WCO News – June 2020

As the title suggests, the latest edition of WCO News contains a variety of articles concerning Customs approach to COVID-19 and even one article relating to Customs Brokers on COVID-19. Other features include C-2-C cooperation and information exchange, Risk Management and the future invisible supply chain and Secure Border . Of interest for Customs Policy are articles on improvements to simplification and harmonisation of components to the Revised Kyoto Convention; WCO’s development of draft “Practical Guidance on Free Zones” as well as Internet domain name ownership data – understanding changes and useful suggestions for Customs. All in all another great read!

Source : World Customs Organisation

Guide to the WCO E-Commerce Framework of Standards

It is often difficult to navigate and assimilate the myriad of documentation and annexes associated with significant initiatives such as WCO’s ‘framework of standards’. True, the documentation is detailed and technical. There are, however, online training courses available on the WCO website for users wishing to attain a level of proficiency on a particular subject. Furthermore, member states can request technical assistance from WCO in the establishment of capacity for the implementation of specific Customs initiatives.

However, sometimes one requires a synopsis or insight as to what a particular initiative aims to achieve. This is important so as to establish the nature and extent of change and capacity required in one’s own domestic situation. In my area of operation, MS PowerPointTM plays an important role in uniformly conveying key information to a multitude of people across different disciplines in the organisation. Im happy to share a ‘guide’ which consolidates most of the ‘official’ WCO documentation that comprise the Framework of Standards on E-Commerce. When viewed as a PowerPoint Show, all hyperlinks to the official WCO E-Commerce documentation are available for download or display. Below are versions for both standard PowerPoint or PowerPoint Show. I hope it will serve some useful purpose.

Guide – WCO Framework of Standards on E-Commerce [PPTX, 3MB]

Guide – WCO Framework of Standards on E-Commerce [PPSX, 3MB]

Blockchain – introducing Customs to the Global Supply Chain, earlier

Picture: Dadiani Fine Art

Customs authorities are age-old institutions whose missions have been subject to numerous changes over time. Historically, the main role was to levy customs duties, which, in other words meant collecting resources for the benefit of local authorities. Today, customs performs many other functions, from securing national borders, recording import and export trade and prevention of fraud and illegal trade activity.

From the customs authority’s perspective, there is a constant focus on finding innovative technology and new methods and techniques to become more effective on risk assessment and inspection of the goods circulating across their borders. At the same time, customs authorities must examine the consequences these changes will have on trade, avoiding the creation of additional burden and obstacles for industries and entities involved in the exchange. Adopting flexible technology is often key for meaningful strategic transformations.

More quality data with accuracy and speed

Each country has its own policies for operating border control when goods arrive or depart from their territory. Most of these policies work from systems built off a central repository, powered by data collected from different sources. Time and effort are often spent in sorting and cleansing data from these various sources but disconsonant data can still create confusing outcomes when analyzed.

While globalization gives an incentive to operate in an open market, the increased amount of trade activity also conceals illicit activities that must be supervised by customs authorities, such as tax evasion, drug traffic or smuggling. It is in the best interest of the entire industry to cooperate, allowing data sharing to flag the early recognition of risky trade transactions.

Receiving data related to the supply chain activities prior to and during the transportation process can assist authorities, supporting them to pinpoint risky elements on international trade. Data validation across various trade and transportation documents allows authorities to manage detailed risk assessment processes and is enhanced with access to earlier and more granular information.

Providing government authorities with access to upstream transport data is one of the features of TradeLens. On the platform, customs authorities have access to data related to their countries from the moment a booking is placed with a carrier. Updates on documents from different data sources and transportation milestones are shared in near real-time.

Additional data is not only a way to make sure that accurate risk assessments are being made, but it can also help decrease the burden placed by the bureaucracy related to importing or exporting goods. Increasing the accuracy of the inspection of goods, can enable authorities to focus their resources on the most important targets and improve trade documentation processing for reliable shippers, truckers and carriers. Enhancing global trade and the upstream exchange of information can drive growth and prosperity for the entire ecosystem.

Doing more with less

While many technologies and platforms exist in the marketplace, organizations are often constrained by limited public resources that must be utilized wisely. TradeLens does not aim at replacing existing systems but enhancing them with additional data from the supply chain. The TradeLens Platform provides a forum for authorities to run pilots and test innovative solutions in a true end-to-end shipment lifecycle.

In order to contribute to the logistics operations of the entire ecosystem, customs authorities can send notifications related to their inspection and release activities to TradeLens. This information will be made available in near real-time to all the players involved in the shipment and permissioned to see the data.

Several countries have already started using TradeLens to improve their access to valuable information that will in turn support their mission goals:Indonesia, Ukraine, Saudi Arabia, Thailand, Jordan and Azerbaijan.

Source: TradeLens, 28 May 2020

WTO Director General Roberto Azevêdo resigns

The World Trade Organization’s Director General, Roberto Azevêdo announced his resignation effective 31 August of this year. His tenure will end three years into his second four year term which was otherwise due to expire in 2021.

Azevêdo’s departure annouoncement comes in a week where a bill to withdraw the United States from the organization was introduced in the US House of Representatives by the Democratic Chairs of the Transportation & Infrastructure, and Energy and Commerce Committees. This following the introduction of a Joint Resolution to the same effect in the US Senate by Republican Senator Josh Hawley of Missouri.

It comes as the organisation finds its dispute resolution function paralyzed by a US Appellate Body blockade, a potentially existential budget battle looms, its scheduled ministerial conference cancelled and even supportive members eyeing unilateral trade action in contravention of its principles.

At perhaps the most perilous time in its 25-year history, the WTO will be without a formally appointed leader, and the forthcoming selection process for his replacement hands the US yet another opportunity to exercise an effective veto over the organization’s future.

Dmitry Grozoubinski highlights the significance of Azevêdo’s departure.

Is this resignation a big deal?

While not likely to be the straw that breaks its back, this unfortunately timed resignation is still a hefty new weight for an exhausted WTO camel whose knees were already trembling. As the kids would say, “It’s not great.”

While opinions on the Roberto Azevêdo’s performance vary, his departure couldn’t come at a worse time, and the process to replace him is both very long and just as susceptible to being held hostage by an ornery member as everything else in the organisation.

As a global champion of rules based trade, the WTO’s ‘DG’ has an important role to play in making the full throated case against the rising tide of export restrictions, protectionism and unilateralism unleashed by the US-China trade tensions and exacerbated by Covid-19. Now is no time for the system to be without its Knight in Shiny Armani.

As the head of the WTO secretariat, the director general was poised to play a key role in steering the organisation through what now seems a near inevitable battle over its budget at the end of the year. If the US once again blocked adoption of the WTO’s budget, it would have been up to him to try and forge a compromise, or make the difficult and controversial decisions required to keep the lights on, staff paid and fondue pot glowing in the face of an unapproved budget.

As the chair of the trade negotiations committee, the director general offers convening power, good offices, and a consensus building voice. With critical negotiations around fisheries subsidies, e-commerce, investment, and WTO reform all hanging in the balance, the absence of a Director-General only further decreases the likelihood of progress (perhaps from Hail Mary Pass to Igloo in Hell).

What happens now – Interim Director-General? 

Upon Mr Azevêdo’s departure at the end of August, The rules now require the WTO General Council – a meeting of all WTO Members which serves as its highest decision making-body outside of a ministerial conference to appoint one of the four Deputy-Directors General as an interim director.

This presents a potential hurdle, as the WTO General Council makes decisions by consensus. Therefore, even a single member’s objection could prevent the appointment of an interim leader for the organisation.

The current deputies are Yonov Frederick Agah of Nigeria, Karl Brauner of Germany, Alan Wolff of the United States and Yi Xiaozhun of China. For obvious reasons, neither the US nor the Chinese DDGs are likely candidates for unanimous approval, and it is not impossible to envisage objections to Agah and Brauner as well – either personally or on general principle to sabotage the organisation further.

What happens next – A new Director-General?

Whether an interim DG is appointed or not, the WTO members will need to begin the process of selecting a new Director-General.

The procedure is lengthy and would ordinarily begin nine months before a DG’s term is set to expire. Once the process begins, WTO members have one month to nominate candidates, which must be their own nationals.

After this month is over, the candidates are expected to come to Geneva and meet with the WTO missions. The next seven months are to be spent weening the applicants down to a single final consensus candidate.

Is there politics? 

Oh my god yes. While the Director-General has no legal authority to make or enforce the rules, WTO members are still intensely jealous of the position and allergic to any candidate they feel might impede their interests.

Arriving at a single consensus candidate requires a raft of compromises, trades and deals even at the best of times, which of course the current situation is not.

What happens if no consensus candidate can be found? 

Theoretically, the rules do allow for a vote by the membership to select a Director-General. However, this procedure is both a measure of last-resort and intended primarily for a situation where the membership is split between two or more valid candidates and agrees by consensus on a vote to break the deadlock.

Were the US or some other member to block all candidates as a matter of principle, they would also likely oppose a vote. Even if a vote could then be forced regardless, it would only fuel the fires of those who argue the WTO has gone rogue.

So what does it all mean? 

On its own, this resignation does not fundamentally change the state of play. The WTO is severely weakened, partially paralysed and increasingly in the crosshairs of the US, where concerns about it extend beyond the Trump administration and across party lines.

It does however rob the WTO of an experienced, consensus-approved leader at a time when both the organisation and the cause of rules-based trade desperately need one.

Still, though slim, there is hope the DG selection process might serve to revitalise the organisation. Long rumored candidacies like that of Kenya’s formidable Amina Mohamed, who chaired the 10th WTO Ministerial Conference to a successful conclusion and would be the organization’s first female and first African Director-General, offer a path to a more globally representative future.

Source: article by Dmitry Grozoubinski, Borderlex.eu, 14 May 2020

China Shanghai Pudong Airport log jammed – Medical Supplies for export

Freight gridlock at Shanghai Pudong International Airport is so bad that some cargo planes are being forced to leave nearly empty and logistics companies are recommending ocean transportation as a faster option. 

Airfreight professionals describe an operational meltdown, with trucks stuck in queues for two to three days to drop off shipments and boxes piling up in warehouses unable to get put on aircraft because Chinese customs officials and ground handlers are overwhelmed by the surge in export demand for face masks and other medical supplies.

The volume of hospital gear, resumption of e-commerce and other trade following China’s coronavirus quarantine and new export restrictions are blamed for the massive backlog, which was compounded by factories rushing out extra shipments before closing for the May Day holiday.

“In my 20 years, I have never experienced this level of congestion at any airport. And there are no signs of this alleviating in the next week to 10 days,” especially with factories reopening again, Neel Jones Shah, the global head of airfreight at San Francisco-based Flexport, said in an interview.

An avalanche of personal protective equipment, test kits and disinfectant is descending on Chinese airports because the rest of the world desperately needs it to minimize exposure to the COVID-19 virus and air is the fastest delivery method. China is the world’s largest source for respirator masks, surgical masks, medical goggles and protective garments, accounting for 50% of global exports in 2018, according to Chad Bown of the Peterson Institute for International Economics.

But the onslaught of goods is running into a bureaucratic wall and piling up. Last month, Chinese authorities placed export controls on 11 types of medical supplies, including infrared thermometers, after complaints in Europe and the U.S. about low-quality purchases. Chinese-made N95 respirators failed in several tests to meet filtering standards for small particles, while non-medical masks are also being sold as medical-grade ones. In addition to special certification, all the shipments must be individually inspected and verified by customs authorities to make sure they are not defective or fraudulent.

The risk-control office that certifies the medical equipment was closed for Chinese Labor Day and customs worked reduced hours during the holiday, adding to the bottleneck.

The process of opening boxes and going through the contents with a fine-tooth comb is very manual and adds at least three days to transit times, said Brian Bourke, chief growth officer at Chicago-based SEKO Logistics.

China’s new policy has forced freight forwarders to cancel many bookings because export shipments are regularly failing customs inspections. Most of them are demanding customers have cargo ready at least four days before a flight. It now takes five to six days for shipments to get from the manufacturer’s dock onto a plane, according to logistics companies in the area. 

Meanwhile, forwarders and consolidators are requiring all freight charges for protective garments be paid up front, 72 hours before departure, because the cost of chartering a dedicated plane at the eye-popping one-way rate of $1.5 million or more, is prohibitively expensive. Pre-payment is also desired because shipments may miss the flight’s cutoff time and result in the forwarder otherwise having to eat the loss.    

Delayed or rejected loads have a knock-on effect, too, because they need to be rebooked on later flights.

The most-affected transfer station is PACTL, a joint venture between Shanghai Airport Group and Lufthansa Cargo that controls three of the seven cargo terminals at Pudong Airport, according to a SEKO client advisory. Since May 3, Eastern Air Logistics’ western cargo terminal is temporarily not accepting any new charter flights in an attempt to clear the backlog.

Chinese social media sites show massive traffic jams of trucks, with no space to unload, on the entrance road to Pudong Airport. The wait is so long, Bourke said, that trucking companies have to rotate fatigued drivers via motorcycle.

Even after shipments are cleared, they can sit in a warehouse because ground handling companies often don’t have enough labor to consolidate shipments for aircraft loading, he added.

Light loading

Jones Shah, a former head of cargo at Delta Air Lines, Inc. (NYSE: DAL), and others who do business at Pudong airport say the increased tender times have forced multiple carriers on several occasions to depart only 10% or 20% loaded because of schedule commitments, or fears that pilots will violate duty-hour limits by waiting.

Under normal circumstances, cargo airlines typically change crews in China. Instead, flights are originating in Tokyo or Seoul. Upon arrival, crews stay on the planes to avoid being tested or quarantined by Chinese authorities keen on preventing outsiders from reinfecting the local population. If freighters stay too long in Shanghai, crews will time out their duty clock and violate anti-fatigue rules before reaching a refueling stop in Anchorage, Alaska, or U.S. destinations.  

“It’s a disaster right now.  . . . There is personal protective equipment that could have been coming to the U.S. just wasn’t able to because of this backlog,” Bourke said.

Contacted by FreightWaves, North American passenger airlines that now operate so-called “ghost” charters — planes without passengers flying dedicated cargo routes — downplayed the congestion’s impact on load factors.

“PVG [airport code for Shanghai] has some challenges as a result of a huge increase in volume and flights, but American Airlines Group Inc. (NASDAQ: AAL) has been able to fill nearly all flights to-date. Demand remains very strong and our handling partners have been able to process freight in time to meet our outbound flights,” Sandy Scott, managing director of cargo operations – Europe & Asia Pacific, said in a statement. “Limiting export deliveries to 48 hours prior to flight departure helps with smoothing the flows through the cargo terminal. American is in constant contact with all global account customers, local customers, and handling partners to ensure flights leave on time and with full loads.”

A Delta spokesperson said, “Delta Cargo is working with our ground handlers and contracted warehouse providers in Shanghai to improve the situation in light of congestion affecting all airlines. Delta is committed to continuing our cargo-only flights between Shanghai and the U.S.”

Air Canada has not had aircraft leave empty because of good planning that enables it to swap out shipments that are not ready for ones that are, said Tim Wong, director of cargo sales and services for Asia-Pacific.

Airfreight workarounds

Freight forwarders are employing a number of tactics to bypass the bottlenecks and say customers need to be open to quick course corrections.

Flexport works with airline partners to delay flights upline, “before they leave for Shanghai because then the crews can continue to rest and not start their duty day. And that gives us a little more time to have freight tendered and built,” Jones Shah said. “But it can get tricky. Flights have to get to their destination because they have another flight after that. So, you’re operating within the confines of a very intricate schedule. This is a 24/7 job right now managing the complexity.”

Other Chinese airports face similar problems, to a lesser degree. SEKO is trying to avoid Shanghai at all costs for now, instead sending most airfreight to Zhengzhou airport, a 10-hour drive west of Shanghai. Time:matters, the logistics arm of Lufthansa Cargo, and its Chinese agent, Shanghai International Freight Forwarding, are also arranging cargo-only passenger charters from airports in Xiamen, Malaysia, and Nanjing, China, spokeswoman Katja Sondey said.

Making matters worse is that Chinese regulations don’t allow personal protective equipment to be exported or transshipped through Hong Kong.

“That has created lots of backlogs and capacity issues in Guangzhou and Shenzhen as many airlines do not have landing rights in mainland China and is one of the reasons why rates are sky high,” said Christos Spyrou, the CEO and founder of logistics cooperative Neutral Air Partner, via email from Hong Kong.

Fast-boat services, like those offered by Matson, Inc. (NYSE: MATX) and APL, offer another relief valve for shippers. Matson, for example, sails direct from Shanghai to Long Beach, California, in 10 days.

“We’re telling people that sometimes it’s more of a sure thing to move via expedited ocean services. And that’s an education,” Bourke said. “When your airfreight guys are selling ocean, that’s when you know that the market is working in a crazy way.”

Jones Shah said shippers — especially those who are moving a lot of volume — need a diversified strategy when it comes to moving medical supplies.

“If you’re just moving one shipment of 500,000 masks, airfreight is the way to go. If you’re moving multiple shipments of 40 million to 50 million masks over the duration of a project, there is absolutely a hybrid, modal strategy that is going to get you there.

“It’s not just air or ocean that’s going to let you be successful. You need a combination of the two,” he said.

Europe doesn’t have an express-ocean option, so some logistics companies are increasing use of transcontinental rail from China to move urgently needed protective suits and related supplies. Imperial Logistics International said it took 20 days for the first batch of 45 containers with medical gear for health care workers to arrive in Germany by train.

Source: Benzinga, featured on Yahoo.com, 8 May 2020

Bid to Hire 50,000 Post-Brexit Customs Staff

The U.K. risks failing to recruit the 50,000 customs agents the logistics industry says are needed before Britain’s final parting with the European Union, spelling potential chaos at the country’s busiest border.

The coronavirus has hampered efforts to train staff to handle the extra paperwork firms will need to complete after the U.K. exits the EU’s customs union at the year-end, according to industry bodies involved with the process. One lobby group says its offer to help plug the shortage of recruits has met with silence from Whitehall.

Without enough agents, goods traveling to and from the EU, the U.K.’s single biggest trading partner, risk being delayed at ports, disrupting supply chains and heaping more pain on companies reeling from coronavirus. Even if the two sides strike a trade deal by December, agents will still be needed to process an additional 200 million customs declarations, according to estimates by Her Majesty’s Revenue and Customs.

“This is all blown out the water by the virus,” said Robert Keen, director-general of the British International Freight Association, which is helping to train workers to process the new paperwork with funding from a 34 million-pound ($43 million) government program. “Everybody is fighting to keep their businesses going.”

Keen’s industry group has postponed its classroom training until at least June. The number of monthly registrations for its online learning course has dropped by 80% since February.

Asked by lawmakers on April 27 how many agents have been recruited so far, Cabinet Office Minister Michael Gove said he didn’t know.

He told members of Parliament the government had been in talks with the logistics industry about creating a training school. Such an initiative already exists — the U.K. Customs Academy was started in September with the Institute of Export. 876 courses have been initiated or completed since the academy opened, according to KGH Customs, which helps run the program.

“There is a significantly long way to go,” said Marco Forgione, director-general of the Institute for Export. According to him, the 50,000 figure is almost certainly a conservative estimate of how many agents will be needed. He is calling on the government to encourage people who have lost their jobs because of the virus to re-train as customs officials.

‘Full Stop’

In a sign of how the virus has sapped attention away from Brexit in Whitehall, the Freight Transport Association submitted a proposal to the Treasury on March 17 about how to set up a mass education program to train up agents. More than a month later, the lobby group hasn’t received a reply.

“My impression is it has come to a full stop,” said Rod McKenzie, managing director of policy and public affairs at the Road Haulage Association. He expressed surprised he hadn’t seen any job ads for customs agents.

Talks to seal a trade deal between Britain and the EU have been disrupted by the virus. The U.K. is seeking a Canada-style accord which would eliminate tariffs on goods but create new non-tariff barriers like customs declarations and rules-of-origin paperwork. Without a deal, the U.K. would trade with the EU on terms set by the World Trade Organization, meaning steep duties on products from cars to beef.

Need to Prepare

The two sides have until the end of June to extend the standstill period Britain entered after Brexit on Jan. 31 – but the government has repeatedly ruled out seeking a delay. Business groups such as BIFA and the FTA have called for an extension, arguing firms shouldn’t have to face the double whammy of higher trade costs while still recovering from the negative effects of coronavirus.

A government spokesman said thousands of agents, freight forwarders and parcel operators had used the 34 million-pound fund to improve their IT hardware and train staff.

“The U.K. has a well-established industry of customs intermediaries who serve British businesses trading outside the EU,” the spokesman added.

Even if firms are able to divert resources into training later in the year, by when the virus might have abated, companies will still need time to prepare, said Arne Mielken, founder of Customs Manager, an advisory firm for importers and exporters.

“You can’t hammer in customs knowledge overnight,” he said. “We urge companies not to neglect the fact that Brexit is still happening.”

Source: Article by Joe Mayes, Bloomberg, 4 May 2020

Indonesia, 12 cross-region countries agree to keep supply chains open

Top diplomats from 13 countries of a cross-regional network, including Indonesia, Singapore and Canada, have agreed on key principles of keeping transportation links and supply chains open to cushion the impacts of COVID-19 on global trade and economy.

Facilitated by Canada, the informal network called the International Coordination Group on COVID-19 (ICGC) consists primarily of half of the G20 countries — Brazil, France, Germany, Italy, Mexico, South Korea, Turkey and the United Kingdom — with the addition of Morocco, Peru and Singapore. It was recently established to look for a shared commitment to “promote and protect free trade” and other selected measures to tackle COVID-19.

The fresh declaration was made by foreign ministries of ICGC in a Friday evening teleconference, after it was deliberated at a recent senior officials meeting.

Going forward, Indonesian Foreign Minister Retno LP Marsudi said, any future cooperation “must be action-oriented” which would bring tangible benefits to the general public worldwide.

The declaration, despite its nature as a non-legally binding political declaration, aims at bolstering international norms and actions in handling the COVID-19 pandemic and to manage its social economic impacts. It identified a number of areas for concrete collaborative actions, outlining commitments to maintain an open flow of trade and investment, facilitate repatriation of stranded travelers, and to look for efforts to restore the post-pandemic global economy.

“We will continue to promote and protect free trade,”  the ministers said in the declaration, as quoted from a press statement on Saturday. “[…] and we agree that emergency measures designed to tackle COVID-19, if deemed necessary, must be targeted, proportionate, transparent and temporary, and that they do not create unnecessary barriers to trade or disruption to global supply chains, and are consistent with WTO [World Trade Organization] rules.”

Singapore’s Foreign Minister Vivian Balakrishnan said on Facebook on Saturday that the ICGC ministers had reiterated the importance of maintaining global connectivity, “such as transport and supply chain links, which will help all our economies recover more quickly when the pandemic eventually subsides”.

The WTO had sounded the alarm on Wednesday that global trade could plummet by a third this year due to the coronavirus pandemic, warning the deepest recession “of our lifetimes” could be on the horizon.

North America and Asia would be hardest-hit and could see their exports plunge by 40 and 36 percent respectively, while Europe and South America could see declines of more than 30 percent, the WTO said. Keeping markets open to international trade and investment would help economies recover more quickly, we will see a much faster recovery than if each country goes it alone.

Following the declaration, the ICGC would now strongly advocate for other countries to take similar steps, with South Korea leading a conversation on best practices for emerging from the COVID-19 crisis.

“The COVID-19 pandemic is a global challenge. Maintaining strong coordination with our international partners is critical to mitigate the repercussions of the ongoing challenges we face,” Canada’s Foreign Minister François-Philippe Champagne said in a statement. “Keeping people, goods and services moving is key in both addressing these issues and ensuring the transition to a strong recovery.”

Source: Article by Dian Septiari, The Jakarta Post, 19 April 2020

WTO – Trade in Medical Goods in the Context of Tackling COVID-19

This WTO study provides a comprehensive overview of trade and tariffs imposed on medical goods in general, many of which appear to be in severe shortage as a result of the current crisis. The purpose of this note is to provide factual information on how these goods are traded globally.

Download the Study here!

Source: WTO, 3 April, 2020

COVID-19 Reference page for Customs and Trade users

A dedicated COVID-19 page has been added to this blog to provide Customs and Trade users a reference and insight into a variety of international and South African weblinks and documents concerning guidelines under COVID-19. This page will be updated regularly to include additional links and updates to any relevant document or website referenced. Please bookmark this page to be kept abreast of updates.

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

Unpacking ICC's Digital Initiatives for global trade

ICC is partnering with government, business and other stakeholders to create digital solutions that will advance economic prosperity for all.

In line with ICC’s Declaration for the Next Century of Global Business, we are committed to maximising the benefits of the digital economy through establishing key partnerships to unify, simplify, and transform trade processes for all.

Here are seven ICC digital initiatives that will prepare business for the future of global trade:

1). TradeTrust facilitating ICC TradeFlow

During the World Economic Forum Annual Meeting in Davos, ICC joined the Singapore Government and major firms from key industries to launch TradeTrust, a public-private partnership that uses blockchain technology to digitalize global trade. The TradeTrust framework allows for interoperability across different trade platforms for the exchange of trade documents on a public blockchain.

ICC TradeFlow, a blockchain platform developed by ICC and Perlin to simplify the trade documentation process for all, was the first project built on the TradeTrust network. The platform, launched by ICC, DBS Bank, Trafigura, Infocomm Media Development Authority (IMDA), Enterprise Singapore, and Perlin, enables businesses to visually map out trade flows, issue instructions to partners, and analyse trade actions in real time.

2). Digital Trade Standards Initiative

The ICC Banking Commission has announced the creation of the Digital Trade Standards Initiative (DSI) to establish open technology standards that will promote interoperability among existing blockchain and technology platforms.

3). Digitalisation in Trade Finance Working Group

ICC’s Digitalisation in Trade Finance Working Group coordinates the ICC Banking Commission’s work related to the digitalisation of global trade, including the Internet of Things (IoT), artificial intelligence, and blockchain.

Formed in 2017, the Working Group evaluated all existing ICC rules for electronic compatibility, leading to the release of the eUCP version 2.0 and eURC version 1.0. In addition, the Working Group conducted a legal survey to understand the rights of third parties under e-Bills of Landing and developed a Digital Trade Roadmap, a communication tool for policymakers engaged in digital trade work.

4). Partnership with Perlin

In May 2019, ICC Secretary General John W.H. Denton AO announced the formation of a technology partnership between ICC and Perlin, a Singapore-based blockchain technology company. As part of this partnership, ICC and Perlin will work in close association to develop innovative blockchain products that will simplify and transform global trade for all.

AirCarbon, Perlin, and ICC at COP25

In recognition of the significant environmental impact of commercial air traffic, ICC, Perlin, and AirCarbon, formed a partnership on the side-lines of COP25 to facilitate carbon credit schemes to reduce worldwide aviation emissions. ICC will work with its global network to pursue adoption of the AirCarbon Exchange, the world’s first blockchain backed trading network for CORSIA compliant carbon credits. CORSIA, International Civil Aviation Organization’s Carbon Offset and Reduction Scheme for International Aviation, was signed in Montreal in 2016 by 191 countries.

Chambers Climate Coalition

The Chambers Climate Coalition is an initiative launched by ICC to mobilise chambers of commerce to take climate action, aligned with limiting global temperature rise to 1.5°C above pre-industrial levels and reaching net-zero emissions by no later than 2050. The Coalition, which was recognised as part of the landmark Climate Ambition Alliance at COP25, aims to reduce the greenhouse footprint from chamber service activities without delay.

Chambers of commerce can use Perlin’s blockchain technology to trace their value chains and implement a more sustainable model for their services to local businesses.

ICC Centre of Future Trade

ICC, Perlin, and Enterprise Singapore, established the ICC Centre for Future Trade in Singapore, an innovation hub for the creation and development of blockchain solutions for business. From the Centre for Future Trade, ICC and Perlin will work together to accelerate the commercial adoption of blockchain technologies for business.

International E-Registry of Ships (IERS)

In collaboration with Perlin and the Singapore Shipping Association, ICC has announced the creation of the International E-Registry of Ships, the world’s first blockchain-backed digital ship registration system. IERS will standardise the international shipping registration and renewal system through the use of digital technology.

Perlin Clarify

ICC’s partnership with Perlin enables ICC’s global membership network with access to Perlin Clarify, a blockchain solution that enables businesses to trace their value chains. Perlin Clarify allows businesses to track their compliance with government regulations, environmental standards, and other industry indicators.

The Incoterms® rules and smart contacts

ICC with support from Perlin is piloting customisable, self-executing digital sales agreements, that incorporate the latest edition of the Incoterms® rules into contracts. The creation of these blockchain-backed Incoterms® rules with smart contracts will help facilitate trade by reducing costs faced by importers and exporters worldwide.

The project was announced by Mr Denton, Dorjee Sun, CEO and co-founder of Perlin, and Satvinder Singh, Assistant CEO for Enterprise Singapore at an event in Singapore in August 2019.

5). Partnership with GIST Advisory

On the side-lines of the World Economic Forum Annual Meeting in Davos, Mr Denton joined Pavan Sukhdev, CEO of GIST and President of the World Wildlife Foundation, to launch two digital platforms that track the environmental impact of business operations for companies of all sizes. The platforms, I360X and SME360X, utilise analytics and global databases to measure the environmental impacts of market goods and services.

With the analytical information provided by these platforms, companies can transition their operations toward a more sustainable model for the future.

6). eATA Carnet

In November 2019, ICC successfully piloted the first ever digital ATA Carnet, a customs document allowing duty- and tax-free movement of goods for up to one year. The project, known as the Mercury II pilot, was initially launched by ICC in 2018 as part of the organisation’s commitment to using digital technology to simplify the trade documentation process.

Over the next six months, the project will enter a testing phase with six participating pilot countries, including Belgium, China, Russia, Switzerland, the United Kingdom and the United States. The European Union Directorate-General for Taxation and Customs Union actively supports the implementation of the eAta Carnet.

7). Digital platforms with the World Trade Organization (WTO)

Global Dialogue on Trade

In October 2018, Mr Denton and World Trade Organization Director-General Roberto Azevedo launched the Global Dialogue on Trade digital platform to gather input from policymakers, business leaders, and academia on the future of global trade.

The first series of debates, which concluded in March 2019, resulted in a set of concrete policy recommendations to provide guidance to stakeholders for strengthening multilateral trade.

Trade Dialogues

At the request of the WTO and B20, ICC is responsible for hosting Trade Dialogues, a digital platform connecting stakeholders from around the world to spark discussions among WTO members on critical business issues.

Source: ICC Website, February 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

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

South Africa to lose preferential access to US markets

The US has narrowed its list of countries it considers to be developing nations, including SA, to prevent them getting special trade preferences.

SA is set to lose preferential access to US markets after the Trump administration moved to change key exemptions to America’s trade-remedy laws on Monday.  

In 2019, US President Donald Trump issued an executive memo that asked US trade representative Robert Lighthizer to determine whether there has been “substantial progress” towards limiting the number of countries considered developing nations. 

“The WTO [World Trade Organisation] is BROKEN when the world’s RICHEST countries claim to be developing countries to avoid WTO rules and get special treatment. NO more!!! Today I directed the U.S. Trade Representative to take action so that countries stop CHEATING the system at the expense of the USA!” Trump said in a tweet in July.

In doing so, the US eliminated its special preferences for a list of self-declared developing countries that includes Albania; Argentina; Armenia; Brazil; Bulgaria; China; Colombia; Costa Rica; Georgia; Hong Kong; India; Indonesia; Kazakhstan; the Kyrgyz Republic; Malaysia; Moldova; Montenegro; North Macedonia; Romania; Singapore; South Africa; South Korea; Thailand; Ukraine; and Vietnam.

The US trade representative said the decision to revise its developing country methodology for countervailing duty investigations is necessary because America’s previous guidance — which dates back to 1998 — “is now obsolete.”

In a separate, but related matter the US is already considering whether SA can continue to be part of its preferential trade programme.

The Trump administration wants to reconsider SA’s preferential access to its markets over concerns that the Copyright Amendment Bill will threaten intellectual property (IP) rights. Should the US decide to suspend SA from the trade programme, the country could lose as much as R34bn in export revenue. The bill, which is being opposed by several local and international lobby groups, has been on President Cyril Ramaphosa’s desk for 10 months.

The International Association for the Protection of Intellectual Property (AIPPI), which represents US companies that produce copyright-protected material including computer software, films, television programmes, music, books, and journals (electronic and print media), is objecting to the bill because of the risk it poses to US IP rights. As a retaliatory measure, the association has been lobbying the US government to withdraw SA’s preferential trade status.

Under the US Trade Act, one of the criteria for eligibility for the generalised system of preferences (GSP) programme is that the state “provide ‘adequate and effective protection’ of American copyrighted works and sound recordings”.

Source: Article by Bekezela Phakathi, Business Day, 11 February 2020

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