A new WTO publication, launched on 22 February, provides an overview of the purpose and scope of the WTO Agreement on Technical Barriers to Trade (TBT Agreement), the types of measures it covers and its key principles. Prepared by the WTO Secretariat, this new edition in the “WTO Agreements” series aims at enhancing understanding of the TBT Agreement.
The TBT Agreement entered into force with the establishment of the WTO on 1 January 1995. It aims to ensure that product requirements in regulations and standards — on safety, quality, health, etc. — as well as procedures for assessing product compliance with such requirements (testing, inspection, accreditation, etc.) are not unjustifiably discriminatory and do not create unnecessary obstacles to trade. The Agreement also emphasizes the importance of transparency and strongly encourages the use of international standards as a basis for harmonizing regulations across WTO members.
The handbook sets out the key principles of the TBT Agreement and discusses how these have been addressed in recent disputes brought under this Agreement. The publication looks into requirements on transparency, a cornerstone of the TBT Agreement, and describes the mandate, role and work of the TBT Committee. It also considers how TBT‑related matters have been tackled in negotiations at the WTO.
The handbook also contains the full text of the TBT Agreement, as well as a compilation of all decisions and recommendations adopted by the TBT Committee since its creation in 1995.
“Standards and regulations are among the most important types of trade-related measures used around the world. Crafting them carefully, in line with the disciplines of the WTO Agreement on Technical Barriers to Trade, can help governments achieve important policy objectives, including safeguarding human health and safety, as well as protecting the environment — and this without unnecessarily disrupting trade. This Handbook is a must-read for anyone interested in these issues,” says Deputy Director-General Alan Wolff in a foreword to the handbook.
The publication contains many substantive updates, changes and additions as compared to previous editions (this is the 3rd edition). It can be downloaded here. Printed copies can be purchased from the WTO’s Online Bookshop.
Other publications in this series cover the Agreement on Agriculture and the Agreement on the Application of Sanitary and Phytosanitary Measures.
Two recent articles reaching my desk reiterate the importance of clean and standardised Customs data. Without this, any real benefits to be derived from the latest and future technologies will not be fully achieved. Downstream, a country’s economy depends on this data for accurate analysis, forecasting and policy-making. Similarly, the business community relies on accurate information to assist in better business and investment decisions.
During the 15th PICARD Conference held during 23-26 November 2020, ‘World Customs Journal Special Edition’ was introduced. The first paper of the special edition is based on the keynote speech which was given at the 14th PICARD Conference in October 2019 titled “Data Science: Policy Implications for Customs”.
“Governance by data is a growing global trend, supported by strong national public policies whose foundation is open data, artificial intelligence and decision-making supported by algorithms. Despite this trend and some technical advances, Customs face obstacles in deploying ambitious data use policies. This article describes these challenges through recent experience in some Customs administrations and considers the technical and ethical issues speci c to all law enforcement agencies in the context of customs missions, to open paths for research and propose policy recommendations for a better use of customs data.”
The second matter is perhaps more directed towards Africa. TRALAC Newsletter, of October 2002 titled“Trade and Related Matters“discusses the importance of data, specifically now with the introduction of the African Continental Free Trade Area (AfCFTA) in January 2021.
The article considers more than just Customs trade data relating to goods. It envisages trade in services data as just as important to ensure a holistic approach –
“Trade-related data includes not only recorded values and volumes of goods trade among countries, but also data on services trade, non-tariff measures and barriers, tariffs, informal trade, trade restrictiveness, macro-economic conditions (like gross domestic product), micro-economic data (industry/firm-level data including employment, sales, profits and prices) and investment. This data is utilised by governments to make public policy decisions including the formulation of industrial, agriculture, trade and economic growth policies, strategies and regulations; trade negotiations strategies; merger and acquisition reviews; assessments of anti-competitive practices and determinations in trade remedy cases and applications for changes in tariffs. Businesses use trade information, such as tariffs in destination markets, applicable non-tariff measures, transportation costs and trade restrictiveness in combination with macro-economic indicators, firm-level data and market information to make investment, trade and market development decisions, and also to lodge trade remedy and tariff review applications and to inform their participation in public-private forums.”
The Newsletter continues to explain the notable improvements in data and reporting oer the last decade –
“Although trade and trade-related data has various uses, it needs to be useful, reliable and accurate information which is publicly available (except in the case of confidential information). This is the area where most African countries have historically fallen short although there has been some significant progress over the last decade. Initially, African trade data was only available on subscription databases and only for a select number of countries (like South Africa, Kenya and Egypt) and limited to trade in goods. There was a lack in published tariff schedules and data pertaining to non-tariff measures, investment, informal trade and services. In recent years, the availability of some data has improved significantly, especially for goods trade.
African countries are now increasingly publishing their statistics on websites of national statistics authorities and notifying their national data to the United Nations (UN). This data includes data on formal goods trade, aggregate services trade, non-tariff measures, tariffs, investment and some market information. The quality of the data has also improved as most countries now extensively verify the data prior to publication and submission. Increased access enables organisations like the World Bank, the World Trade Organisation (WTO) and International Trade Centre (ITC) to obtain, collate and publish trade data in databases like the ITC TradeMap and MacMap and the WTO trade portal.
As part of the implementation of the WTO Trade Facilitation Agreement, many countries are establishing trade portals. Southern and eastern African countries that already have functioning portals include Seychelles, Eswatini, Kenya, Rwanda and Uganda. Some portals contain detailed information on import and export requirements by specified product, sanitary and phytosanitary requirements, port of entry and applicable tariffs. The trade portals of countries in east Africa, including Uganda and Rwanda provide details of import or export processes including the trade costs such as inspection charges, and indicate the waiting time to complete the different steps.
Once fully operational, the African Trade Observatory (ATO) will contribute significantly to the availability of African trade data and capacity building. The ATO will collect and analyse trade and trade-related qualitative and quantitative data and information, establish a database for African trade; monitor implementation and evaluate the implementation process and impact of the AfCFTA and the Action Plan for Boosting Intra-Africa Trade (BIAT); and equip national governments and businesses to analyse and use of trade and related data.
Informal trade is recognised as a major component of intra-Africa trade and this is not captured in formal trade statistics. There are a number of initiatives to gather data on informal cross-border trade (ICBT), including studies by UNECAand ongoing work by the Bank of Uganda which has been conducting surveys and reporting ICBT data since 2005.
Although there have been improvements in intra-Africa trade data, there is room for improvement.”
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.
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.
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.
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
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.
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.
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.
Zimbabwe’s Deputy Finance and Economic Planning Minister Terrence Mukupe has estimated that the country has lost an estimated $20 million in revenue receipts since ZIMRA’s automated Customs processing system (ASYCUDA World) collapsed in the wake of server failure on 18 December 2017.
During a site visit of Beit Bridge border post earlier this week, it was revealed that ZIMRA collects an estimated $30million per month in Customs duties at its busy land borders. The Revenue Authority has since instituted manual procedures. Clearing agents are submitting their customs documents accompanied by an undertaking that they will honour their duties within 48 hours. That is, when the ASYCUDA system is finally resuscitated and this is totally unacceptable.
Furthermore, Zimbabwe lies at the heart of the North-South Corridor which handles a substantial volume of transit traffic. The threat of diversion due to lack of proper Customs control and opportunism will also create both a fiscal and security headache. The deputy minister stated that the government was considering abandoning the Ascyuda World Plus system to enhance efficiency and the ease of doing business. “We need to benchmark it with what our neighbours in the region are using”.
It has also been suggested that the ZIMRA board have been complacent in their oversight of the affair. While it is a simple matter to blame systems failure, the lack of management involvement in taking proactive steps to ensuring redundancy of the country’s most crucial revenue collection system has been found wanting.
This calamity undoubtedly signals a huge concern for several other African countries who are likewise supported by UNCTAD’s ASYCUDA software. Many question post implementation support from UNCTAD, leaving countries with the dilemma of having to secure third party vendor and, in some cases, foreign donor support to maintain these systems. The global donor agencies must themselves consider the continued viability of software systems which they sponsor. Scenarios such is this only serve to plunge developing countries into a bigger mess than that from which they came. This is indeed sad for Zimbabwe which was the pioneer of ASYCUDA in sub-Saharan Africa.
This development must surely be a concern not only for governments, but also the regional supply chain industry as a whole. While governments selfishly focus on lost revenue, little thought is given to the dire consequence of lost business and jobs which result in a more permanent outcome than the mere replacement of two computer servers.
Under such conditions, the WCOs slogan for 2018 “A secure business environment for economic development” will not resonate too well for Zimbabwean and other regional traders tomorrow (International Customs Day) affected by the current circumstances. Nonetheless, let this situation serve as a reminder to other administrations that management oversight and budgetary provisioning are paramount to maintaing automated systems – they underpin the supply chain as well as government’s fiscal policy.
The U.S. National Retail Federation (NRF) and a coalition representing retailers, manufacturers, truckers, transportation intermediaries and other business groups has asked the Federal Maritime Commission to set new policy preventing terminal operators and ocean carriers from charging unfair fees when uncontrollable incidents such as storms and strikes keep cargo from being picked up from ports on time.
“Recent events involving port congestion, labor strife, an ocean carrier bankruptcy, inclement weather and other disruption events have had crippling effects on U.S. ports and the stakeholders who rely on the efficient movement of goods,” the 25-member Coalition for Fair Port Practices said in a petition filed with the commission. During the incidents, storage and use charges have continued “even though shippers, consignees and drayage providers had no control over the events that caused the ports to be inaccessible and prevented them from retrieving their cargo or returning equipment.”
Cargo owners and trucking companies are normally given a certain number of free days to pick up containers of imported goods from ports after they have been unloaded from ships. After that, they can be charged demurrage, a fee intended to ensure that containers are removed quickly and efficiently. In addition, detention and per diem fees can be charged if the cargo containers and chassis used to haul them are not returned within a specified time.
That system was thrown into disarray this fall when the bankruptcy of South Korea’s Hanjin Shipping left cargo owners unable to pick up containers on time and later prevented them from returning containers and chassis, says the NRF.
Delays have also occurred during other port disruptions cited in the petition, including the 2014-2015 labor slowdown at West Coast ports and Hurricane Sandy on the East Coast in 2012.
The coalition said millions of dollars in fees have been charged during such incidents:
A retailer was charged $80,000 because it took up to nine days to retrieve containers when only four free days were allowed.
A trucking company was charged $1.2 million after long lines at New York and New Jersey ports kept it from returning containers on time.
A transportation company was charged $1.25 million after containers it tried to return were turned away at West Coast ports. The amount was eventually reduced to $250,000 but only a year after the company was forced to pay the fees upfront.
“Shippers, consignees and drayage providers do not create and cannot avoid these events,” the group said. “They cannot control the weather. They do not choose the terminals that carriers use. They are not parties to port labor collective bargaining agreements.”
The federal Shipping Act requires that the fees and related practices be “just and reasonable.” The petition asks the FMC to adopt a policy that would require free days to be extended during times of port congestion, weather-related events, port disruptions or delays caused by government actions or requirements beyond the control of the parties picking up or returning containers. Demurrage and similar fees charged during such incidents would be declared “unreasonable.” In some cases, “compensatory” fees could be charged provided that they did not exceed actual storage or equipment use costs. The proposed policy would apply to ocean carriers and marine terminal operators. Source: Maritime Executive
Recent speculation concerning the Border Management Agency Bill have brought about reaction from both within government and industry. While there appears widespread support for a unified agency to administer South Africa’s borders, the challenge lies in the perceived administration of such agency given the specific mandates of the various border entities.
The Davis Tax Committee (DTC) was requested to provide a view on the affect of the proposed bill insofar as it impacts upon revenue (taxes and customs and excise) collection for the fiscus of South Africa.
The purpose of the Bill is to provide for the establishment, organisation, regulation and control of the Border Management Agency (BMA); to provide for the transfer, assignment, and designation of law enforcement border related functions to the BMA; and to provide for matters connected thereto. The functions of the BMA are (a) to perform border law enforcement functions within the borderline and at ports of entry; (b) to coordinate the implementation of its border law enforcement functions with the principal organs of state and may enter into protocols with those organs of state to do so; and (c) to provide an enabling environment to facilitate legitimate trade.
In short the DTC recommends that the functions and powers of SARS and the BMA be kept separate and that the Agency should not be assigned any of the current functions and powers of SARS with regard to revenue (taxes and customs and excise) collection and the control of goods that is associated with such collection functions. Of particular concern is the extraordinarily poor timing of the Bill. According to the 2014 Tax Statistics issued by SARS, the total of customs duties, import VAT, and ad valorem import duties collected amounted to R176.9 billion for the 2013-14 fiscal year. This was approximately 19% of the total revenue collected.
The DTC is of the view that to put so significant a contribution to the fiscus in a position of uncertainty, if the Bill were to be implemented, is fiscally imprudent at this critical juncture for the South African economy. Follow this link to access the full report on the DTC website. Source: www.taxcom.org.za
The implementation of the Government’s new pre-shipment regulations under the Consignment Based Conformity Assessment (CBCA) programme (essentially a fancy term for plain old pre-shipment inspection – who they trying to fool?) took off with host of challenges last Tuesday. The new regulations that were gazetted into law on 18 December last year and requires that goods be tested for conformity with required standards prior importation into Zimbabwe, went into operation on 1 March.
Government introduced the programme with the view to reduce hazardous and substandard imported products and improve customs duty collection. Bureau Veritas has been appointed by the Ministry of Industry and Commerce for the verification and the assessment of conformity of goods in exporting countries.
The new developments have seen cargo piling up on the South African side of the border with most importers failing to produce the required transitional certificate of conformity. The Shipping and Forwarding Agents Association of Zimbabwe (SFAAZ) chief executive officer, Mr Joseph Musariri, called on the government to waive the implementation of the CBCA on goods that were shipped before it became operational.
“You will note that the Zimbabwe Revenue Authority (Zimra) has failed to enforce the regulations since 18 December last year only to try and implement it this week (last week) and that has resulted in a chaotic situation.
“It is sad that cargo is piling up at Beitbridge border post where most importers are having challenges in acquiring the transitional CBCA certificates,” he said.
Mr Musariri said the government introduced the idea on 27 July last year but could not implement it since there was no legislation to that effect.
He said under the new dispensation all products regulated by the Ministry of Industry and Commerce of Zimbabwe exported into Zimbabwe must be accompanied by a CBCA certificate.
“The categories of goods regulated under the programme include the following: food and agriculture, building and civil engineering, petroleum and fuels , packaging material, electrical/electronic products, body care, automotive and transportation , clothing and textile and toys,” he said.
Mr Musariri said Zimra was now refusing to clear goods without the CBCA certificate and requesting for the conformity certificates.
“They are telling those importers to contact the nearest offices for Bureau Veritas for inspections and issuance of the requisite certificates.
“Locally destined cargo which is being shipped from various overseas markets is the worst affected and importers are incurring daily demurrage expenses of between $250 and $5000.
“In some cases duties had been paid to Zimra but now they are singing a different song,” he said.
The Minister of Industry and Commerce, Mr Mike Bimha, could not be reached for comment.
Bureau VERITAS liaison officer for Zimbabwe, Mr Tendai Malunga, said his organisation was ready for the implementation of the CBCA programme.
“We have trained various stakeholders on the new programme and are ready to roll.
“Furthermore we have hired more staff in most countries to conduct inspections and various conformity tests on the various countries exporting goods to Zimbabwe,” he said.
Source: The Herald (Zimbabwe)
The following article is published with the kind permission of the author, Tapia Naula who is Principal Transport Economist at African Development Bank, based in the Ivory Coast. He is an international project manager and transport economist with experience in logistics business, research and trade facilitation. This article is a must for anyone associated with or working on the TFA on the African sub-continent, and a bit of a wake up call to those countries who have as yet done little or nothing to progress their participation.
In the World TFA Cup Asia is leading Africa 72 – 35. The first scores of the WTO Trade Facilitation Agreement are out as member countries submit their Category A notifications. Initial results of the African first series are somewhat unfulfilling. Some teams are playing defensive even if attacking tactic is the only way to win.
In December 2013, WTO members concluded negotiations on a Trade Facilitation Agreement (TFA) at the Bali Ministerial Conference, as part of a wider “Bali Package”. Among trade facilitation practitioners the Agreement was received with great enthusiasm: finally there was a legal instrument, which is concrete enough to make a difference! TFA will enter into force once two-thirds of members have completed their domestic ratification process. Section I contains substantive provisions in 12 main Articles. The members are required to categorize and notify each provision of the Agreement as either A, B or C Category. The A Category commits a country to implement the provision upon entry into force of the TFA, or one year after for LDC’s. For B-Category there will be a transitional period. C-Category provisions are allowed a transitional period, technical assistance and capacity building.
First, let it be said loud and clear: the WTO TFA is an excellent collection of modern trade and transport facilitation instruments in one folder. In developing countries its implementation would mean reforms that would save time, money and efforts for regular business people and consumers. These reforms may be painful but the countries that can do it, will be the future winners of their regional competition and they will be the ones that will most benefit from joining the global value chains. TFA is the best vehicle for poverty reduction invented so far and that is why it is so important.
In August, 2015, 14 African countries and 25 Asian countries had submitted notifications for category A provisions. Asian countries had “accepted” 72 % of all the provisions as A-Category commitments on average where the respective share of the African countries is only 35 %. On Article-level African countries lag behind on every Article except one (Table 1).
In addition to the low overall share of category A-notifications, the African notifications generally look like “random picks” of sub-paragraphs, compared to many Asian members that have commonly chosen the strategy of basically accepting the whole Agreement and making exceptions for certain few paragraphs according to their particular needs.
Were African governments well-informed of the impact and substance of each paragraph – or are they just being cautious, perhaps trying to delay the final commitment? The patterns between African and Asian countries are in any case different.
TFA includes also “low hanging fruit” – sections that require little technical expertise to be implemented. At least some of these should have been easy for member countries to accept. “Publication and Availability of Information” is one of those sections. Access to information through internet is routine and affordable. It should not require transition periods or particular technical assistance. Donors are even competing to assist governments with such low cost and high-return activities. Still, less than one third of the African Governments notified this Article.
Here are some other peculiar findings:
Out of 14 African countries only Morocco accepted “Border Agency Cooperation” as A –Category provision. Three of the others countries that did not notify it are landlocked countries;
Only four out of 14 African countries had fully notified “Freedom of Transit.” Transit challenges in Africa are probably the single most significant source of inefficiency in trade logistics;
One of the foundations of modern customs management is the introduction of Risk Management. Only 3 out of 14 African countries had notified this provision;
Only Morocco notified Trade Facilitation Measures for Authorized Economic Operators (AEO), which gives certain privileges to traders and transport operators, who show high level of compliance to regulations. One wonders why Kenya, Uganda, Rwanda, Burundi and Tanzania did not notify it as we know that an AEO program is being piloted in the East African Community;
Only Senegal notified the sub-Article on Single Window, which is probably the most important one of the whole Agreement. Senegal perhaps deserves this honor – being the first truly African-based single window country – and also representing the good practice of SW management. Yet, according to the African Alliance for e-Commerce, currently there are at least 16 other single windows either already operational or under development in Africa. Why weren’t these developments recognized?
Despite the above “peculiarities” the African situation is fortunately nowhere near as somber as the A-Category notifications indicate. There are plenty of trade and transport facilitation initiatives under implementation – and Africa is indeed “on the Move.” We should on one hand side make sure that the valuable TFA Agreement is not becoming a separate formal process alongside the practical actions on the ground, but rather a framework for coaching governments in climbing up the stairs toward greater competitiveness. On the other hand, the countries should not ignore the existing achievements. A lot has been achieved in Africa in recent years and this process should go on and gain speed. Some sub-regions, which have been less successful in this field need benchmarks, encouraging and coaching. This is where African and international organizations can play a role.
Although the direct cost of TFA implementation is relatively low, the indirect cost may be extremely high. The indirect cost concerns existing structures, which generate income for organizations and individuals, who often greatly benefit from the status quo. Some governments have entered into concessions outsourcing critical government functions such as pre-customs clearance operations and processing and submissions of declarations to customs. Western firms have efficiently seized the opportunity and negotiated deals, which guarantee profits for in many cases for decades to come. Single Windows in certain countries are good examples for these. In an unnamed Southern African country for example, humanitarian aid is exempt from taxes and duties in import. If however a UN agency for example imports a container of pharmaceuticals worth five million USD, it will have to pay for a Single Window fee of 42,500 USD! Such Ad Valorem fee arrangements are against the TFA. Such concessions are often built inside structures, which profit from the concessions and in exchange – protects its operations and continuity. This is why they are difficult to tackle. This is an example of the problematics that African policy makers must deal with when taking a position in committing in TFA provisions. It may be a whole lot more complicated than what it looks like.
Association between % Share of Sub-Article Level A-Category Commitments and the Corruption Perception Index Score (CPI). Sources: WTO and transparency International.
The diagram above shows the association of share of the provisions that have been covered by A-Category notifications and the Corruption Perception Index (CPI) score of the countries. For African countries the correlation is moderate (correlation co-efficient: 0.42) but for Asian countries the association is strong (correlation co-efficient: 0.73). The association of the two variables is understandable: the less corruption a country has (the higher the CPI rank is), the more reforms the government is in liberty to conduct (the higher coverage of TFA as A-category Notifications).
We need to better understand the underlying reasons why policymakers cannot let reforms take off. Traditions, corruption and outdated structures are usually the biggest obstacles. These cannot be overcome by merely providing short-term technical assistance and bench-marking the world best practices but only strong political leadership can make the change. Developing partners should raise this topic on the highest political level and “live together” through the reforms with the counterparts.
The Northern Corridor (Kenya, Uganda, Rwanda) provides an encouraging example how multiple reforms can be carried out in very short time. Only two years ago it took staggering 27 days to transport a container from Mombasa Port and deliver it in Kigali, Rwanda. Today it takes only seven days. The improvement was enabled by series of reforms, which were championed by the Heads of States of the Corridor member countries. The example proves that major improvements can indeed be achieved in very short time. On the other hand, even with the most sophisticated instruments, reforms will not succeed if there the high-level ownership is not there. Author: Tapio Naula
Zimbabwe has introduced custom-control measures aimed at reducing the inflow of smuggled and inferior goods, and boosting its revenue from customs duty. Goods being exported to Zimbabwe will have to undergo consignment verification from May 16.
The government’s customs officials are also tightening up inspections at the Beitbridge border post to stem the flow of cheap, illegal goods, which Zimbabwean companies blame for their financial woes.
Executive chairman of the European Union Chamber of Commerce and Industry of Southern Africa Stefan Sakoschek said on Thursday that “the general idea is for Zimbabwe to protect its borders from substandard goods, as well as from undervaluation”.
Mr Sakoschek said the consignment-based conformity assessment programme fell within the framework of the World Trade Organisation’s technical barriers to trade as well as the regulations of the General Agreement on Tariffs and Trade.
Exporters and clearing agents have been informed of the new consignment verification measures, which will ensure conformity to standards and the value of goods declared. A certificate will be issued for the consignments for presentation to customs officials on arrival in Zimbabwe. Goods without a certificate will be refused entry.
Targeted products include food and agricultural goods, building and civil engineering products, timber and timber products, petroleum and fuel, packaging materials, electrical and electronic appliances, body care products, automotive and transportation goods, clothing and textiles, engineering equipment, mechanical appliances and toys.
Trade Law Chambers director Rian Geldenhuys said the pre-shipment verification process would entail additional costs but should not contribute to further delays in shipment. Consignment verification was widely practised especially in developing countries as a way to ensure the collection of customs duty revenue, Mr Geldenhuys said.
“Underinvoicing is a huge problem throughout the world, especially least developed and developing countries which Zimbabwe is one of,” he said.
Trade Law Centre researcher Willemien Viljoen also said the assessments would entail additional costs. Much of the effect would depend on how the conformity assessments were implemented and the standards that would be applied, Ms Viljoen said.
The Zimbabwean government has appointed well-recognised French company Bureau Veritas as the conformity assessment company for verification purposes, and has given the assurance that “compliant exporters will be able to benefit from fast-track procedures reducing systematic intervention on their frequent exports to Zimbabwe.”
Zimbabwean Industry and Commerce Minister Mike Bimha was quoted by the Zimbabwean press as saying that Zimbabwe was being “flooded with sub-standard imports which do not meet quality, safety, health and environmental standards”.
These goods had a negative effect on the country’s economic development and the competitiveness of its industries, Mr Bimha said.
In terms of its four-year agreement with Bureau Veritas the Zimbabwean government will receive monthly royalty fees equivalent to 5% of all monies received for its services. This arrangement will eventually lapse when the Zimbabwe Standards Regulatory Authority is established to monitor and control imports, exports and local goods to ensure compliance with quality, health, safety and environmental standards. Bureau Veritas operates in 140 countries and offers pre-shipment services to SA, Ethiopia, Kenya, Somalia, Uganda and Côte d’Ivoire. Source: BDLive (Reporter: Linda Ensor)
The role of the private sector in the implementation of the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) will be the focus of the 2015 edition of the Global Facilitation Partnership for Transportation and Trade (GFP) meeting. With the world’s customs administrations currently identifying their respective TFA implementation commitments and setting up National Trade Facilitation Committees, trade and logistics operators can learn how they can participate in such initiatives by attending these sessions.
Organized by the International Trade Centre (ITC) in partnership with the United Nations Conference on Trade and Development, the United Nations Economic Commission for Europe and the World Bank, the event will bring together representatives of the private sector, WTO member states and international organizations to discuss how best support trade facilitation implementation.
The GFP meeting will be held at Palais des Nations, Geneva, on 22 April, and will be divided into three thematic sessions.
The first session, ‘Governments’ Priorities: Strategies for Fostering Private Sector Participation in the TFA Implementation Process’ will look at how governments are planning to implement the TFA.
It will focus on how the private sector is consulted and how an effective participation of the private sector can be facilitated to implement the Agreement.
The second session, ‘Priorities, Perspectives, and Expectations from the Private Sector on TFA Implementation’ will assess how the private sector – including large corporates and small and medium-sized enterprises – view TFA implementation. It will look at the potential benefits from a private-sector perspective, and how the sector can contribute to national and international initiatives to implement the agreement.
The third session, ‘International Organizations’ Co-ordination and Partnership for Supporting TFA Implementation’, will provide an opportunity to share information and experiences on how the TFA can be implemented with public-private partnerships in mind, as how national trade facilitation committees can better support this process.
ITC invites all interested stakeholders to join the GFP meeting at the Palais des Nations on 22 April from 9:00. Click here for link to online registration.
SADC organizes a Customs Training of Trainers Course on NTBs in cooperation with the WCO [SADC]
The Southern African Development Community (SADC) organized a Training Course under its Customs Training of Trainers (TOT) Programme between 17 to 20 November 2014 at its Headquarters (Gaborone, Botswana). The training was conducted in collaboration with the World Customs Organization (WCO), the WCO Regional Office for Capacity Building (ROCB) for the Eastern and Southern Africa Region, and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). Forty-two senior Customs officers from 13 of SADC’s 15 Member States, many of whom are active in their administrations’ training departments, participated in the Training Course.
The main objective of the TOT Programme is to provide technical and professional support, particularly in view of the contribution by Customs administrations to the consolidation of the SADC Free Trade Area and the successful implementation of the SADC Protocol on Trade. This will be achieved through the TOT Course on Non-Tariff Barriers (NTBs), which continue to be major stumbling blocks to trade in the region and many of which are Customs-related (or perceived as such). Participants who complete the Training Course will disseminate the knowledge gained, at national level, to relevant stakeholders including Customs officers from their own administrations.
Participants learnt the basic principles and definition of Non-Tariff Measures and NTBs, covering the World Trade Organization (WTO) Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and inter-regional initiatives such as the online NTB monitoring mechanism and national monitoring committees. They also gained an overview of the Agreement on Trade Facilitation (TFA) recently concluded under the auspices of the WTO. The WCO gave an introduction to its tools and instruments for applying trade facilitation measures and to the Revised Kyoto Convention (RKC). Particular emphasis was placed on the new Transit Handbook and the TFA Implementation Guidance.
The course was highly interactive and participants shared their views on the importance of global standards to facilitate regional integration and various trade facilitation measures. They discussed how they could promote Coordinated Border Management (CBM) and increase public-private dialogue at national and regional level. Source: WCO
Since July 2014, EAC revenue officers work together to facilitate trade within the community. Some improvements remain made; the Single Customs Territory (SCT) does present some advantages. Since the single customs territory is operational, clearing processes are established in the country of destination while the goods are still at the port of Dar es Salaam”, explains Leah Skauki, a SCT liaison officer at the Tanzania Revenue Authority (TRA).
Once the declaration is over, when custom duties and taxes are paid, TRA verifies the physical goods. “The office grants a notification testifying that the goods fulfil all requirements in order to get the exit note.” Within the new system, the number of weighbridges and non-tariff barriers are reduced because “truck drivers only have to show the documents which certify that the goods have undergone verification.”
Massoundi Mohamed Ben Ali, Administrative Director in Charge of Human Resources and Import – Export at the Bakhresa Grain Milling Burundi, is pleased with the new development. “Before the system was implemented, Bakhresa used to import 3800 Tonnes of wheat (40 trucks) and we were obliged to declare each truck with a different clearing agent. We now fill in one statement with one clearing agent. The procedures are done quickly with a small of amount of money”, he points out.
Clearing agents testify that the number of statement on the borders is reduced. “Before, transporters had to fill in a transit declaration (T1) on each border”, one of the clearing agents in the Dares Salaam port relates.
Aimable Nsabimana, a focal point of SCT in Dar es Salaam for the Burundi Revenue Authority, indicates that the computerised system they use is different in each country.”It is not easy to exchange data. We are forced to print documents for verification. And when the goods arrive in Tanzania, they are in the hands of the TRA which has its own software”, he notes.
Inter-connectivity of software would facilitate verification and avoid fraud. This opinion is shared by many clearing agents: “If we were interconnected, the Tanzanians would be able to easily access Burundian data and vice versa”, one of them says.
Léonce Niyonzima, programme and monitoring officer at OBR and the national coordinator of SCT, agrees that the lack of interconnectivity causes delays in the transmission of documents.
He says that all EAC countries should have been interconnected by June 2014, but due to technical problems Tanzania and Burundi still lag behind. “There is a technical committee responsible for monitoring and evaluation which will draw up the balance sheet of the challenges before ending the pilot stage at the end of this year.”
The Single Customs Territory is funded by Trademark East Africa with an amount of USD 450 thousand for the redeployment of staff, travel expenses, inspection and supervision, information technology, office equipment and assistance. Source: http://www.iwacu-burundi.org
The ICC recognises that the survey results are neither statistically valid nor entirely representative of the hundreds of thousands of organizations that trade globally, the survey does much to reveal a set of common prerequisites – such as predictability, reliability and consistency – that international traders seek. The ICC concludes that there is a need for further capacity-building efforts, in particular education and availability of information for both traders and border control officials on the correct process to follow. The survey results illustrates the need for an effective customs-business dialogue at national level to find ways to lessen delays in trade processes and shorten release times, as called for by ICC.
The survey coincides with a number of international developments seeking to facilitate trade and simplify border procedures. These include the conclusion of a multilateral agreement on trade facilitation at the 9th Ministerial Conference of the World Trade Organization in December 2013 and the ongoing negotiations of the Trans-Pacific Partnership Agreement, the Trans-Atlantic Trade and Investment Partnership and the Regional Comprehensive Partnership Negotiations. Source: International Chamber of Commerce