wholly capture the reality on the ground. Measurement indicators must be carefully chosen to ensure that knowledge is being uncovered.

Measurement, for purposes of reform, should not be “copied and pasted” from one country to another. Due consideration must be given to the varying aims of the customs service and the specific political, social, economic, and administrative conditions in the country.

Measurement applied to experimentation is also about how donors, experts, and national administrations work together. On the one hand, national administrations in developing countries ask for technical assistance, standards, and expertise that are based on experiences of developing countries and use experts from such countries.These requests encourage the dissemination of such models. On the other hand, reforms of customs or tax administrations are represented as semi-failures in terms of the initial expected outcomes set by donors and politicians – usually the end of a reform is the time when donors and local administrations become aware of the gaps of their own representations of success.

While scientific and academic in approach, lets hope it means more than just miserable experimentation in target countries.

The book is available for free reading online – www.scribd.com or you can purchase from amazon.com.

Building hard and soft infrastructure to minimise regional costs

I post this article given it ties together many of the initiatives which I have described in previous articles. The appears to be an urgency to implement these initiatives, but the real question concerns the sub-continent’s ability to entrench the principles and maintain continuity. At regional fora its too easy for foreign ministers, trade practitioners and the various global and financial lobbies to wax lyrical on these subjects. True there is an enormous amount of interest and ‘money’ waiting to be ploughed into such programs, yet sovereign states battle with dwindling skills levels and expertise. Its going to take a lot more than talk and money to bring this about.

South Africa is championing an ambitious integration and development agenda in Southern Africa in an attempt to advance what Trade and Industry Minister Rob Davies describes as trade and customs cooperation within the Southern African Customs Union (SACU), the Southern African Development Community (SADC) and other regional trade organisations.

Central to pursuing this intra-regional trade aspiration are a series of mechanisms to combine market integration and liberalisation efforts with physical cross-border infrastructure and spatial-development initiatives. Also envisaged is greater policy coordination to advance regional industrial value chains. “Trade facilitation can be broadly construed as interventions that include the provision of hard and soft infrastructure to facilitate the movement of goods, services and people across borders, with SACU remaining the anchor for wider integration in the region,” Davies explains.

This approach is also receiving support from the US Agency for International Development (USAid), which recently hosted the Southern African Trade Facilitation Conference, held in Johannesburg.

Trade programme manager Rick Gurley says that virtually every study on trade in sub- Saharan Africa identifies time and cost factors of exporting and importing as the most significant constraints to regional trade potential. Limited progress has been made by SADC member States and SACU partners to tackle the factors undermining trade-based growth, limiting product diversification and increasing the price of consumer goods, including of foodstuffs. However, far more would need to be done to realise the full potential of intra-regional trade.

Regional Alliance
One high-profile effort currently under way is the Tripartite Free Trade Area (T-FTA), which seeks to facilitate greater trade and investment harmonisation across the three existing regional economic communities of the SADC, the Common Market of Eastern and Southern Africa and the East African Community.

The existing SADC FTA should be fully implemented by the end of the year, with almost all tariff lines traded duty-free and, if established, the T-FTA will intergrate the markets of 26 countries with a combined population of nearly 600-million people and a collective gross domestic product (GDP) of $1-trillion. At that size and scale, the market would be more attractive to investors and could launch the continent on a development trajectory, Davies avers. It could also form the basis for a later Africa-wide FTA and a market of some $2.6-trillion.

However, as things stand today, intra- regional trade remains constrained not merely by trade restrictions but by a lack of cross-border infrastructure, as well as poor coordination and information sharing among border management agencies such as immigration, customs, police and agriculture.Cross-national connectivity between the customs management systems is also rare, often requiring the identical re-entry of customs declarations data at both sides of the border, causing costly and frustrating delays.

USAid’s regional economic growth project, the Southern African Trade Hub, is a strong proponent of the introduction of several modern trade-facilitation tools throughout the SADC – a number of which have already been successfully pioneered. These tools, endorsed by the World Customs Organisation (WCO) Framework of Standards, which offers international best-practice guidelines, are aimed at tackling the high costs of exporting and importing goods to, from, and within Southern Africa, which has become a feature of regional trade and discouraged international investment.

Bringing up the Rear
A country’s competitiveness and the effec- tiveness of its trade facilitation regime are measured by its ranking on World Bank indices and, with the exception of Mozambique, Southern African States perform poorly – with most in the region settling into the lowest global quartile of between 136 and 164, out of a total of 183. “Our transaction costs in Africa across its borders are unacceptably high and inhibit trade by our partners in the private sector,” says WCO capacity building director Erich Kieck. “We need our States to develop good ideas and policies, but the true test lies in their ability to implement them,” he notes.

He adds that not only does trade facilitation require efficient customs-to-customs connectivity, but also demands effective customs-to-business engagement, adding that, while customs units are responsible for international trade administration, they are not responsible for international trade. “The private sector is the driver of economic activity and international trade, and government’s responsibility is to understand the challenges faced by the business community and develop symbiotic solutions,” Kieck notes.

Despite the establishment of regional trade agreements and regional economic communities in Southern Africa, many partner- ships have failed to deliver on their full potential to increase domestic competitiveness.

In a report, African Development Bank (AfDB) senior planning economist Habiba Ben Barka observes that, despite the continent’s positive GDP growth record – averaging 5.4% a year between 2005 and 2010 – it has failed to improve its trading position or integration into world markets. In 2009, Africa’s contribution to global trade stood at just under 3%, compared with nearly 6% for Latin America and a significant 28% for Asia.

“Since 2000, a new pattern of trade for the continent has begun to take centre stage, as Africa has witnessed an upsurge in its trade with the emerging Brazil, Russia, India and China economies. Overall, Africa is trading more today than in the past, but that trade is more with the outside world than internally,” says Ben Barka. She adds that while many African regional economic communities have made some progress in the area of trade facilitation, much greater effort is required to harmonise and integrate sub-regional markets.

To address enduring trade barriers, consensus among business, government and trade regulators appears to lean towards the adoption of one or a combination of five facilitation tools. These include the National Single Window (NSW), the One-Stop Border Post (OSBP), cloud-based Customs Connectivity, Coordinated Border Management (CBM) and Customs Modernisation Tools.

A National Single Window
NSWs connect trade-related stakeholders within a country through a single electronic-data information-exchange platform, related to cross-border trade, where parties involved in trade and transport lodge standardised trade-related information or documents to be submitted once at a single entry point to fulfil all import, export and transit-related regulatory requirements.Mauritius was the first SADC country to implement the NSW and consequently improved its ranking on the ‘Trading Across Borders Index’ to 21 – the highest in Africa. It was closely followed by Ghana and Mozambique, which have also reported strong improvements.

Developed in Singapore, the benefits of government adoption include the reduction of delays, the accelerated clearance and release of goods, predictable application, improved application of resources and improved transparency, with several countries reporting marked improvement in trade facilitation indicators following the NSW implementation.

In South Africa, the work on trade facili-tation is led by the South African Revenue Service (SARS), which focuses on building information technology (IT) connectivity among the SACU member States, and strengthen- ing risk-management and enforcement measures. However, SARS’ approach to the NSW concept remains cautious, Davies explains. “SARS has considered the viability of this option as a possible technological support for measures to facilitate regional trade, but considers that this would fall outside the scope of its current approach and priorities in the region,” he said.

One-Stop Border Posts
As reported by Engineering News in December last year, effective OSBPs integrate the data, processes and workflows of all relevant border agencies of one country with those of another, which culminates in a standardised operating model that is predictable, trans- parent and convenient. An OSBD success story in Southern Africa is the Chirundu border post, where a collaboration between the Zambia and Zimbabwe governments has culminated in a single structure, allowing officers from both States to operate at the same location, while conducting exit and entry procedures for both countries.

Launched in 2009, this OSBP model is a hybrid of total separation, joint border operations and shared facilities in a common control zone. Implementation of the model has reduced clearance times to less than 24 hours, significantly reduced fraudulent and illegal cross-border activity, enabled increased information sharing between border agencies and reduced the overall cost of export and import activities in the area.

Earlier this year, former South African Transport Minister Sibusisu Ndebele indicated that Cabinet was looking into establishing a mechanism that would bring all border entities under a single command and control structure to address the fragmentation in the country’s border operations, particularly at the high-traffic Beitbridge post between South Africa and Zimbabwe. “The ultimate vision is to create one-stop border operations to facilitate legitimate trade and travel across the borders,” he said.

Customs Connectivity and Data Exchange
Improved connectivity between customs limbs in sub-Saharan Africa has perhaps made the most indelible strides in the region, with improved IT connectivity between States identified as a priority by Sacu.

This includes customs-to-customs inter- connectivity, customs-to-business inter- connectivity and interconnectivity between customs and other government agencies. SACU members have agreed to pursue the automation and interconnectivity of their customs IT systems to enable the timely electronic exchange of data between administrations in respect of cross-border movement of goods. “As a consequence of this acquiescence, we have identified two existing bilateral connectivity programmes as pilot projects to assess SACU’s preferred connectivity approach, cloud computing between Botswana and Namibia and IT connectivity between South Africa and Swaziland,” says SACU deputy director for trade facilitation Yusuf Daya. He adds that a regional workshop was recently convened to explore business processes, functions, data clusters and the application of infrastructure at national level to improve and develop intra-regional links.

Coordinated Border Management
The SADC has been a strong proponent of CBM efforts in the region, which promotes coordination and cooperation among relevant authorities and agencies involved in, specifically, the protection of interests of the State at borders. “The union has drafted CBM guidelines for its members on implementation, based on international best practice, and has received indications of interest from several member States,” explains SADC Customs Unit senior programme officer Willie Shumba.He adds that CBM is a key objective of regional integration, enabling the transition from an FTA to a customs union and, eventually, to a common market, through effective controls of the internal borders.

Customs Modernisation
South Africa’s customs modernisation initiative is well advanced and came about following Sars’ accession to the WCO’s revised Kyoto Convention in 2004, which required customs agencies to make significant changes to it business and processing models. These changes included the introduction of simplified procedures, which would have fundamental effects on and benefits for trade and would require a modern IT solution.

Since its inception, the SARS Customs Modernisation Programme has gained tremendous momentum, with amendments to the Passenger Processing System and the replacement of SARS’s Manifest Acquittal System in the Automated Cargo Management system. Further adjustments were made to enable greater ease of movement of goods, faster turnaround times and cost savings, as well as increased efficiency for SARS. This phase included the introduction of an electronic case-management system, electronic submission of supporting documents, the centralisation of back-end processing in four hubs and an electronic release system and measures to enhance the flow of trucks through borders – in particular at the Lebombo and Beitbridge borders.

Proper Planning
AfDB’s Ben Barka warns that, prior to the implementation of any border improvement efforts by countries in Southern Africa, a thorough analysis and mapping of each agency’s existing procedures, mandate and operations should be undertaken.“Based on these findings, a new set of joint operational procedures need to be agreed upon by all involved agencies and must comply with the highest international standards,” she says.

Development coordination between States is essential, as the largest disparity among regional groupings, in terms of intra-regional trade, is clearly attributable to their differentiated levels of progress in various areas, including the removal of tariffs and non-tariff barriers, the freedom of movement of persons across borders and the development of efficient infrastructure. Source: Engineering News.

Regional Blocs seek to remove Trade Barriers

THREE regional economic communities (Recs) have taken the lead as Africa seeks to remove trade barriers by 2017. The establishment of a Continental Free Trade Area (CFTA) was endorsed by African Union leaders at a summit in January to boost intra-Africa trade. Sadc, Common Market for Eastern and Southern Africa (Comesa) and the East African Community (EAC) have combined forces to establish a tripartite FTA by 2014.

Willie Shumba, a senior programmes officer at Sadc, told participants attending the second Africa Trade Forum in Ethiopia last week that the tripartite FTA would address the issue of overlapping membership, which had made it a challenge to implement instruments such as a common currency. “…overlapping membership was becoming a challenge in the implementation of instruments, for example, common currency. The TFTA is meant to reduce the challenges,” he said.

Countries such as Zimbabwe, Tanzania and Kenya have memberships in two regional economic communities, a situation that analysts say would affect the integration agenda in terms of negotiations and policy co-ordination. The TFTA has 26 members made up of Sadc (15), Comesa (19) and EAC (5). The triumvirate contributes over 50% to the continent’s US$1 trillion Gross Domestic Product and more than half of Africa’s population. The TFTA focuses on the removal of tariffs and non-tariff barriers such as border delays, and seeks to liberalise trade in services and facilitation of trade and investment.

It would also facilitate movement of business people, as well as develop and implement joint infrastructure programmes. There are fears the continental FTAs would open up the economies of small countries and in the end, the removal of customs duty would negatively affect smaller economies’ revenue generating measures.

Zimbabwe is using a cash budgeting system and revenue from taxes, primarily to sustain the budget in the absence of budgetary support from co-operating partners. Finance minister Tendai Biti recently slashed the budget to US$3,6 billion from US$4 billion saying the revenue from diamonds had been underperforming, among other factors.

Experts said a fund should be set up to “compensate” economies that suffer from the FTA. Shumba said the Comesa-Sadc-EAC FTA would create a single market of over 500 million people, more than half of the continent’s estimated total population. He said new markets, suppliers and welfare gains would be created as a result of competition. Tariffs and barriers in the form of delays have been blamed for dragging down intra-African trade.

Stephen Karingi, director at UN Economic Commission for Africa, told a trade forum last week that trade facilitation, on top on the removal of barriers, would see intra-African trade doubling. “The costs of reducing remaining tariffs are not as high; such costs have been overstated. We should focus on trade facilitation,” he said.

“If you take 11% of formal trade as base and remove the remaining tariff, there will be improvement to 15%. If you do well in trade facilitation on top of removing barriers, intra-African trade will double,” Karingi said. He said improving on trade information would save 1,8% of transaction costs. If member states were to apply an advance ruling on trade classification, trade costs would be reduced by up to 3,7%.He said improvement of co-ordination among border agencies reduces trade costs by up to 2,4%.Karingi called for the establishment of one-stop border posts.

Participants at the trade forum resolved that the implementation of the FTA be an inclusive process involving all stakeholders.They were unanimous that a cost-benefit analysis should be undertaken on the CFTA to facilitate the buy-in of member states and stakeholders for the initiative. Source: allAfrica.com