Be guided by trade facilitation concept
The Director and Lead Consultant at Trade Development and Facilitation (TDAF) Consulting in Geneva, Switzerland, Mr Tom Butterly has urged policy-makers to consciously strive to reduce trade barriers and increase efficiency in the areas of doing business.
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According to him, the primary goal of trade facilitation is to help make trade across borders faster, and cheaper and more predictable, whilst ensuring its safety and security.
Mr Butterly made the call when he facilitated a one week Trade Facilitation Implementation Guide (TFIG) training workshop for senior level managers of the Customs Division of the Ghana Revenue Authority (GRA), Ghana Institute of Freight Forwarders (GIFF), Association of Ghana Industries (AGI), Ghana Chamber of Commerce and Industry (GCCI), Ghana Union of Traders’ Association (GUTA), West Blue Consulting, and National Security in Accra.
The workshop was organised by the United Nations Economic Commission for Europe (UNECE) in collaboration with the GRA and sponsored by West Blue Consulting under the Ghana National Single Window (GNSW) project.
The participants were trained on how to use the UN Trade Facilitation Implementation Guide for Trade Facilitation (TF) reform efforts and to stimulate the sharing of best practices and the discussion of opportunities for inter-agency cooperation in the TF.
Implementation guide
The UN Trade Facilitation Implementation Guide is a web-based interactive tool to help countries better understands the key elements and instruments of trade facilitation. A set of case stories on how countries have succeeded in facilitating trade complements the guide.
Mr Butterly noted that trade facilitation has become a key policy issue for both governments and the private sector as it cuts the costs of doing business, reduces delays at the border, and makes public agencies dealing with trade more efficient. It is at the heart of the World Trade Organization (WTO) Doha Round of negotiations.
He explained that; “in terms of focus, it is about simplifying and harmonizing formalities, procedures, and the related exchange of information and documents between the various partners in the supply chain”.
For UNECE and its UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT), trade facilitation is “the simplification, standardization and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payment”. Such a definition implies that not only the physical movement of goods is important in a supply chain, but also the associated information flows.
It also encompasses all governmental agencies that intervene in the transit of goods, and the various commercial entities that conduct business and move the goods. This is in line with discussions on trade facilitation currently ongoing at the WTO, Mr Butterly emphasised.
Reasons for trade facilitation
There are great potential gains from trade facilitation for both governments and the business community. Public entities will profit in terms of enhanced trade tax collection, better use of resources and increased trader compliance, according to the renowned trade consultant.
“A more efficient and transparent delivery of public services will allow the administration to maintain high security levels and effective government control, while diminishing opportunities for corruption.
Traders will gain in terms of higher predictability and speed of operations and lower transaction costs, resulting in more competitive exports on global markets”.
For countries including Ghana as a whole, reducing unnecessary delays and costs attracts investments, and supports growth and job creation. Trade facilitation measures can particularly benefit developing countries, where it frequently takes three times as many days to export goods as it does in developed ones.
Exports from developing countries require nearly twice as many documents and six times as many signatures, according to Word Bank’s Doing Business 2012 report.
Implementing trade facilitation reform programmes certainly has a cost, and facilitation measures need to be prioritised in order to maximize benefits.
However, there are rich opportunities for gains, as documented in many studies and reports, particularly from the World Bank and the Economic Co-operation and Development (OECD).
At the macro level, these look at the positive effects on the trading environment and trade volumes. Every extra day required to ready goods for import or export decreases trade by around 4.5%, according to the OECD.
For the Asia-Pacific Economic Cooperation (APEC) which is the premier forum for facilitating economic growth, cooperation, trade and investment in the Asia-Pacific region, reforms in countries that perform below the regional average could increase intra-APEC trade by US$245 billion. While a 2012 World Bank research on aid effectiveness found out that US$1 of aid for trade facilitation translated into US$70 in exports for recipients.
At the micro level (firms), these studies assess the ease of doing trade and a firm's export performance, measured as export intensity and diversity. And they find that exporters in African countries with more efficient Customs agencies send more products abroad.
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Principles of trade facilitation
The fundamental principles of trade facilitation are transparency, simplification, harmonisation, and standardisation.
Transparency within government promotes openness and accountability of a government's and administration's actions. It entails disclosure of information in a way that the public can readily access and use it. This information may include laws, regulations and administrative decisions of general application, budgets, procurement decisions and meetings, Mr Butterly stressed.
He added: “Regulatory information should be published and disseminated, when possible, prior to enforcement to allow parties concerned to take note of it and make necessary changes. Furthermore, relevant stakeholders and the general public should be invited to participate in the legislative process, by providing their views and perspectives on proposed laws prior to enactment”.