Hurdles before trans-border trade facilitation

Port of Lagos, Nigeria

Port of Lagos, Nigeria

The following article, allbeit long, provides a good overview of trade facilitation developments in Nigeria. I doubt that there is a single country on the African continent that cannot draw some parallel experience contained in this article.

Trade across borders is not a new phenomenon. But the World Trade Organization is now championing the concept of trade facilitation among nations, which has been defined as simplication , harmonization, standardization and modernization of trade procedures.

Trade facilitation seeks to reduce trade transaction between businesses and government. This concept is receiving unprecedented attention globally and it is at the heart of numerous initiatives within the customs world.

The United Nations Centre for Trade facilitation and Electronic business (UN/CEFACT) in its recommendation No 4 of 1974, said trade facilitation programme ought to be guided by simplication, harmonization and standardization (of trade procedures) so that transaction becomes easier, quicker and more economical than before.

According to the body, there was need to eliminate duplication in formalities, process and procedures; align all national formalities, procedures operation and documentation with international conventions, standard and practices to develop international agreed format for practices, procedures, documentation and information in international trade.

Proponent of trade facilitation believed that if transaction cost in international trade is reduced, there could be creation of wealth, especially in developing countries where red-tapism and other procedural barriers to trade tend to be pronounced.

The organization for Economic Cooperation and Development (OECD) estimated recently that even one per cent reduction in such “hidden cost” would boost the global economy by $40 billion with most of these benefits going to the developing world. Trade facilitation therefore encourages, or perhaps requires countries to adopt means such as publishing their imports and export procedures, reducing the number of forms that importers and exporters are required to complete, allowing forms to be submitted on-line, and checking corruption at border post.

Nigeria, though a signatory to Kyoto 1974 and other convention on trade facilitation, is far from embracing the ideals of the global concept.

The president of the council of Managing Directors of Customs licensed Agents, Mr. Lucky Amiwero, said that although Nigeria was yet to comply with all the provisions of trade facilitation, it has the tools to facilitate international trade, such as the scanning machines and the e-platform.

“In Nigeria, the real cost of doing business is an impediment to trade facilitation. We have no good procedure for goods on transit to Niger and Chad. That has been taken over now by our neighboring countries. One of the key component of trade facilitation is charges which must be tied to services. We have shortcoming in that area. We are still working at cross purposes when other countries are busy harmonizing their import and export procedures”, he said.

In Nigeria, there is no one stop shop process for goods clearance as we have over 10 agencies superintending goods clearing procedure at the nation’s gateways.

“This is very bad and constitute hindrance to trade. The regulatory process is supposed to have been harmonized with other agencies to have a one stop procedures. Procedures are not published and not in line with WTO article which has to do with publication, regulation and administration of procedures. Our trading regime are expensive, our procedures are cumbersome. When others are simplifying and synchronizing their process of import and exports, our import and export procedures are lengthy. We have not been able to harmonise process and procedures and that is where we have a problem. If you still have to go through 100 per cent examination when we have the scanners, that is an impediment to trade,” Amiwero said; adding that the time spent to conclude business in Nigerian ports and border post is much higher than anywhere in the West African sub-region.

The level of corruption at the port border post is high and making them the most expensive business environment in Africa; as un-receipted charges far outweigh the official charges in the process of good clearing. Importers are still submitting hard documents instead of making use of e-devices, and going through the cumbersome process of clearing and receiving of consignments. Continue reading →

Global Tax Forum elects SARS Chief Legal Officer as Chair

Kosie Louw, SARS (2nd from right) newly elected Chair of the Global Forum on Transparency and Exchange of Information for Tax Purposes.

SARS’s Chief Officer for Legal and Policy, Kosie Louw, was elected Chair of the Global Forum on Transparency and Exchange of Information for Tax Purposes at the organisation’s 5th meeting which was held in Cape Town last week. The appointment is for an initial two-year period from the beginning of 2013. Finance Minister Pravin Gordhan congratulated SARS and Kosie Louw on his election as chairperson of the Global Forum on behalf of the South African government.

“I am certain that the two years of South Africa’s chairmanship will be beneficial for the forum but also to the wider global tax administration community. South Africa, the first African chair of the forum, takes over the post of the forum chair from Australia,” Minister Gordhan said.

The position of forum chair is especially important because the forum’s current mandate expires in 2015, and it is during SA’s tenure that a decision must be made on the best way to take the work of the forum forward. SA’s tenure also coincides with very challenging times for tax administrations globally, especially when it comes to the exchange of information for tax purposes, the Minister said. The two-day Global Forum event, held on 26 and 27 October, was hosted by SARS and was attended by delegates from 81 jurisdictions and 11 international organisations.

The Global Forum was created by the OECD in 2000 to provide a forum for achieving and implementing high standards of transparency and exchange of information in a way that is equitable and permits fair competition between all jurisdictions, large and small, OECD and non-OECD. The principle that guides the Global Forum’s work is that all jurisdictions, regardless of their tax systems, should meet such standards in order for competition to take place on the basis of legitimate commercial considerations rather than on the basis of lack of transparency or lack of effective exchange of information for tax purposes.

The Cape Town meeting comes at an important juncture in the work of the Global Forum as it starts evaluating whether its members are actually exchanging information effectively. It is developing a ratings system based on a global consideration of members’ effectiveness at implementing the standard in practice.

The organisation is also looking at ways of refining governance and deliberating on its future direction. The importance of the work of the Global Forum in the region is highlighted by the increasing membership of African countries to 15, with Burkina Faso, Cameroon, Gabon, Tunisia and Uganda becoming the most recent members. This brings the Forum’s membership to 116.

South Africa has the largest and ever increasing tax treaty network in Africa and is seen as one of the most active jurisdictions in the work towards transparency and exchange of information. The South African Peer review report, which found South Africa’s legal framework and practices to be in accordance with the internationally agreed standard, was adopted by the Global Forum during this meeting. Source: SARSNews

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Tanzania slams US/ EU non-tariff barriers replacing tariffs

Tariff barriers against African exports have fallen, but European and American non-tariff barriers, exacting high standards of compliance, have replaced them, blocking products and produce, Tanzanian deputy trade minister Gregory Teu told the National Assembly.

“American markets are open, but the standards that our products have to meet are too high for our producers to meet,” Teu said in his response to a question from parliamentarian Rita Mlaki who asked what was being done to exploit the two markets under the African Growth and Opportunity Act (AGOA) and Everything but Arms (EBA) arrangements.

He said the government, through the Exports Processing Zones Authority (EPZA), was pursuing strategies to promote exports by local and foreign investors, but said the markets are practically inaccessible due to the stringent standards set. Tanzanian exports are chiefly coffee, cotton, sisal, tea, tobacco, cashew nuts and pyrethrum. Seems it should be called “Pain for Trade” not “Aid for Trade” Source: AllAfrica.com