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

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

Picture : Bloomberg.com

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Third anniversary of WTO Trade Facilitation Agreement

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

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

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

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

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

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

Source: World Trade Organisation, 22 February 2020

WCO supports SARS with AEO programme implementation

Under the framework of the Southern African Customs Union (SACU) Customs Modernization Programme, funded by the United Kingdom Foreign and Commonwealth Office, WCO experts were invited to lead an AEO Validation Workshop for the South African Revenue Service (SARS). The Workshop was held from 10 to 14 February 2020 in Pretoria, South Africa. Mrs. Rae Vivier who is the Group Executive responsible for AEO in SARS opened the workshop and welcomed the WCO and SACU representatives with a key note address to all attendees. She gave assurance to the audience that AEO is taken seriously by SARS and is one of the organization’s key deliverables. 

During the five day Workshop, the SARS AEO validation team was given an introduction to the WCO SAFE Framework of Standards (FoS), including all its Pillars, core elements, and AEO criteria etc. This was followed by a discussion on the essential elements of the AEO Validation Guidance, the sequential steps of the AEO validation procedures and the skills required by AEO validators. 

The participants, comprised of Customs auditors, legal experts and client relationship managers, were given an opportunity to share their views on the similarities and differences between AEO validation and post-clearance audit. The core values of Customs-Business partnerships were highlighted as an important aspect towards achieving AEO programme implementation. Auditors with a Customs compliance mindset were given security validation knowledge and taught how to hold discussions with business on coordinating and enhancing international supply chain security and safety. Another important element underscored during the training was that validation of the applicant is central to accreditation, and that the applicant’s supply chain may not be tested. Accordingly, the applicant is responsible for securing its own supply chain. 

The Workshop entailed extensive discussions on the self-assessment questionnaire prepared by SARS for potential AEOs taking part in the country’s AEO pilot. While referring to the WCO self-assessment template, the WCO experts also shared questionnaires by other Customs administrations. The participants and experts discussed how to enhance the questions posed, making it simpler for business to understand and answer them. A number of recommendations were made, including adding explanatory notes to the self-assessment questionnaire to help clients provide accurate information about their security and safety protocols.

A further aim of the Workshop was to include practical sessions, such as the mock validation process held at BMW’s South African plant in Rosslyn. Participants were told how BMW guarantees supply chain safety and security. Equipped with this information, the Workshop participants were given a walk-through of BMW South Africa’s processes for receiving goods. The lessons learned were shared among the Workshop participants and SARS management during the post-validation assessment. During that session, several Mutual Recognition Arrangements/Agreements (MRAs) signed between different Customs administrations were also referenced, so as to enhance learning and information sharing. 

SARS embarked on its Preferred Traders Programme (PTP) in May 2017. The initial number of 28 accredited traders (importers/exporters) has grown to reach 119 as of 14 February 2020. Under the SARS Strategic Plan for 2023, the priority will be to focus on improving voluntary compliance and supply chain security through implementation of the standardized WCO SAFE/AEO programme. At the same time, SACU wishes to roll out PTPs for all its Members, while moving towards a full-fledged AEO programme in phases. To this end, the WCO experts discussed and shared views on the PTP compatibility assessment tool aimed at ensuring mutual recognition of Preferred Traders among SACU Members.

Source: WCO, 19 February 2020

Port of Gauteng development

Kenya – Single Window costs to impact on traders

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ICD 2020 – #MakeTradeWork

Picture courtesy of the WCO

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

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

A multilateral agreement to facilitate international trade

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

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

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

Technological progress will never be as slow as today

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

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

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

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

And it has to be sustainable

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

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

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

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

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

It is all about efficiency

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

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

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

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

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

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

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

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

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

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

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

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

Hands-on training

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

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

Hands-on training

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

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

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

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

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

Lost in translation

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

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

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

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

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

Source: UNCTAG.ORG, 17 January 2020

South Korea – aiming to become a Global Customs Services Leader

South Korea hopes to be a leader in global customs services by offering solutions to complex international clearance procedures.

South Korea Customs Service (KCS) chief Kim Yung Moon said the agency hopes it can help foster trade relations between local businesses and partner nations worldwide.

In an interview with the Korea Times, he said the agency would continue to devote its manpower and resources to provide full support for export firms, especially the small and medium sized enterprises (SMEs) that were the foundations of the South Korean economy.

The agency’s commitment was well-illustrated as the KCS under his leadership helped limit the fallout following the ongoing South Korea – Japan trade war that has led to major losses for South Korean exporters.

Since March, KCS officials have been dispatched to 30 customs offices nationwide to offer various forms of support, including consulting, technical aid and trade statistics data management.

The support has helped 2,189 SMEs log a combined US$2.4 billion (RM10 billion) in exports in the March-October period, up 2.2 per cent from US$2.3 billion (RM9.8 billion) the year before.

“We tried to identify what the firms needed most and came up with ideas on how we could be of assistance. I am glad we were able to fulfil our public duty,” Kim said.

In July, the KCS saved a local zinc coated steelmaker 1.3 billion won (RM4.5 million) in tariffs imposed by Taiwanese customs authorities after they accepted KCS opinion asking them to reclassify the item as a tariff-exempt product.

Similarly, a team of KCS officials was able to have the Indian customs authorities in March rescind a 10 per cent tariff imposed on Korea-made copy papers categorised as a no-tariff item under the Comprehensive Economic Partnership Agreement (CEPA), a free trade agreement between South Korea and India.

This helped a local paper maker not only avoid what could have been an annual tariff of 200 million won (RM700,000), but also cleared the way for similar businesses to enter the market without the uncertainty of hefty, unexpected tariffs.

Most significant is that the agency was able to finalise the international standards on display modules, Korea’s key export item.

This allowed them to be classified as LCD modules exempt from tariffs in line with the Information Technology Agreement (ITA), a multilateral agreement enforced by the World Trade Organization (WTO).

The process required painstaking efforts to persuade members of the World Customs Organization (WCO) and it proved South Korea’s “soft power” with the international customs body comprised of 183 countries representing over 98 percent of international trade.

A senior KCS official Kang Tae Il has also been elected a director of the Capacity Building Directorate at the WCO, whose members look to South Korea for training, consulting and multilateral aid utilising official development assistance funds and Customs Cooperation Fund-Korea.

Since 2009, 3,727 customs officials from around the world have undergone training offered by the KCS.

The appointment of Kang has also boosted KCS’ standing on the global stage, coupled with its artificial intelligence-based block chain customs services in a country recognized for its high-tech infrastructure and ICT expertise.

The agency’s key achievement is UNI-PASS, a KCS-developed electronic clearance system designed to enhance swift customs clearance and logistics service convenience.

The e-clearance system highly regarded by the KCS’s global peers increases work efficiency by minimizing manual errors and improving input accuracy by auto-generation of trade records.

“We will continue our efforts to strengthen influence and boost our say in the international customs circle. We will also become a leading standard setter involving the implementation and revision of related customs practices concerning e-commerce and risk management. This will boost the standing of Korea on the global stage,” Kim said.

Source: New Straits Times – December 11, 2019 

India – Introducing New Customs IT Solutions Monitoring Trade and Travellers

Finance Minister has launched two new IT Initiatives – ICEDASH and ATITHI for improved monitoring and pace of Customs clearance of imported goods and facilitating arriving international passengers.

ICEDASH

ICEDASH is an Ease of Doing Business (EoDB) monitoring dashboard of the Indian Customs helping the public see the daily Customs clearance times of import cargo at various ports and airports. 

With ICEDASH, Indian Customs has taken a lead globally to provide an effective tool that helps businesses compare clearance times across ports and plan their logistics accordingly. 

The dashboard has been developed by CBIC in collaboration with NIC. ICEDASH can be accessed through the CBIC website.

ATITHI

With ATITHI, CBIC has introduced an easy to use mobile app for international travelers to file the Customs declaration in advance. 

Passengers can use this app to file a declaration of dutiable items and currency with the Indian Customs even before boarding the flight to India.  ATITHI is available on both, iOS and Android.

Key-Benefits of the Initiative

  • Improving Global Ranking – the reform carried out by the CBIC will increase India’s global ranking in the Trading Across Border.
  • Increase Transparency –  both ICEDASH and ATITHI would be key drivers for further improvement especially as they reduce interface and increase the transparency of Customs functioning. 
  • Encouraging Tourism –  ATITHI would, in particular, create a tech-savvy image of India Customs and would encourage tourism and business travel to India.  
  • Better International Tourist Experience – the ATITHI app will facilitate hassle-free and faster clearance by Customs at the airports and enhance the experience of international tourists and other visitors at our airports.

Source: Press Information Bureau Government of India Ministry of Finance, 4 November 2019

SA Customs Procedure Guideline and Chart – 2019

SARS Customs clearance has operated under a Customs Procedure Code (CPC) regime for almost 10 years now. To commemorate the 10-year anniversary, the accompanying CPC Chart and External User Guideline is intended for expert users and newcomers to Customs clearance, alike. In particular, it is important for cross-border traders to understand that the CPC combinations cannot be used indiscriminately; but, have specific meanings and associations with various other Customs rules for the electronic processing of goods for import, transit and export. Attempts to ‘fudge’ a CPC for any particular purpose or reason, may lead to a negative result downstream. Accuracy in the use and application of CPCs results in improved trade compliance, more accurate trade statistical data and fewer declaration amendments hence less penalties and lost time. Over the last decade, it is certain that most international freight forwarders and tertiary Customs training institutes and universities have introduced some or other CPC methodology into their curricula. Feel free to use this guide in support of such curricula. I do however, request that in so doing, the attached material – made freely available to you – will be delivered ‘intact’ in the form as compiled and presented here.

The files can be dowloaded below –

External CPC Tutorial & Self-Assessment Guide 2019

CPC Chart October 2019

SA Customs launches AEO Programme

Customs stakeholders with members of the SARS Preferred Trader team 

The stakeholders – from various business associations and Customs umbrella bodies – were very positive after the engagement and were open to form part of an AEO Working Group going forward. The idea is to have representatives from the public and private sectors who would discuss and examine the various issues related to the design and roll-out of the future AEO programme.

An engagement with various key Customs stakeholders was held on 25 September to share Customs’ plans to introduce an Authorised Economic Operator (AEO) programme in South Africa.

The AEO programme follows in the footsteps of Customs’ Preferred Trader programme which offers various benefits to compliant Customs clients. The SARS’ Preferred Trader programme, which was officially launched in May 2017, currently has 105 accredited clients who have been awarded Preferred Trader status. 

The AEO programme – based on the World Customs Organisation’s SAFE Framework of Standards – requires an extra level of safety and security compliance from traders and offers additional benefits, compared to the Preferred Trader programme. It is also open to the entire Customs value-chain, as opposed to only local importers and exporters.

SARS Customs intends to pilot the AEO programme in South Africa before the end of 2019. Clients in the motor vehicle manufacturing industry – representing big businesses have been earmarked to participate in the pilot, as well as SMMEs in the Clothing and Textile Industry. SARS is also in the planning stage of engagements with its major trading partners within BRICS and the EU for the purpose of establishing Mutual Recognition Agreements (MRAs) for its AEO Programme and intends to commence engagements within Africa as well.

At the recent stakeholder engagement session, Customs and Excise Group Executive, Rae Vivier, indicated that the AEO programme was being designed for Customs to partner with the private and public sector to improve voluntary compliance and trade facilitation in the country. She mentioned a few key points that SARS was looking at when it came to AEO, including Mutual Recognition Agreements with SACU/SADC trading partners, close cooperation with Other Government Agencies (OGAs) in South Africa to ensure the programme is recognised by all government departments, exploring modern technology such as block chain and augmenting AEO benefits in order to design a programme that would be beneficial for trade. 

She also mentioned that C&E Trade Services would soon be sending a survey to Customs traders to find out what clients’ requirements are, from a trade facilitation point of view. “We need to collaborate with each other to ensure we design something for the future,” she said. 

Source: South African Revenue Service

Brexit and Southern Africa – no trade impact envisaged

Reuters reports that Britain has agreed a deal with six southern African countries including South Africa, the continent’s most developed economy, that will ensure continuity of trade conditions after Brexit, the British High Commission in South Africa said on Wednesday. 

Political turmoil in the United Kingdom has generated uncertainty over how, when and even if the country will withdraw from the European Union. Its current exit date is set for Oct. 31. 

But while the situation has left the future trade relationship between Britain and the EU in doubt, London has been working to minimise the impact of Brexit on other trading partners.

Britain initialled an Economic Partnership Agreement with the Southern African Customs Union (SACU) – comprising South Africa, Botswana, Lesotho, Namibia, and eSwatini (formerly known as Swaziland) – and Mozambique on Tuesday. 

“This trade agreement, once it is signed and takes effect, will allow businesses to keep trading after Brexit without any additional barriers,” Britain’s International Trade Secretary Liz Truss said in a statement. 

The agreement is still subject to final checks. But once signed formally, it will mirror the trade conditions the southern African nations currently enjoy with the EU. 

Trade between Britain and the six countries was worth 9.7 billion pounds ($12 billion) last year, with machinery and motor vehicles topping British exports to the region. The UK meanwhile imported some 547 million pounds worth of edible fruit and nuts. 

Britain has already signed trade continuity agreements with countries accounting for 89 billion pounds of its external trade. 

Prime Minister Boris Johnson says Britain must leave the EU on Oct. 31, but parliament has passed a law compelling him to ask Brussels to delay Brexit until 2020 unless he can strike a divorce deal. Johnson says he will not request an extension.

Source: Reporting by Joe Bavier, edited by Gareth Jones, Reuters Business News, 2019.09.11.

9/11 – 18 years on

WTC 6, home to the US Customs Service, New York until September 2001

As unrecognisable as the building is, the same can be said for the world of Customs today. Few contemplated a ‘Customs’ parallel at the time; but, when the Department of Homeland Security was launched, the emergence of US Customs and Border Protection (USCBP) ushered in a new way of doing business. The world of Customs was literally ‘turned on its head’. Bilateral overtures seeking agreements on ‘container security’, ‘port security’ as well as an industry focussed ‘Customs and Trade Partnership Against Terrorism’ (C-TPAT) forced the World Customs Organisation (WCO) into swift action. After years of deliberation and negotiation several guidelines were released, later to be packaged as the WCO SAFE Framework of Standards. It seemed that the recent Revised Kyoto Convention (RKC) on simplification and harmonisation of Customs procedures was already ‘dated’. Customs as a proud solo entity was gone for ever, as country after country seemed compelled to address border security through wholesale transformation and upheaval of their border frontier policies and structures. Thus was born ‘border security’ and ‘cooperative border management’. In a manner of speaking, 9/11 put Customs onto the global map. Along with WCO developments, the tech industries brought about several innovations for risk management and other streamlined and efficient service offerings. Prior to 9/11, only the wealthy countries could afford non-intrusive inspection capabilities. One key aspect of the SAFE Framework’s was to include a pillar on Capacity Building. Through this, the WCO and business partners are able to offer tailor-made assistance to developing countries, to uplift their Customs and border capabilities. In particular, countries in Africa now are now in a position to consider ‘automated’ capabilities in the area of Customs-2-Customs information exchange as well as establishment of national Preferred Trader and Authorised Economic Operator (AEO) schemes. At the same time a parallel industry of ‘Customs Experts’ is being developed in conjunction with the private sector. The end result is the availability of ‘standards’, ‘policies’ and ‘guidelines’ fit for Customs and Border operations, focussed on eliminating incompatibilities and barriers to trade. Where these exist, they are largely attributed to poor interpretation and application of these principles. With closer cooperation amongst various border authorities still a challenge for many countries, there are no doubt remedies available to address these needs. In gratitude, let us remember the thousands of public servants and civilians who lost their lives that we can benefit today.

WCO SAFE FoS – 2018 Edition

SAFE FoS 2018 Edition2

The WCO has published a 2018 edition of its Framework of Standards. The 2018 version of the SAFE Framework augments the objectives of the SAFE Framework with respect to strengthening co-operation between and among Customs administrations, for example through the exchange of information, mutual recognition of controls, mutual recognition of AEOs, and mutual administrative assistance.

In addition, it calls for enhanced cooperation with government agencies entrusted with regulatory authorities over certain goods (e.g. weapons, hazardous materials) and passengers, as well as entities responsible for postal issues. The Framework now also includes certain minimum tangible benefits to AEOs, while providing a comprehensive list of AEO benefits.

The updated SAFE Framework offers new opportunities for Customs, relevant government agencies and economic operators to work towards a common goal of enhancing supply chain security and efficiency, based on mutual trust and transparency.

Customs officers and trade practitioners also be on the lookout for then new WCO Academy course on SAFE and AEO. The Framework of Standards to Secure and Facilitate Global Trade is a unique international instrument which usher in a safer world trade regime, and also heralds the beginning of a new approach to working methods and partnership for both Customs and business. This E-Learning course aims to present this tool and the benefits of its implementation.