World Bank -Trade and COVID-19 (Coronavirus)

Photo: Martin Sanchez, Unsplash

Maintaining trade flows during the COVID-19 pandemic will be crucial in providing access to essential food and medical items and in limiting negative impacts on jobs and poverty.

The speed and scale of the crisis are unprecedented. But governments can ameliorate the impact. The following documents, hyperlinked to this page provide initial guidance for policymakers on best practices to mitigate pandemic-related trade risks, support trade facilitation and logistics, and implement trade policy in a time of crisis.

Managing Risk and Facilitating Trade in the COVID-19 Pandemic

Maintaining trade flows as much as possible during the COVID-19 pandemic will be crucial in providing access to essential food and medical items and in limiting negative impacts on jobs and poverty.

Some countries are closing border crossings and implementing protectionist measures such as restricting exports of critical medical supplies. Although these measures may in the short-term provide some immediate reduction in the spread of the disease, in the medium term they may undermine health protection, as countries lose access to essential products to fight the pandemic. Instead, governments should refrain from introducing new barriers to trade and consider removing import tariffs and other taxes at the border on critical medical equipment and products, including food, to support the health response.

Trade facilitation measures can contribute to the response to the crisis by expediting the movement, release, and clearance of goods, including goods in transit. The World Bank Group provides guidance and technical assistance to developing and least developed countries to implement best practices to facilitate the free flow of goods.

Download the Guideline here!

Do’s and Don’ts of Trade Policy in Response to COVID-19

Despite the initial inclination of policy makers to close borders, maintaining trade flows during the COVID-19 pandemic will be crucial. Trade in both goods and services will play a key role in overcoming the pandemic and limiting its impact in the following ways:

  • by providing access to essential medical goods (including material inputs for their production) and services to help contain the pandemic and treat those affected,
  • ensuring access to food throughout the world,
  • providing farmers with necessary inputs (seeds, fertilizers, pesticides, equipment, veterinary products)for the next harvest,
  • by supporting jobs and maintaining economic activity in the face of a global recession. Substantialdisruption to regional and global value chains will reduce employment and increase poverty.Trade policies will therefore be an essential instrument in the management of the crisis.

Trade policy reforms, such as tariff reductions, can contribute:

  • to reducing the cost and improving the availability of COVID-19 goods and services,
  • to reducing tax and administrative burdens on importers and exporters,
  • to reducing the cost of food and other products heavily consumed by the poor and contributing to themacro-economic measures introduced to limit the negative economic and social impact of the COVID-19 related downturn,
  • to supporting the eventual economic recovery and building resilience to future crises.

Governments with industries producing COVID-19 medical goods or food staples can further contribute by committing to refrain from limiting exports through bans or taxes. If export restrictions must be used, then they should be targeted, proportionate, transparent, and temporary.Measures to streamline trade procedures and facilitate trade at borders can contribute to the response to the crisis by expediting the movement, release, and clearance of goods, including goods in transit, and enabling exchange of services.

Reforms can be designed to reduce the need for close contact between traders, transporters and border officials so as to protect stakeholders and limit the spread of the virus, while maintaining essential assessments to ensure revenue, health and security. Interventions to sustain and enhance the efficiency of logistics operations may also be critical in avoiding substantial disruption to distribution networks and hence to regional and global value chains.

Download the Guideline here!

Trade in Critical COVID-19 Products

The covid-19 pandemic is increasingly a concern for developing countries. Using a new database on trade in covid-19 relevant products, this paper looks at the role of trade policy to address the looming health crisis in developing countries with highest numbers of recorded cases. It shows that export restrictions by leading producers could cause significant disruption in supplies and contribute to price increases. Tariffs and other restrictions to imports further impair the flow of critical products to developing countries. 

Download the Guideline here!

Also view the Blog post – Viral protectionism in the time of coronavirus

Source: World Bank, 1April, 2020

Digital Trade Standards Initiative launches under the umbrella of ICC

ICC has launched the Digital Trade Standards Initiative (DSI) – a collaborative cross-industry effort to enable the standardisation of digital trade.

The ICC Digital Trade Standards Initiative (DSI) will build on work done by various likeminded initiatives, many of which aim to digitise trade, notably through the development of open trade and technology standards to promote interoperability.

The ICC DSI will promote greater economic inclusion through the development of open trade standards. This will facilitate technical interoperability among the variety of blockchain-based networks and technology platforms that have entered the trade space over the past two years.

“Universal standards will connect existing digital islands and enable market forces to improve customer experience,” said ICC Secretary General John W.H. Denton AO. “As a leading and neutral voice in the industry, it made sense to bring this project under the umbrella of ICC. This will allow the ICC DSI to lead and coordinate efforts in developing standards and protocols to digitise trade.”

The ICC DSI is unique among trade digitisation initiatives due to its collective nature. Too often, digitisation is enacted through bilateral agreements between institutions that require members to run on the same platform. This has resulted in siloed data and bespoke trade and trade finance processes.

“The ICC DSI seeks to coordinate all parties in the standardisation of data formats and processes, rather than duplicate existing efforts. In turn, membership will be open to all organisations across industries and geographies supporting the project’s core mandate, including existing industry associations and initiatives,” explained Steven Beck, Head of Trade Finance at the Asian Development Bank.

The ICC DSI will be supported by seed-funding committed by the Asian Development Bank and the Government of Singapore, in addition to ICC’s support. The ICC DSI will be run as an independent entity out of the recently-established ICC Centre for Future Trade.

“We have seen the tremendous impact of technology in growing businesses and facilitating international trade,” said Gina Lim, Director of Financing Ecosystem Development at Enterprise Singapore. “The ICC DSI will promote greater adoption of technology within the trade ecosystem and facilitate greater inclusiveness for small businesses. We are excited for the establishment of the ICC DSI office in Singapore and look forward to working with our global partners across geographies and sectors.”

ICC anticipates the implementation of a full-time management team, and a global and diverse steering committee to provide guidance and set priorities for the project’s development.

ICC has opened the recruitment process to hire a managing director to lead operations within the ICC DSI, with an official launch event to follow once this first process completed.

Source: ICC webpage, 4 March 2020

AfCFTA – an uphill struggle in quest for regional trade on the continent

Picture : Bloomberg.com

The following article was published by Bloomberg and sketches the day-to-day hardship for cross border trucking through Africa. In a sense it asks the very questions and challenges which the average African asks in regard to the highly anticipated free trade area. While rules of origin and tariffs form the basis of trade across borders, together with freedom of movement of people, these will mean nothing if African people receive no benefit. As globalisation appears to falter across Europe and the West, it begs the question whether this is in fact is the solution for Africa; particularly for the reason that many believe globalisation itself is an extension of capitalism which some of the African states are at loggerheads with. Moreover, how many of these countries can forego the much need Customs revenue to sustain their economies, let alone losing political autonomy – only time will tell.

Nyoni Nsukuzimbi drives his 40-ton Freightliner for just over half a day from Johannesburg to the Beitbridge border post with Zimbabwe. At the frontier town—little more than a gas station and a KFC—he sits in a line for two to three days, in temperatures reaching 104F, waiting for his documents to be processed.

That’s only the start of a journey Nsukuzimbi makes maybe twice a month. Driving 550 miles farther north gets him to the Chirundu border post on the Zambian frontier. There, starting at a bridge across the Zambezi River, trucks snake back miles into the bush. “There’s no water, there’s no toilets, there are lions,” says the 40-year-old Zimbabwean. He leans out of the Freightliner’s cab over the hot asphalt, wearing a white T-shirt and a weary expression. “It’s terrible.”

By the time he gets his load of tiny plastic beads—the kind used in many manufacturing processes—to a factory on the outskirts of Zambia’s capital, Lusaka, he’s been on the road for as many as 10 days to traverse just 1,000 miles. Nsukuzimbi’s trials are typical of truck drivers across Africa, where border bureaucracy, corrupt officials seeking bribes, and a myriad of regulations that vary from country to country have stymied attempts to boost intra-African trade.

The continent’s leaders say they’re acting to change all that. Fifty-three of its 54 nations have signed up to join only Eritrea, which rivals North Korea in its isolation from the outside world, hasn’t. The African Union-led agreement is designed to establish the world’s biggest free-trade zone by area, encompassing a combined economy of $2.5 trillion and a market of 1.2 billion people. Agreed in May 2019, the pact is meant to take effect in July and be fully operational by 2030. “The AfCFTA,” South African President Cyril Ramaphosa said in his Oct. 7 weekly letter to the nation, “will be a game-changer, both for South Africa and the rest of the continent.”

It has to be if African economies are ever going to achieve their potential. Africa lags behind other regions in terms of internal trade, with intracontinental commerce accounting for only 15% of total trade, compared with 58% in Asia and more than 70% in Europe. As a result, supermarket shelves in cities such as Luanda, Angola, and Abidjan, Ivory Coast, are lined with goods imported from the countries that once colonized them, Portugal and France.

By lowering or eliminating cross-border tariffs on 90% of African-produced goods, the new regulations are supposed to facilitate the movement of capital and people and create a liberalized market for services. “We haven’t seen as much institutional will for a large African Union project before,” says Kobi Annan, an analyst at Songhai Advisory in Ghana. “The time frame is a little ambitious, but we will get there.”

President Nana Akufo-Addo of Ghana and other heads of state joined Ramaphosa in hailing the agreement, but a number of the businesspeople who are supposed to benefit from it are skeptical. “Many of these governments depend on that duty income. I don’t see how that’s ever going to disappear,” says Tertius Carstens, the chief executive officer of Pioneer Foods Group Ltd., a South African maker of fruit juices and cereal that’s being acquired by PepsiCo Inc. for about $1.7 billion. “Politically it sounds good; practically it’s going to be a nightmare to implement, and I expect resistance.”

Under the rules, small countries such as Malawi, whose central government gets 7.7% of its revenue from taxes on international trade and transactions, will forgo much-needed income, at least initially. By contrast, relatively industrialized nations like Egypt, Kenya, and South Africa will benefit from the outset. “AfCFTA will require huge trade-offs from political leaders,” says Ronak Gopaldas, a London-based director at Signal Risk, which advises companies in Africa. “They will need to think beyond short-term election cycles and sovereignty in policymaking.”

Taking those disparities into account, the AfCFTA may allow poorer countries such as Ethiopia 15 years to comply with the trade regime, whereas South Africa and other more developed nations must do so within five. To further soften the effects on weaker economies, Africa could follow the lead of the European Union, says Axel Pougin de La Maissoneuve, deputy head of the trade and private sector unit in the European Commission’s Directorate General for Development and International Cooperation. The EU adopted a redistribution model to offset potential losses by Greece, Portugal, and other countries.

There may be structural impediments to the AfCFTA’s ambitions. Iron ore, oil, and other raw materials headed for markets such as China make up about half of the continent’s exports. “African countries don’t produce the goods that are demanded by consumers and businesses in other African countries,” says Trudi Hartzenberg, executive director of the Tralac Trade Law Center in Stellenbosch, South Africa.

Trust and tension over illicit activity are also obstacles. Beginning in August, Nigeria shut its land borders to halt a surge in the smuggling of rice and other foodstuffs. In September, South Africa drew continentwide opprobrium after a recurrence of the anti-immigrant riots that have periodically rocked the nation. This could hinder the AfCFTA’s provisions for the free movement of people.

Considering all of these roadblocks, a skeptic would be forgiven for giving the AfCFTA little chance of success. And yet there are already at least eight trade communities up and running on the continent. While these are mostly regional groupings, some countries belong to more than one bloc, creating overlap. The AfCFTA won’t immediately replace these regional blocs; rather, it’s designed to harmonize standards and rules, easing trade between them, and to eventually consolidate the smaller associations under the continent­wide agreement.

The benefits of the comprehensive agreement are plain to see. It could, for example, limit the sort of unilateral stumbling blocks Pioneer Foods’ Carstens had to deal with in 2019: Zimbabwe insisted that all duties be paid in U.S. dollars; Ghana and Kenya demanded that shippers purchase special stickers from government officials to affix to all packaging to prevent smuggling.

The African Export-Import Bank estimates intra-African trade could increase by 52% during the first year after the pact is implemented and more than double during the first decade. The AfCFTA represents a “new pan-Africanism” and is “a pragmatic realization” that African countries need to unite to achieve better deals with trading partners, says Carlos Lopes, the former executive secretary of the United Nations Economic Commission for Africa and one of the architects of the agreement.

From his closer-to-the-ground vantage point, Olisaemeka Anieze also sees possible benefits. He’s relocating from South Africa, where he sold secondhand clothes, to his home country of Nigeria, where he wants to farm fish and possibly export them to neighboring countries. “God willing,” he says, “if the free-trade agreement comes through, Africa can hold its own.”

In the meantime, there are those roads. About 80% of African trade travels over them, according to Tralac. The World Bank estimates the poor state of highways and other infrastructure cuts productivity by as much as 40%.

If the AfCFTA can trim the red tape, at least driving the roads will be more bearable, says David Myende, 38, a South African trucker resting after crossing the border post into South Africa on the way back from delivering a load to the Zambian mining town of Ndola. “The trip is short, the borders are long,” he says. “They’re really long when you’re laden, and customs officers can keep you waiting up to four or five days to clear your goods.” 

Source: article by Anthony Sguazzin, Prinesha Naidoo and Brian Latham, Bloomberg, 30 January 2020

Third anniversary of WTO Trade Facilitation Agreement

Three years since the Trade Facilitation Agreement (TFA) entered into force on 22 February 2017, WTO members have continued to make steady progress in its implementation. Director-General Roberto Azevêdo, on the occasion of the TFA’s third anniversary, welcomed members’ efforts to ensure traders can reap the full benefits of the Agreement.

The TFA, the first multilateral deal concluded in the 25-year history of the WTO, contains members’ commitments to expedite the movement, release and clearance of goods across borders. As of the TFA’s third anniversary, 91% of the membership have already ratified the Agreement. It entered into force three years ago when the WTO obtained the two-thirds acceptance of the Agreement from its 164 members.

The Agreement is unique in that it allows developing countries and least-developed countries (LDCs) to set their own timetables for implementing the TFA depending on their capacities to do so. They can self-designate which provisions they will implement either immediately (Category A), after a transition period (Category B), or upon receiving assistance and support for capacity building (Category C). 

As of 22 February 2020, over 90 per cent of developing countries and LDCs have notified which provisions they are able to implement after a transition period, and the ones for which they will need capacity-building support to achieve full implementation of the Agreement. Developed countries committed to immediately implement the Agreement when it entered into force.

Based on members’ notifications of commitments, 65 per cent of TFA provisions are being implemented today compared to the 59 per cent implementation rate recorded on the Agreement’s first anniversary. Broken down, the latest figure equates to a 100 per cent implementation rate for developed members and 64 per cent for developing members. As for least-developed countries, the improvement in the implementation rate is particularly notable at 31 per cent today versus the 2 per cent recorded a year after the Agreement entered into force. The implementation rate for each WTO member can be viewed here

The Agreement has the potential, upon full implementation, to slash members’ trade costs by an average of 14.3 per cent, with developing countries and LDCs having the most to gain, according to a 2015 study carried out by WTO economists. It is also expected to reduce the time needed to import and export goods by 47 per cent and 91 per cent respectively over the current average.

Source: World Trade Organisation, 22 February 2020

Kenya – Single Window costs to impact on traders

Importers and exporters will have to pay to use the Single Window System, Kenya Trade Network Agency(KenTrade) has said.

The agency dismissed concerns that it will increase the cost of doing business.

This comes as it moves to upgrade its system which provides the sole trading platform for lodging entries and accessing trade approvals, mainly by government agencies.

Companies will now have to pay Sh5,000 [ZAR722] annually as registration to the Single Window System. Application for Unique Consignment Reference (UCR) number in the system costs Sh750 [ZAR108] per UCR.

Arrival notification for any the impending arrival notice of a consignment will cost Sh7,500 [ZAR1,080] per ship. 

The charges have been approved by the National Treasury and Planning, following a legal notice issued on December 24 which became effective this month.

This is to support the cash-strapped government agency’s operations after Treasury cut its budget by more than a half.

KenTrade CEO Amos Wangora said the  charge are informed by low funding by the exchequer,which is threatening sustainability of the Single Window Services.

“The agency has over the years relied on the exchequer for funding to run its operations as well as maintain the system, this funding has not been sufficient and has been declining over the years,” Wangora said.

The Single Window System was rolled out in 2013, providing a single platform to process import and export cargo documentation.

It currently serves 12,000 users and processes close to 800,000 transactions annually.

The system brings together 35 permits, licenses and certificates from various government issuing agencies whose cargo clearance documentations have been interfaced with the  KenTrade system.

It is also linked to financial institutions (banks, mobile payment solutions) through Kenya Revenue Authority (KRA) iTax System and the governments eCitizen platforms.

Source: article published in The Star, Kenya, 24 January 2020

ICD 2020 – #MakeTradeWork

Picture courtesy of the WCO

To mark International Customs Day 2020 – focusing on the theme of ‘fostering Sustainability for People, Prosperity and the Planet’, the following article from the Spring 2018 edition of World Trade Matters by Jan Hoffmann, the Chief of the Trade Logistics Branch, Division on Technology and Logistics at UNCTAD, is relevant. The article discusses global trade facilitation reforms, the digitalisation of trade and measures towards ensuring long-term sustainability in the maritime industry. 

Confronted with growing populism and a surge in protectionist measures recorded by the WTO, policy makers and enterprises are struggling to avoid a backlash in international trade. At UNCTAD’s Trade Logistics Branch, we support these endeavours by helping to make trade work better. Through trade facilitation reforms, the promotion of digitalisation, and ensuring the long-term sustainability of international transport, we aim at ensuring that the international movement of goods is not confronted with unnecessary obstacles and costs. 

A multilateral agreement to facilitate international trade

Under the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO), developing countries commit to implement a number of very practical measures that make trade easier and more transparent. Countries are obliged to publish duties and procedures on the web, traders can transmit their declarations prior to the arrival of the goods, payments can be made electronically, and fees and charges must not become hidden taxes to generate income for the government. These are but some of the 37 concrete measures grouped into 12 Articles of the TFA. They are all useful and help make trade more efficient. 

However, many of these measures involve an initial investment or reforms that require human and financial resources to start with, which developing countries many not have. The good news is that the TFA also includes a novel mechanism – the so called “Special and Differential Treatment” – that helps developing countries plan and acquire the necessary capacity prior to being fully committed to comply with all 12 Articles. Concretely, the mechanism puts the developing countries in the position – and obligation – to analyse and notify their own implementation capacity. At UNCTAD, we are working closely with the developing countries to enable them to do so. Our main counterpart in this endeavour are the National Trade Facilitation Committees (NTFCs) that each country must set up under the TFA. UNCTAD’s Empowerment Programme for NTFCs includes training and knowledge development for the members of the NTFC, combined with advisory services and the development of a Roadmap of TFA implementation. 

By the same token, UNCTAD also supports developing countries in setting up Trade Information Portals. Under the TFA, members of the WTO are obliged to make relevant information on tariffs and trade procedures available on-line. UNCTAD’s Trade Information Portals not only help countries become compliant with this obligation, but in the process of analysing and publishing applicable trade procedures, a Trade Information Portal effectively helps countries identify the potential for the further simplification of procedures. Thanks to these new insights, NTFCs can then develop programmes and reforms that subsequently ensure the further simplification of procedures. 

Technological progress will never be as slow as today

My favourite provision of the TFA is Article 10.1., as it provides for a dynamic dimension of the Agreement. According to this article, countries need to minimize “the incidence and complexity of import, export, and transit formalities”, continuously “review” requirements, keep “reducing the time and cost of compliance for traders and operators”, and always choose “the least trade restrictive measure”. As such, even if a country is compliant with all TFA provisions today, countries will need to continue monitoring if existing procedures are still appropriate in view of technological or regulatory developments. 

As trade becomes increasingly digitalised, and new technologies which do not yet exist will be developed, it will be important that governments continuously revise and review the applicable rules and regulations. 

Digitalisation comes in stages. First, we optimize existing procedures, making use of cargo tracking, the Internet of Things, blockchain et al. Second, new businesses are developed which could not exist without the new technologies; new platforms come into being and we see more “uberisation”. Finally, there is transformation and science fiction; still in our lifetime Artificial Intelligence will overtake human capabilities to manage international trade and its logistics. 

But let us take one step at a time. At UNCTAD, we support developing countries through eTrade readiness assessments, the development and upgrade of technological solutions in Customs automation and Single Windows, and by providing a Forum for our members to analyse and discuss the challenges that come with digitalisation. We encourage the development of global standards that allow for interoperability among new systems. The challenge for policy makers it to encourage private sector investments in new technologies and solutions, while ensuring that no new monopolies emerge that might exclude smaller players.  

And it has to be sustainable

While we aim at ensuring continued growth in international trade, there is a catch. The transport of this trade encompasses increasing externalities, such as pollution, green-house-gas emissions, and congestion. 

Ports need to minimise social and environmental externalities. Many port cities are among the most polluted places to live, as ships burn heavy oil, and delivering trucks produce noise and cause traffic congestions. In addition, ports need to be resilient in the face of disruptions and damages caused by natural disasters and climate change impacts. 

International transport, including shipping, needs to play a larger role in addressing global warming and contribute to mitigating the carbon emissions that are causing climate change. Shipping emits less carbon dioxide (CO2) per ton-mile than other modes of transport, but then due to its sheer volume it also produces many ton-miles. Would it be possible that the industry could be charged by its main regulatory body not per ship tonnage (as is currently the case), but per tonne of CO2 emission? 

Currently, the International Maritime Organization is funded proportional to the tonnage registered under the members’ flags. Like this, Panama, Marshall Islands and Liberia pay for the largest share of the IMO budget – and in the end, this is passed on to the ship-owner, who in turn passes this on to the shipper, who will charge the consumer. This is a good established mechanism that could be expanded to also internalize the external costs of CO2 emissions. 

Being the most globalized of all businesses, maritime transport should consider adopting a global regime that helps further internalize its environmental externalities – to ensure prosperity for all.  

It is all about efficiency

Investing in trade facilitation reforms, making intelligent use of the latest technologies, and ensuring that externalities are internalized are all several sides of the same coin. Trade efficiency is necessary to promote an open international trading system. It requires a continuous effort by policy makers to continuously review current procedures, apply the most appropriate technological solutions, and support an efficient allocation of scarce resources. 

Source: Jan Hoffman, UNCTAD – originally published in World Trade Matters, Spring Edition, 2018

China’s most ambitious One Belt, One Road (OBOR) initiative

View the high resolution version here!

Visual Capitalist – Costing between $4-8 trillion and affecting 65 countries, China’s ambitious One Belt, One Road (OBOR) initiative is the granddaddy of all megaprojects.

By the time of it’s estimated completion in 2049, OBOR will stretch from the edge of East Asia all the way to East Africa and Central Europe, and it will impact a lengthy list of countries that account for 62% of the world’s population and 40% of its economic output.

Today’s infographic from Raconteur helps visualize the initiative’s tremendous size, scale, and potential impact on Asian infrastructure.

The tangible concept behind OBOR is to build an extensive network of infrastructure – including railways, roads, pipelines, and utility grids – that help link China to the rest of Asia, as well as Africa and Europe. 

This multi-trillion dollar project will fill the infrastructure gap that currently inhibits economic growth potential on the world’s largest continent, but it has other important objectives as well. By connecting all of these economies together, China is hoping to become the gatekeeper for a new platform international trade cooperation and integration.

But that’s not all: if China’s economic corridor does what it’s supposed to, the countries in it will see more social and cultural links, financial cooperation, and a merger of policy goals and objectives to accomplish. 

Naturally, this will expand the clout and influence of China, and it may even create the eventual scaffolding for the renminbi to flourish as a trade currency, and eventually a reserve currency.

One Road or Roadblock?

When billions of dollars are at play, the stakes become higher. Although some countries agree with the OBOR initiative in principle – how it plays out in reality is a different story.

Most of the funding for massive deep-water ports, lengthy railroads, and power plants will be coming from the purse strings of Chinese companies. Some will be grants, but many are taking the form of loans, and when countries default there can be consequences.

In Pakistan, for example, a deep-water port in Gwadar is being funded by loans from Chinese banks to the tune of $16 billion. The only problem? The interest rate is over 13%, and if Pakistan defaults, China could end up taking all sorts of collateral as compensation – from coal mines to oil pipelines.

Meanwhile, Sri Lanka was unable to pay its $8 billion loan for the Hambantota Port. In the middle of 2017, the country gave up the controlling interest in the port to a state-owned company in China in exchange for writing off the debt. China now has a 99-year lease on the asset – quite useful, since it happens to be right in the middle of one of China’s most important shipping lanes to Africa, the Middle East, and Europe.

Natural Opposition

While most economies in Asia are willing to accept some level of risk to develop OBOR, there is one country that is simply not a fan of the megaproject.

India, a very natural rival to China, has a few major qualms:

  • The China-Pakistan Economic Corridor (CPEC) goes right through Kashmir, a disputed territory
  • Chinese investment in maritime trade routes through the Indian Ocean could displace India’s traditional regional dominance
  • India sees the OBOR megaproject as lacking transparency

Meanwhile, with neighboring states such as Sri Lanka and Pakistan getting billions of dollars of investment from Chinese state-run companies, it likely creates one more issue that Indian Prime Minister Modi is not necessarily happy about, either.

Source: Original article by Jeff Desjardins, Visual Capitalist, published on 15 March 2018

AU – Online tool to remove Trade Barriers in Africa goes live

An online platform developed by UNCTAD and the African Union to help remove non-tariff barriers to trade in Africa became operational on 13 January.

Traders and businesses moving goods across the continent can now instantly report the challenges they encounter, such as quotas, excessive import documents or unjustified packaging requirements.

The tool, tradebarriers.africa, will help African governments monitor and eliminate such barriers, which slow the movement of goods and cost importers and exporters in the region billions annually.

An UNCTAD report shows that African countries could gain US$20 billion each year by tackling such barriers at the continental level – much more than the $3.6 billion they could pick up by eliminating tariffs.

“Non-tariff barriers are the main obstacles to trade between African countries,” said Pamela Coke-Hamilton, director of UNCTAD’s trade division.

“That’s why the success of the African Continental Free Trade Area depends in part on how well governments can track and remove them,” she said, referring to the agreement signed by African governments to create a single, continent-wide market for goods and services.

The AfCFTA, which entered into force in May 2019, is expected to boost intra-African trade, which at 16% is low compared to other regional blocs. For example, 68% of the European Union’s trade take place among EU nations. For the Asian region, the share is 60%.

The agreement requires member countries to remove tariffs on 90% of goods. But negotiators realized that non-tariff barriers must also be addressed and called for a reporting, monitoring and elimination mechanism.

The online platform built by UNCTAD and the African Union is a direct response to that demand.

Hands-on training

Complaints logged on the platform will be monitored by government officials in each nation and a special coordination unit that’s housed in the AfCFTA secretariat.

The unit will be responsible for verifying a complaint. Once verified, officials in the countries concerned will be tasked with addressing the issue within set timelines prescribed by the AfCFTA agreement.

Hands-on training

UNCTAD and the African Union trained 60 public officials and business representatives from across Africa on how to use the tool in December 2019 in Nairobi, Kenya.

They practiced logging and responding to complaints, in addition to learning more about non-tariff barriers and their effects on trade and business opportunities.

“The AfCFTA non-tariff barriers mechanism is a transparent tool that will help small businesses reach African markets,” said Ndah Ali Abu, a senior official at Nigeria’s trade ministry, who will manage complaints concerning Africa’s largest economy.

UNCTAD and the African Union first presented tradebarriers.africa in July 2019 during the launch of the AfCFTA’s operational phase at the 12th African Union Extraordinary Summit in Niamey, Niger.

Following the official presentation, they conducted multiple simulation exercises with business and government representatives to identify any possible operational challenges.

Lost in translation

One of the challenges was linguistic. Africa is home to more than 1,000 languages. So the person who logs a complaint may speak a different language from the official in charge of dealing with the issue.

Such would be the case, for example, if an English-speaking truck driver from Ghana logged a complaint about the number of import documents required to deliver Ghanaian cocoa to importers in Togo – a complaint that would be sent to French-speaking Togolese officials.

“For the online tool to be effective, communication must be instantaneous,” said Christian Knebel, an UNCTAD economist working on the project.

The solution, he said, was to add a plug-in to the online platform that automatically translates between Arabic, English, French, Portuguese and Swahili – languages that are widely spoken across the continent. More languages are being added.

UNCTAD’s work on the AfCFTA non-tariff barriers mechanism is funded by the German government.

Source: UNCTAG.ORG, 17 January 2020

Top 20 Easiest Countries for Doing Business

Another great infographic from the folks at Visual Capitalist. For the full diagram please click their webpage at this link.

Embracing Blockchain for Cross-border Trade

In August of 2019, both the United States and Thailand announced their plans to test blockchain applications for tracking and managing shipments. The U.S. Customs and Border Protection (CBP) is planning to test a blockchain application against their current system to determine how distributed ledger technology (DLT) can improve its existing processes. Thailand, on the other hand, plans to use IBM’s blockchain-based logistics platform Tradelens to improve customs processes such as data sharing.

Originally developed in a joint venture between IBM and logistics giant Maersk, Tradelens seeks to streamline processes in the global shipping industry by making the flow of information occur in real-time. The blockchain platform is reported to currently process about half of the world’s shipping data.

These moves highlight countries’ increasing interest in employing blockchain technology in their customs and border operations. The Tradelens website says its ecosystem comprises over 100 different organizations including carriers, ports, terminal operators, third-party logistics firms, and freight forwarders. More specifically, a map on the Tradelens website suggests that about 60 ports and terminals worldwide are directly integrated with TradeLens.

Elsewhere, the Directorate-General for Taxation and Customs Union (TAXUD), which develops policies and operational systems for the European Customs Union, explored the applicability of blockchain in customs and taxation with a focus on utilizing blockchain as a notarization service.

The Union is looking into using blockchain to digitize ATA Carnet, an international customs document used in 87 countries for temporarily admitting goods duty-free. A pilot project conducted in collaboration with the International Chamber of Commerce World Chambers Federation (ICC WCF), was successfully tested in 2018. 

The ICC WCF, a body of the ICC that helps facilitate mutually beneficial partnerships between ICC members, has been working with different customs authorities to develop solutions for converting ATA Carnets into electronic documents.

About 80 countries around the world have developed authorized economic operator (AEO) programs and signed a mutual recognition agreement (MRA), all in an effort to streamline cargo security. Under such arrangements, individual countries identify and approve trustworthy logistics operators that pose a low risk in security and share the approval information with participating countries. 

This allows countries to piggyback on the security checks of other countries to make customs operations more efficient. However, a few problems have arisen with the program. 

  • There are information leakage risks associated with the conventional way of sharing AEO data by email. While a sender’s email server may be encrypted, there is no guarantee that the receiver’s is as well, and vice versa.
  • Data sharing is not real-time, but monthly or at an agreed-upon interval. This limits the speed at which information on new or suspended AEOs can reach all participants.

To avoid the aforementioned problems as well as achieve additional time and cost savings on security procedures, customs administrations in Mexico, Peru and Costa Rica are working with the Inter-American Development Bank to develop a blockchain application called Cadena.

The move by governments around the world to employ blockchain to improve cross-border trade marks a step toward paperless customs processes, which originally began with the digitization of information flows by making trade-related data and documents available and exchangeable electronically. For all the improvements they’ve brought to paper-heavy processes, traditional electronic data exchange systems still face the challenges of authenticity and the unavailability of real-time data exchange.

For instance, the Netherlands and China launched a five-year project in 2010 to test the applicability of electronic sanitary and phytosanitary (SPS) certificates. A World Economic Forum white paper titled “Paperless Trading: How Does It Impact the Trade System?” noted that concerns around the authenticity of the electronic documents arose. This necessitated the adoption of electronic signature systems and a whole new legal framework that recognized the electronic signature.

Still, the entire process requires longer procedures and the introduction of new types of intermediaries — e-signature providers, for instance. Moreover, low-income countries, the trade costs of which remain high compared to high-income countries as according to World Bank data, may not have the budget to implement several new systems for data and document digitization. They still need to invest in better customs infrastructure. 

Blockchain, on the other hand, if implemented in border protection, will ensure real-time availability and immutability of customs documents while saving considerable costs on excessive paperwork.

Source: Original article titled: “Blockchain Adoption as a Cure for Cross-Border Trading“, authored by Craig Adeyanju, Cointelegraph.com, 2019.09.28

SADC Border posts under the spotlight

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Land borders in the SADC region are critical zones for unlocking economic development, regional value chains and trade. In this light the Global Economic Governance Africa programme is working with the Zimbabwe Trade Forum and the University of Zambia to look at two case studies on the border regions around Beitbridge and Chirundu. The borders, between South Africa and Zimbabwe, and Zimbabwe and Zambia, represent critical links in the North-South Corridor and are vital in both regional development initiatives as well as bilateral ones between the countries.

The seminar, attended by trade experts, policy makers and researchers from South Africa and the region discussed the field research findings of a study at the Beitbridge and Chirundu border posts conducted on behalf of the programme in June 2018.

The following presentation documents should be of interest to all parties concerned with inter regional trade and trade facilitation development initiatives.

It is also worthwhile to visit Tutwa Consulting’s webpage as it explains how the surveys were conducted and provides salient features in relation to each of the border posts concerned which may not necessarily be apparent in the presentation documents as such.

Source: Tutwa Consulting

SA Documentary on Rhino Poaching wins International Award

STROOP – Journey into the Rhino Horn War, is getting a lot of attention all the way around the world at the moment and its clear to see why!

The film tells the shocking and touching story of the ongoing poaching of the rhinos and the trade in its coveted horn. Four years in the making, this labour of love saw de Bod and director Susan Scott sell their houses, leave their jobs and move in with their mothers in order to document what is happening in the fight to save the rhino from extinction.

The locally made documentary film, has just been awarded the 2018 Green Tenacity Award by the judges of the Eighth Annual San Francisco Green Film Festival, coming ahead of the film’s world premiere at the festival which will run from Thursday September 6 through to Friday, September 14. STROOP was one of 26 final films selected out of 350 submissions and one of five to win awards – a huge credit for producer, Bonné de Bod.

It was supposed to be a 6-month project but soon turned in to a dangerous and intense expedition for which the passionate duo often found themselves in immense danger. In an exclusive first, de Bod and Scott filmed special ranger units inside the world-famous Kruger National Park and at the home of the white rhino, the Hluhluwe iMfolozi Park and travelled undercover to the dangerous back rooms of wildlife traffickers and dealers in China and Vietnam.

The result is a hard-hitting – and ultimately moving – documentary that challenges and shocks viewers.

Says Bonné “We are over the moon at receiving this prestigious award and it makes all our hard work and dedication to this film that much more worthwhile. Hopefully, it also means that the recognition will create additional awareness and encourage even more people to see the film when it releases.”

According to the festival’s criteria, the Green Tenacity Award is given to filmmakers “who show great tenacity in exploring crucial environmental issues in their work.”

Made solely with crowdfunding and grants – the film shows why this hunted and targeted species deserves to live in dignity, free from exploitation by illegal traders, poachers, money men and corrupt governments.

STROOP – Journey into the Rhino Horn War will premiere in South Africa in February 2019 after its film festival run overseas.

Source: sandtonchronicle.co.za, 22 August 2018.

Australia and Singapore sign Customs Mutual Recognition Agreement

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Companies that have been certified by the Singapore Customs for adhering to robust security practices can now enjoy a faster customs clearance process for goods that they export to Australia, the agency for trade facilitation and revenue enforcement said on Thursday.

In addition to the faster clearance process, certified Singapore firms will also be subject to reduced documentary and cargo inspections. The same will be applied to Australian companies that are certified by the Australian Border Force (ABF) for goods that they export to Singapore.

The move was recognised under a Mutual Recognition Arrangement (MRA) of Authorised Economic Operator programmes signed by Singapore Customs and the ABF on May 31 that aims to foster closer customs collaboration and elevate bilateral trade ties between the two countries.

The MRA comes under the Comprehensive Strategic Partnership signed between Singapore and Australia in 2015. In addition, Singapore is the first Asean country to sign an MRA with Australia.

In its media statement on Thursday, Singapore Customs said: “The Australia-Singapore MRA recognises the compatibility of the supply chain security measures implemented by companies certified under Singapore Customs’ Secure Trade Partnership (STP) programme and the trusted companies of the ABF’s Australian Trusted Trader programme.”

The agreement was signed on Thursday by Singapore’s director-general of customs, Ho Chee Pong, and the commissioner of ABF and comptroller-general of customs, Michael Outram, in Singapore.

Mr Ho said: “The signing of this MRA reinforces the commitment of both our customs administrations to maintain the security of regional and global supply chains, and to facilitate legitimate trade undertaken by Authorised Economic Operators in both countries.

“As major trading partners, I am confident that this new MRA of our respective Authorised Economic Operator programmes will bring about much benefit to our businesses and boost bilateral trade.”

The signing of the Authorised Economic Operator-MRA will further strengthen closer cooperation at the borders and smoothen the passage of goods between our two countries of trusted traders.

Source: The Business Times (Singapore), original article by Navin Sregantan, 31 May 2018

 

WCO News – February 2018

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This edition of WCO News features a special dossier on the theme chosen by the WCO for 2018, namely “A secure business environment for economic development”, with articles presenting initiatives and related projects that contribute to creating such an environment. The articles touch on authorized economic operators, national committees on trade facilitation, coordinated border management, performance measurement, e-commerce, data analysis, and partnerships with the private sector.

For sub-Saharan African readers, look out for the write up of the Customs systems interconnectivity and the challenges and opportunities for Customs administrations in the SACU region.

Other highlights include articles on Customs systems interconnectivity in the Southern African Customs Union, on the experience of a young Nigerian Customs officer who participated in the Strategic Management and Intellectual Property Rights Programme at Tokyo’s Aoyama Gakuin University, on how the WCO West and Central Africa region is using data to monitor Customs modernization in the region, and on the benefits that can be derived by facilitating transit procedures.

Source: WCO, February 2018

US-China: First Agricultural Commodity traded through Blockchain

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The first full agricultural commodity transaction using a blockchain platform has been completed by Louis Dreyfus Company (LDC), Shandong Bohi Industry, ING, Societe Generale and ABN Amro.

The trade included a full set of digitalized documents (sales contract, letter of credit, certificates) and automatic data-matching, thus avoiding task duplication and manual checks. Time spent on processing documents and data was reduced five-fold. The companies involved said that other benefits included the ability to monitor the operation’s progress in real time, data verification, reduced risk of fraud and a shorter cash cycle.

In the test, the Easy Trading Connect platform was used to execute a soybean shipment transaction from the U.S. to China. The transaction involved user participation on the blockchain-based platform by teams from Louis Dreyfus Company as the seller and Bohi as the buyer, with banks issuing and confirming the letter of credit. Russell Marine Group and Blue Water Shipping also participated in the process, issuing all required certificates. The U.S. Department of Agriculture provided valuable insights on how to include phyto-sanitary certificates in the process.

The Easy Trading Connect platform was first validated with an oil cargo transaction in February 2017, with the subsequent launch in November 2017 of an energy consortium aiming to offer blockchain-based services to the energy sector. The same principle was then applied to develop a blockchain-based platform tailored to agricultural commodities trading.

ING, Societe Generale, ABN Amro and other major industry players such as LDC have a long-term ambition to improve security and operational efficiency in the commodity trading and finance sector through digitalization and standardization.

“One thing is clear: the digital revolution is transforming the commodities sector,” said Gonzalo Ramírez Martiarena, Chief Executive Officer of LDC. “Distributed ledger technologies have been evolving rapidly, bringing more efficiency and security to our transactions, and immense expected benefits for our customers and everyone along the supply chain as a result. The next step is to harness the potential for further development through the adoption of common standards, and welcome a truly new era of digital trade flow management on a global level.”

Source: Maritime Executive, 3 January 2018 (Image credit: David Hundley (LDC)