paperless trade: implementation experience and the way ahead experience of the world bank hamid...
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Paperless Trade:Implementation Experience and the way
ahead
Experience of the World Bank
Hamid AlaviMiddle East and North Africa Region, World Bank
UN/CEFACT Executive Forum
Geneva , 20-21st June 2005
June 2005 2
Overview .1.
How does the World Bank view Trade Facilitation and what it is doing in this filed?
Why are the simplification and automation of trade transactions important?• Efficiency and competitiveness• Security concerns
Guiding principles for the application of ICT• Simplify processes• Simplify documentation• Re-engineer processes (codes and standards)• Automate • Customs is only one of many agencies involved in trade transactions
Implementation approach
Lessons learned
Implementation lessons from the application of information technology to facilitate trade and smooth out supply chains
Presentation Purpose
June 2005 3
Overview of World Bank Activities
Expanding Country Policy Dialogue
Supporting the Doha Round
Established Trade Department including Trade Logistics Group
Bringing together Trade Policy, Infrastructure and Customs/Border Management teams
Stepping up trade – related operations
Global Facilitation Partnership for Trade & Transport
Trade and Transport Facilitation Audits
Trade Facilitation Seminars
Better coordination with donors & international organizations
Research, analysis and advocacy
Customs Modernization Handbook
Trade facilitation is increasingly important in Bank policy support and operations
Quick Background
June 2005 4
Overview .1.
How does the World Bank view Trade Facilitation and what it is doing in this filed?
Why are the simplification and automation of trade transactions important?• Efficiency and competitiveness• Security concerns
Guiding principles for the application of ICT• Simplify processes• Simplify documentation• Re-engineer processes (codes and standards)• Automate • Customs is only one of many agencies involved in trade transactions
Implementation approach
Lessons learned
Implementation lessons from the application of information technology to facilitate trade and smooth out supply chains
Presentation Purpose
June 2005 5
Efficiency : Time is a Trade Barrier
Trade occurs in physical space and moving goods requires time.
Trade logistics costs are as important as tariffs• Each day saved is equivalent to 0.5% tariff (Hummels)• 7% of value of world trade is cost of administration of trade logistics (UNCTAD)
Time becomes even more important in multi-stage production (global supply chain)• % of vertical specialization in trade (use of imported inputs for exports) has grown
30% in the past 20 yrs and accts for half of overall trade growth.
Willingness to pay to save time:• Share of airfreight in US grew from 7% in 65 to 30% in 98• Airfreight 7 times as expensive as ocean shipping.
June 2005 6
Efficiency gains from streamlining and simplifying trade processes
Imagine if the contents of a ship can be processed in half a day instead of a day …
• Infrastructure capacity effectively doubled• Twice the cargo• Twice the # of ships• Twice the number of containers• Increased harbor duties, excise and revenue• Considerably lower cost to traders• …even more benefits:
–These efficiencies offer wider attraction to trading partners–Efficiency in vessel turnaround attracts new trading, market center,
distribution business.
June 2005 7
Efficiency gains from streamlining and simplifying trade processes
A wide-body jet can carry fresh produce from supplier in one hemisphere to the buyer in the other hemisphere on the same or next day.
BUT it can take 10 days to :• Process orders• Obtain customs and TC approvals• Book and schedule transport and distribution• Obtain payment approvals• Complete the transaction
This means removing 10 days from the selling season, revenue that cannot be replaced
June 2005 8
What Gains?
Port efficiency improvements (from 75th to 25th percentile) could reduce transport costs for a country as much as shortening it distance from its trading partners by 9,000 km (IDB 2000)
$100 million could be saved each year through the application of ICT (UNCTAD)
Singapore gained 1% of GDP
Tunisia case
June 2005 9
Overview .1.
How does the World Bank view Trade Facilitation and what it is doing in this filed?
Why are the simplification and automation of trade transactions important?• Efficiency and competitiveness• Security concerns
Guiding principles for the application of ICT• Simplify processes• Simplify documentation• Re-engineer processes (codes and standards)• Automate • Customs is only one of many agencies involved in trade transactions
Implementation approach
Lessons learned
Implementation lessons from the application of information technology to facilitate trade and smooth out supply chains
Presentation Purpose
June 2005 10
Trade transaction is a complex process
Many documents
Many players• A typical trade transaction can take as many as 150 different documents
to complete– Raw material and component supplier– Manufacturer/assembler– Customs agents/brokers– Customs authorities– Government authorities- export promotion/approval/stat.– Local transport and warehousing companies– Container handlers– Port and harbor authorities– Shippers (sea, air, road, rail, canal, …)– Bank and insurance companies
Each have own set of paper forms and interactions with other organizations (incl. counterparts in importing countries.
1111
•Manifest•Bills of Lading•Sea/AW Bill•Container Plans
•Invoice•Packing List•Declaration•Delivery Note
Storage
Air, Sea, LandInternational
TransportCustoms Port
Pay TaxesClear CustomsRelease Goods
Ship’sDocuments
•CertificatesOf Origin
•Licenses•Certificates•Government Approvals
Chamber ofCommerce
ForeignChambersCommerce
OverseasEmbassies
Post/Courier
•“LegalInvoices”
DOMESTICSUPPLY CHAIN
Raw MaterialsPackagingTransportStorage
•Quotations•P.O.s•Delivery Notes•Con. Notes•Invoices•Statements
•Payments•Remittance Advice
IMPORTER
MANUFACTURER
EXPORTERFOREIGNBUYER
IMPORT
•Licenses•Certificates•Government Approvals
•Certificates Of Origin•Form A•EUR.1
GovernmentDepartments
FinanceMinistry
Port
•Invoice•Packing List•Declaration•Delivery Note
Customs
“InformalProcesses”
Pay TaxesClear CustomsRelease to Port
InformalProcesses
Port Processes•Internal Transport•Storage•Container Handling•Loading
Port Customs
MANUFACTURING/ VALUE ADD EXPORT
ReceiveGoods
Bank
•P.O.•Contract Terms•Delivery Instructions•L.O.C.
PayBank
L.O.C.Packing ListInvoice LOC Courier
LOC Approval
ShippingDocuments
Book/Confirm Transport
/Dues
/Dues
June 2005 12
Different ways to use ICT for TF
Systems built around different agencies• Ports • Customs
– long term difficulties in technology areas such as flexibility, interoperability, international standards, volume, ongoing support and support costs.
Single windows
Customs
Customs Brokers
CargoHandling
Port Authority
Traders
Ministry ofCommerce
Freight Forwarders
Shipping Agents
Banks
EDI Server
Figure B
CustomsCustoms
Customs Brokers
CargoHandling
Port Authority
Traders
Ministry ofCommerce
Freight Forwarders
Shipping Agents
Banks
EDI Server
Figure B
A facility providing standardized information and documents with a single body to fulfill requirements for import, export and transit regulations and clearance
Expedite and simplify information flows between trading community and the government
June 2005 13
Paperless Trade reduces Time and Increases Efficiency and Security- Examples
Mauritius Trade Net has reduced average clearance times of goods from 4 hours to 15 minutes
Tunisie Trade Net (TTN) has reduced processing times of trade documents from max of 18 to 7 (3.5 days in cases not requiring technical controls).
Time savings in Singapore (STN) translate into 1% of GDP per year.
Advanced information sharing in all cases has contributed to security requirements
…
14
Processing of TCE
2 - 3 D
1 D
0 Goods Arrival
Validation, Amendments, Data Capture of Manifest
2 D
Deliver Manifest hardcopy to Customs and STAM
1/4 D
Goods discharged from vessel
STAM submits hardcopy report of unloaded cargo discrepancies to ship agent
2 - 4D
Shiping Agent reconciles discrepancies regarding cargo unloaded
2 - 5 D
1/2 D 1 -2 D
Shipping Agent delivers final manifest to Customs and STAM
Importer / Broker prepares customs declaration.and delivers to Customs
2 - 3 D Importer / Broker picks up processed declaration.
1 D
Payment of customs duty, storage charges and port dues
0 - 2 D
Confirmation of goods landed byShipping Agent and issue of delivery note
Goods removed from port area
1/4 D 15 mins
Prior to Trade Facilitation Initiative
1 2 3 15 10 5
After Trade Facilitation Initiative
Days
Figure C
June 2005 15
Overview .1.
How does the World Bank view Trade Facilitation and what it is doing in this filed?
Why are the simplification and automation of trade transactions important?• Efficiency and competitiveness• Security concerns
Guiding principles for the application of ICT• Simplify processes• Simplify documentation• Re-engineer processes (codes and standards)• Automate • Customs is only one of many agencies involved in trade transactions
Implementation approach
Lessons learned
Implementation lessons from the application of information technology to facilitate trade and smooth out supply chains
Presentation Purpose
June 2005 16
Design Approach
It is more than simply applying information technology to trade processes. It requires a comprehensive approach and commitment at all levels
Simplify trade documents and eliminate duplicationSAD
Simplify trade documents and eliminate duplicationSAD
Reengineer back-officesReengineer back-offices
Automate/Single Window
Automate/Single Window
Streamline and simplify trade transaction processesStreamline and simplify trade transaction processes
Codes and standardsCustoms only one among manyPhased approach/demonstration effectSupporting and implementing structure
Steering committees and working groups (cross agency) to design components and draw up action plans
June 2005 17
Implementation Approach
Phased Approach• Complexity• Quick wins to secure confidence
International Standards (UN EDIFACT, etc.)• International information exchange requires standards
Pilot users• Surveys / evaluation / fine –tune
Implementing body
June 2005 18
Implementation Issues
Trade Processes - Chain effect• As good as weakest link in the chain• Benefits only visible when everything works
Complex• Many details that must fit together
Resistance to change• Organizational • Shift from paper to electronic processes
Prepare to manage project risks• Multiple activities / issues to address Inter-institutional
dependencies
June 2005 19
Overview .1.
How does the World Bank view Trade Facilitation and what it is doing in this filed?
Why are the simplification and automation of trade transactions important?• Efficiency and competitiveness• Security concerns
Guiding principles for the application of ICT• Simplify processes• Simplify documentation• Re-engineer processes (codes and standards)• Automate • Customs is only one of many agencies involved in trade transactions
Implementation approach
Lessons learned
Implementation lessons from the application of information technology to facilitate trade and smooth out supply chains
Presentation Purpose
June 2005 20
Success Factors
There is potential dramatic improvements in efficiency and security that can be made in trade clearing process when administrative and political commitment joins forces with advances in
information technology
Relevance To firms
Commitment at the highest level of government
Cooperation among private sector operators and various government stakeholders at all stages of the process
Adoption of a regulatory framework that allowed for electronic processing and signature
Simplification of customs requirements
Extension of electronic processing to all import and export administration and other agencies involved in trade transactions
Adoption of internationally recognized standards and codes in order to ensure a common language among different users and in different countries
Aligning the relative costs of processing paper documentation and on-line processing.