The Illicit Tobacco Trade in Zimbabwe and South Africa

The following report (Working Paper) was issued in March 2019, a while back, but should not be considered too outdated for analysis and consideration, nevertheless.

A study was conducted to explore how the illicit trade in licit goods supports organized crime, corruption, and erodes state structures. The illicit tobacco trade in southern Africa occupies a prominent place in southern African politics, due to its prominent role in the ‘state capture’ scandals that characterized politics in South Africa between 2013 and 2018. Indeed, the illicit tobacco trade occupies a prominent place in public debate in South Africa, both about crimes that may have been committed in the last five years, and about how the current administration responds to the illicit economy right now.

The study maps the key dimensions of the illicit cigarette trade in Zimbabwe and South Africa, including the key actors, the pathways of trade and the accompanying ‘modalities’ of criminality, as well as other important dimensions of the illicit cigarette market in southern Africa. It then identifies ‘good-faith actors,’ primarily in South Africa, whose positions could be strengthened by policy and technical interventions, explores opportunities for such intervention, and assesses the practi- cal solutions that can be applied to combat illicit trade and tax evasion in the tobacco industry. The paper contributes to expanding awareness among policymakers and the public of the nexus between the illicit trade in licit goods, corruption, and organized criminal networks.

Download the Report via this link.

Source: Atlantic Council

The Diffusion of Heroin in Eastern and Southern Africa

This research report “A Shallow Flood: The Diffusion of Heroin in Eastern and Southern Africa(click hyperlink to access report) draws from and analyzes field data examining three characteristics of the illicit drug economy in a selected number of countries of eastern and southern Africa:

  • Price. This part of the data identifies the retail price (i.e. street price) for heroin in a given market location, and examines factors that influence retail price variations within a particular market, and between markets.
  • Distribution system. Identifying the means by which heroin is moved between wholesale and retail vending situations, and how it is moved within and between adjacent and/or distant markets.
  • Market structure. Identifying core structural components of domestic heroin markets in the region, with particular attention to those features that enable markets to emerge and flourish, as well as factors that disrupt or deteriorate these markets.

The flow of heroin from Asian production points to the coastal shores of eastern and southern Africa is not new. Whereas the first heroin transit routes in the region in the 1970s relied heavily on maritime transport to enter the continent, a number of transport modes and urban centres of the interior have increasingly become important features in the current movement of heroin in this region. Interior transit hubs and networks have developed around air transport nodes that use regular regional and international connections to ship heroin. As regional air routes proliferated and became more efficient, their utility and value for the heroin trade increased as well. Heroin is also consolidated and shipped over a frequently shifting network of overland routes, moving it deeper into the African interior in a south-westerly direction across the continent.

Consequently, a shallow flood of heroin has gradually seeped across the region, and this has had a significant impact on the many secondary towns found along the continent’s transcontinental road networks. These places, in turn, have spawned their own small local heroin markets, and become waypoints in rendering sustainable the now chronic, metered progression of heroin’s resolute geographic diffusion across the region.

The impact of this creeping spread of heroin on regional state development has been significant and, paradoxically, symbiotic. The emerging illicit African drug market environments may represent credible threats to the development and security of the region’s nascent independent state institutions and structures. At the same time, these markets have also presented new and considerable sources of economic livelihood and opportunity for the continent’s ever-expanding population of poor, disenfranchised and vulnerable people. A surrogate ‘drug working class’ has emerged as a socio-economic sequela to more traditional, yet increasingly limited, licit income opportunities.

The purpose of this report is to examine the diffusion of heroin across eastern and southern Africa. This will be achieved through an analysis of retail heroin prices, distribution systems and domestic marketplaces. The report provides an analytical summary of heroin market data collected across the countries of the region, with specific retail price points, commentary on domestic heroin distribution systems and structures, and a discussion of the common structural characteristics evident across the region that enable, embed and sustain these heroin markets.

Source: Authored by Jason Eligh, Global Initiative against Transnational and Organised Crime, 28 May 2020

Dubai Customs – Compliance with International Standards, remotely.

Quality Assurance Section at Dubai Customs successfully audited a number of departments during the remote working period following the international standards. Auditing covered the Corporate Social Responsibility standard ISO6000, the Development and Training Standard ISO10015, and the Innovation Management European Standard TS16555.

“The successful auditing during this difficult time is the result of our commitment and sustainable efforts in assuring quality in every job we do,” said Samira Abdul Razzak, Senior Manager of Quality Assurance at Dubai Customs. “Thanks to the sophisticated technological infrastructure Dubai Customs has, auditing during working from home was possible. Many procedures are automated and communication has never been easier.”

On his part, Engineer Nizar Bashairah, Regional Partner, TUV Germany said most auditing is carried now from afar as business activities can’t stop even in hard times like the breakout of the virus.  

“Dubai Customs covered a number of international standards very effectively despite its big size and the number of departments, activities and services involved.” 

Source: Dubai Customs

HMM Algeciras, the largest container ship worldwide – 2020

At maximum capacity, the ship carries slightly more 20-foot containers than its predecessor MSC Gülsün: 23,964 TEU versus 23,756 TEU. During this maiden voyage, HMM Algeciras will have 19,621 TEU on board – itself a record number.

The Korean vessel was completed at Daewoo Shipping & Marine Engineering’s Okpo shipyard on 24 April. It is some 400 metres long and 61 metres wide. For further information about Algeciras, we refer you to the video at “Biggest Container Ship in the World 2020”.

HMM is the new name for the South Korean ship-owner Hyundai Merchant Marine, the ninth-largest container shipping line worldwide. The company has ordered another eleven 24,000-TEU vessels in this class.

Source: Port of Rotterdam, 3 June 2020

“Trophy Hunters Exposed” by Eduardo Goncalves

Five years ago, a dentist from Minnesota killed Cecil the lion, Hwange National Park’s most famous resident. This caused an outcry in the United Kingdom and in the rest of the world against trophy hunting. Yet people are still killing big game for sport.

A new book reveals explosive insight into hidden world of trophy hunting. The book was written by Eduardo Goncalves, a former WWF consultant, CEO of a major UK animal charity, journalist award-winning founder of the Campaign to Ban Trophy Hunting which is supported by over 100 celebrities.

Eduardo Goncalves is currently leading an international campaign to close a loophole in CITES wildlife trade laws which controversially allow trophy hunters to shoot critically endangered animals. The campaign is supported by dozens of conservation groups as well as Members of the European Parliament across the EU and political parties. He is also working with wildlife and animal welfare groups across Europe to ban hunting trophy imports throughout the EU, and is assembling a group of lawyers and senior politicians to push for an international treaty banning all trophy hunting around the world.

Among the astonishing revelations in the book are how –

  • Powerful trophy hunting bodies are posing as conservation organisations in order to weaken wildlife conservation laws, so that hunters can shoot and take home trophies of threatened species
  • The Convention on International Trade in Endangered Species (CITES) – the body meant to protect wildlife – is allowing trophy hunters to shoot tens of thousands of animals at risk of extinction every year
  • Steven Chancellor, a leading fundraiser for US President Donald Trump, broke the world record for the biggest ever trophy lion
  • A former Vladimir Putin right-hand man is one of the world’s ‘top’ trophy hunters and has hunting trophies of more than 250 species at his home 60km outside Moscow
  • Prestigious industry awards have been bestowed on a paramilitary death squad leader linked to the deaths of more than 1 million dissidents and ethnic minorities
  • Michel Bergerac, a record-breaking trophy hunter and member of Safari Club International, was also a World Wildlife Fund (WWF) Director
  • The US Salvation Army and Boy Scouts Association is helping the industry to recruit tens of thousands of children as hunters: psychologists and criminologists fear this could lead to a rise in violent crime
  • The trophy hunting industry made contributions totalling over $1 million to the congressional election campaigns of pro-hunting politicians including US Secretary of State Mike Pompeo, Interior Secretary Ryan Zinke (who was responsible for America’s hunting laws and trophy import regulations), US Senate leader Mitch McDonnell, and House of Representatives speaker John Boehner
  • A trophy hunter still alive today is thought to be the only man in history to have killed 100+ lions and 1,000 elephants, and has more than 4,000 confirmed kills
  • The use of trophy hunting as a ‘cover’ for wildlife trafficking, and how the Chinese are now the world’s top hunters of white rhinos

The book also reveals –

  • The identity of over 500 hunters who have won industry awards for shooting all the ‘African Big Five’ – lions, elephants, rhinos, leopards, buffalos
  • Scientists fear that South Africa’s canned lion hunting industry, and the sale of lion bones for traditional Chinese medicines, could spark a devastating new disease outbreak
  • Some of the industry’s top donors and hunting group leaders include Trump fundraiser Steven Chancellor, well-known drinks brands (Budweiser, the Bacardi family), vehicle manufacturers (Yamaha), oil companies (Chevron, Halliburton, Shell Oil), banking institutions (Morgan Stanley), gun-makers (Beretta)
  • Controversial funding has come from US schools, the Scouts Association, and American and European taxpayers.

Trophy Hunters Exposed – Inside the Big Game Industry’ is published by Green Future Books Ltd and is available in paperback and kindle from  www.greenfuturebooks.com

Proceeds will be donated to the Campaign to Ban Trophy Hunting

For background about the author, see https://edgoncalves.wordpress.com/about/

Source: Review by the African Conservation Foundation, 4 June 2020

Blockchain – introducing Customs to the Global Supply Chain, earlier

Picture: Dadiani Fine Art

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

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

More quality data with accuracy and speed

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

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

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

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

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

Doing more with less

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

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

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

Source: TradeLens, 28 May 2020

SADC Set to Reopen Cross-Border Trade

The Southern African Development Community (SADC) is gearing up for a full reopening of cross-border trading.

This comes after experts in the region expressed satisfaction over the precautionary measures countries within the 16-member bloc have taken to prevent further spread of the novel coronavirus which causes Covid-19.

The move comes after about 50 days when the body adopted its regional guidelines for harmonising and facilitating movement of critical goods and services across the region during the Covid-19 pandemic.

The guidelines, adopted after a meeting of the SADC Council of Ministers on April 6, 2020, aimed at –

  • limiting the spread of Covid-19 through transport across borders;
  • facilitating the implementation of transport related national Covid-19 measures in cross-border transportation and facilitating flow of essential goods such as fuel, food and medicines.

The guidelines also sought to limit unnecessary and mass movement of passengers across borders and harmonising and coordinating transport-related national Covid-19 policies, regulations and response measures.

But with some countries – including Tanzania – making some important milestones in their fight against Covid-19, a virtual meeting of experts met yesterday to draw the roadmap for a meeting of SADC Council of Ministers today (Thursday, May 28) resolved that some things must now change.

“This meeting is being held in preparation for a meeting for the SADCCouncil of Ministers. Key on the agenda that we will be presenting to the Sadc Council of Ministers is that some of the issues that we knew about Covid-19 must now change,” said the meeting chairman and Permanent Secretary (PS) in Tanzania’s Foreign Affairs and East African Cooperation Ministry, Colonel Wilbert Ibuge.

He said permanent secretaries for SADC foreign affairs ministries had agreed in principle to remove a provision that allowed only the facilitation of movement of critical goods and services across the region during the Covid-19 period.

“The truth is that all products that [move across borders] seek to improve lives of our people within SADC. All business goods must move across our borders,” he said.

He said recommendations from the meeting of PS’ would be forwarded to a virtual meeting of council of ministers today (Thursday) for deliberations.

The meeting of experts comprised senior officials from six ministries from each Sadc member state.

They deliberated on eight items that had been approved by the council of ministers last early month.

“The experts noted that people must learn to live with Covid-19 because the disease could be here to stay and therefore, all kind of businesses must continue so that together we can build our economies,” he said.

The ministers will also deliberate on issues pertaining to the financial position of SADC, implementation of a resolution on disaster management within the bloc and progress towards implementation of the theme that was adopted during the 39th Sadc meeting.

The ministers will also deliberate on the state of business operations among SADC member states, industrial development in Sadc and implementation of the SADC Industrial Development Strategy and its work plan.

Source: Article by Kelvin Matandiko, The Citizen, Dar es Salaam, 28 May 2020

East Africa COVID-19 Preventative Measure – Transit Cargo to move by Rail

Transit cargo destined for Uganda, Rwanda and South Sudan will be transported by Standard Gauge Railway (SGR) to Naivasha then to Tororo Kampala from June 1st, the government has said.

Transport Cabinet Secretary James Macharia said the move was arrived at during a meeting with his counterparts from the three countries as a key measure to curb cross border transmissions of COVID-19.

“All transit cargo/containers transported on SGR will be armed only at the Inland Container Depot (ICD) AT Naivasha to be tracked through the Regional Electronic Cargo Tracking System,” a part of the statement read.

Macharia further pointed out that all cargo railed to the Inland Container Depot at Naivasha will be collected by trucks to the partner states via Busia or Malaba.

He however, pointed out that fuel products will be transported by pipeline to Kisumu and thereafter through Lake Victoria to Port Bell or Jinja in Uganda.  

Cases of coronavirus among truck drivers who transport cargo across East African member states have tested positive with high numbers prompting Kenya to close its borders with Somalia and Tanzania.

Kenya has subsequently banned any truck driver who turn positive at the border from corssing into the country, with Tanzania having adopted a similar approach lately.

Health Cabinet Secretary Mutahi Kagwe said the development explained why President Uhuru Kenyatta ordered the mandatory screening of truck drivers at border posts before clearance into the country.

Kenya also closed its borders with Somalia, following increased coronavirus cases in Wajir which borders Somalia.

Since the border closure, Tanzanian government officials in Arusha and other border towns have publicly protested, accusing Kenya of discriminating their truck drivers.

Martin Shigella, the Tanga Regional Commissioner was blunt last week, declaring that no Kenyan truck driver will be allowed to cross into Tanzania, accusing them of exporting COVID-19 to the country which is largely seen as the weak link in managing coronavirus in the region, and the world. He also warned Tanzanians against buying goods in Kenya.

But on Wednesday, President John Pombe Magufuli announced on a tour to Singinda region, that “COVID-19 pandemic will not threaten our association with Kenya.”

He said he had held talks with his Kenyan counterpart Kenyatta, and agreed to have their ministers resolve the matter.

“Our economies need each other, our onions are sold in Kenya and Kenya exports milk and other items here,” he said, rooting for a diplomatic solution to the crisis.

Source: Capital News, (Kenya), 22 May 2020

Zimbabwe expedites Rutenga Dry Port

The face of Rutenga in Mwenezi District, Zimbabwe is fast changing with the growth point undergoing rapid expansion as it reaps huge benefits from its designation as a dry port.

The Second Republic, led by President Mnangagwa, wants to expedite opening of a dry port at Rutenga to de-congest Beitbridge Border Post and quicken human and land cargo movement as part of efforts to meet vision 2030 targets.

Rutenga, which is the district’s capital, was identified as a suitable place for a dry port owing to its location at the centre of a road and rail network linking Zimbabwe and South Africa — its largest trading partner — together with Mozambique.

Since its designation as a dry port, the urban settlement is now home to a new Government complex while private players are rushing to open service stations and hardware shops with financial institutions expected to follow suit.

Mwenezi Rural District Council is expected to adopt a local development plan that will designate land for both residential and industrial purposes at the growth point.

Council chief executive Mr Albert Chivanga last week said the development plan was awaiting approval by a full council.

“We have worked on the local development plan and a full council meeting will soon meet to approve it after which various companies and businesses that have been allocated land will start actual construction work.”

“We are excited by the level of interest to invest in Rutenga and the future looks good because companies are stampeding to come and invest thanks to the planned opening of a dry port here.”

Among the big companies eyeing a piece of the cake at Rutenga are beef processing firms seeking to exploit Mwenezi’s vast cattle herd.

“More than two abattoirs have applied for land in the recent past while there is a Marula processing plant being earmarked for the growth point. The plan is to make Rutenga a major producer of export quality beef and processed Marula juice,” said Mr Chivanga.

He said his council had also offered Zimbabwe Revenue Authority 12 hectares of land to set up a holding bay for the envisaged dry port.

Some investors making inquiries were from Asian countries such as India, which he said was evidence of the growth point’s vast potential.

Government has already taken the lead by completing a new modern complex, housing State offices to make sure provision of key services is housed at one place for easy logistical processes. Future water problems were also being forestalled by upgrading works undertaken by Zimbabwe National Water Authority.

Rutenga draws its water from Manyuchi Dam, one of the largest water bodies in Masvingo province, which remains largely underutilised. The urban settlement’s population is billed to quadruple to over 20 000 in the next few years, buoyed by the opening of a dry port and other investment that will flow.

It is hoped that the dry port opening and subsequent growth of Rutenga will also have a domino effect on the growth of Sango Border Post, which is a gateway to Mozambique to the south east.

Government has already started upgrading the Rutenga-Sango and Rutenga-Zvishavane roads to create a faster and accessible link between the growth point and both eastern and western parts of the country.

Source: The Herald (Zimbabwe), 25 May 2020

New Zealand Customs – announces new laws concerning the importation of Tobacco Products

When you import or bring tobacco products into New Zealand, you must comply with New Zealand laws. You must pay all relevant taxes on your imported tobacco at the border.

From 1 July 2020, tobacco products, tobacco leaf and tobacco refuse will become prohibited imports and you will be required to have a permit to import these products.

Permits are approved and issued by Customs. That means if you want to send someone in New Zealand any kind of tobacco product including as a gift, you will have to apply for a permit.

Also from 1 July 2020 you cannot receive any tobacco products through the international mail. Tobacco must only be imported using a freight forwarder, the fast-freight courier system or as bulk sea or air cargo. You will still be able to use New Zealand Post’s international courier service.

Customs will issue a permit to established importers for one year from 1 July or the length of time a manufacturer holds a licence to manufacture tobacco products. Other importers will need to apply for a permit.  Permits will be issued free of charge. 

From 1 July 2020, any tobacco products, leaf or refuse imported without a permit will be seized and destroyed. Customs will send a written notice to importers confirming the seizure and destruction of the tobacco products, leaf and refuse. In the unlikely event of the product being seized and destroyed in error (for example, when the person had a valid permit to import), the importer will be entitled to compensation for the customs value of the products.

A permit is not required to import cigars, cigarillos, water-pipe tobacco, chewing tobacco, snuff and snus.

Passengers arriving into New Zealand with tobacco do not need a permit and individual duty-free tobacco limits are unchanged. More information about duty-free limits and FAQs are available to download.

Source: New Zealand Customs Service, 22 May 2020

WCO launches COVID-19 Trade Facilitation Repository

In the wake of the ongoing COVID-19 outbreak, characterized by the World Health Organization (WHO) as a pandemic on 11 March 2020, countries around the world have been adopting a series of trade and border protection measures to try to contain the spread of the disease across borders. Such measures have had immediate and severe impacts on economic activities and caused major disruptions in supply chains. Given that trade facilitation is a key policy tool that can help countries mitigate some of the impacts of the COVID-19 pandemic, the WCO has partnered with the WTO, UNCTAD, the CSSO, the GATF, IATA and ITC to develop a COVID-19 Trade Facilitation Repository in which all these actions are consolidated.

The repository acts as a platform that consolidates the initiatives on trade facilitation adopted by organizations and stakeholders, seeking to provide access to these resources in a unique and user-friendly database. It contains a useful listing of all such initiatives broken down by organization, type of measure and subject matter. As the situation evolves and further actions are taken, the platform will be expanded to include other key actors working in the area of trade facilitation.

Since the beginning of the COVID-19 pandemic and its unprecedented sanitary and economic effects, the WCO and other international organizations, NGOs, business associations and other representative entities have redeployed resources to develop new instruments, tools and guidance materials on trade facilitation measures. These documents can be a useful source of information for countries to learn from each other, share best practices and experiences and provide inspiration to design targeted policy responses. However, these resources were scattered throughout a multitude of platforms. This initiative will assist in ensuring that the seamless flow of safe cross-border trade continues, especially with regard to essential goods which are crucial for fighting the COVID-19 pandemic.

The COVID19 Trade Facilitation Repository can be accessed via the following link and will be updated regularly to reflect new guidance material developed.

The WCO thanks its partners, the World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD), the Commonwealth Small States Office (CSSO) in Geneva, the Global Alliance for Trade Facilitation (GATF), the International Air Transport Association (IATA) and the International Trade Centre (ITC) for this initiative and reiterates its commitment to assist its Members in securing, protecting and facilitating legitimate global trade.

Source: World Customs Organisation, 9 May 2020

WTO Director General Roberto Azevêdo resigns

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

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

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

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

Dmitry Grozoubinski highlights the significance of Azevêdo’s departure.

Is this resignation a big deal?

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

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

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

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

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

What happens now – Interim Director-General? 

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

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

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

What happens next – A new Director-General?

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

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

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

Is there politics? 

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

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

What happens if no consensus candidate can be found? 

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

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

So what does it all mean? 

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

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

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

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

WCO-IMO Partnership for maritime digitalization to support flow of trade by ship

The WCO and the International Maritime Organization (IMO) strengthened their partnership recently to further facilitate the exchange of information in a harmonized way by updating the IMO Compendium on Facilitation and Electronic Business and mapping it to the WCO Data Model. The updated Compendium, which is a set of standards on the submission of maritime related data, will enable the integration of Maritime and Customs Single Windows and allow closer coordination between Customs administrations and Maritime authorities. 

It is known that when ships enter and leave ports, vital information concerning cargo, dangerous goods, crews, vessel details and other pieces of information have to be exchanged with the authorities ashore. However, under the International Maritime Organization (IMO) Convention on Facilitation of International Maritime Traffic (FAL), public authorities are now required to set up systems for this all to happen digitally. 

With a view to sustaining the maintenance work of the Compendium and to allow more involvement of different stakeholders in the maritime supply chain, within the framework of existing partnerships, the IMO, the WCO, the United Nations Economic Commission for Europe (UN/ECE) and the International Standards Organization (ISO) have come together to support this increased maritime digitalization. 

The renewed partnership paves the way for updating the IMO Reference Data Model and for its further development towards the harmonization of data standards in other areas, beyond the FAL Convention, such as exchanging operational data that could help facilitate the just-in-time operation of ships. Just-in-time operations allow ships to optimise their speed, so they arrive at their destination port when their berth is ready for them, thereby saving energy and cutting costs and emissions. 

The partners involved have been cooperating to develop the IMO Reference Data Model, which is a key element of the IMO Compendium on Facilitation and Electronic Business and covers the reporting requirements defined in the FAL Convention to support transmission, receipt, and response of information required for the arrival, stay, and departure of ships, persons, and cargo via electronic data exchange.  This work ensures interoperability between the respective standards of each organization, such as the WCO Data Model.

Source: WCO, 14 May 2020

WTO Report – Role of e-Commerce during the COVID-19 pandemic

The WTO Secretariat has published a new information note looking at how the COVID-19 pandemic has affected e-commerce, including the implications for cross-border trade. It notes the increased use of e-commerce as consumers adapt to lockdowns and social distancing measures and draws attention to several challenges, such as the need to bridge the digital divide within and across countries.

As well as highlighting the uptick in e-commerce during the COVID-19 crisis, the report looks at measures introduced by governments to facilitate e-commerce and some of the challenges facing these initiatives. Governments have worked to increase network capacity, encourage the provision of expanded data services at little or no cost, and lowered or scrapped transaction costs on digital payments and mobile money transfers. The report also looks at ongoing e-commerce discussions in the WTO and how continued implementation of the WTO’s Trade Facilitation Agreement could address some of the challenges brought to the fore by the COVID-19 pandemic.  

The report argues that the experiences and lessons emerging from the COVID-19 crisis could be a further incentive for global cooperation in the area of e-commerce, which could help to facilitate cross-border movement of goods and services, narrow the digital divide, and level the playing field for small businesses.  

Download the report here!

Source: World Trade Organisation

China Shanghai Pudong Airport log jammed – Medical Supplies for export

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Light loading

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

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

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

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

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

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

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

Airfreight workarounds

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

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

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

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

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

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

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

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

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

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

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

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