In many countries, border crossing requires cumbersome procedures with a lot of paperwork and clearances from multiple agencies before the release of the consignment, adding to the cost of transaction. The cost of doing trade is particularly high for landlocked countries as they need to comply with regulatory requirement of the transit countries while transiting the goods through the latter’s territory. A study done by United Nations Conference on Trade and Development (UNCTAD) reveals that the cost of logistics and transit transportation for the landlocked countries is 15 percent higher than their competitors of coastal countries.
Smooth flow of trade is becoming a challenging task as several non-tariff barriers are being raised by the importing countries that sometimes offsets the market access opportunities provided by the trading agreements concluded at bilateral, regional or multilateral levels. Requirement of food safety, quarantine, environmental and labor standards, product standards are some prominent barriers that impede the export of developing countries. Besides, the lack of a consistent, transparent and predictable trading environment due to complex and irrational customs behavior and other administrative procedures hinder, delay or increase the cost of moving goods across the borders. These sorts of problems are drawing attention of the trade negotiators who are engaged in dealing with these issues at various international trade forums.
The ongoing negotiations on trade facilitation at World Trade Organization (WTO) focuses on a wide range of trade facilitation issues, mainly on freedom of transit, fees and formalities connected with importation and exportation and publication and administration of trade regulations that emanates from General Agreement on Tariffs and Trade (GATT) Articles V, VII and X respectively. Besides, the WTO agreements cover wider range of trade facilitation issues like customs valuation, mark of origin, pre-shipment inspection, import licensing, sanitary and phyto-sanitary measures and technical barriers to trade that are under the ambit of negotiating group on trade facilitation.
The South Asian Free Trade Agreement (SAFTA) also includes trade facilitation as a complimentary measure to facilitate the flow of goods within the member countries. The measures outlined in the agreement includes simplification and harmonization of customs clearance procedures, harmonization of standards, reciprocal recognition of test and certifications, customs cooperation, transit facilities, simplification of banking facilities and import financing, development of transport infrastructures and visa facilitation, among others. Similar kinds of arrangements are under negotiation in the Trade Negotiation Committee meetings of Bay of Bengal Initiative for MultiSectoral Technical and Economic Cooperation (BIMSTEC) free trade agreement.
Trade integration has become a much-hyped topic in the international forums. However, one should bear that integration cannot result merely by liberalizing trade. Rather, the effort of liberalization needs to be combined with trade facilitation and regional connectivity that help in achieving a meaningful integration. The European Union and Association of Southeast Asian Nations (ASEAN) are good examples of trade and economic integration at the regional level as these organizations have been able to reduce transaction cost with the application of single window in trade transactions.
The main advantage of having a single window for a country or economy is a significant rise in time and cost efficiency for traders while dealing with various agencies to obtain relevant clearances and permits for moving cargoes across international borders.
A single window is a part of trade facilitation process. This provides an innovative idea in reducing the cost of transaction in international trade. As we observe, the processing of export and import requires visit and dealings with multiple public and private agencies in multiple locations in order to obtain the necessary papers, permits and clearances. In case of Nepal, normally export requires 10 set of documents while for import 11 set of documents are required with numerous pages comprising of quadruplet and sextuplet copies and signature of competent authorities for clearances. As such, the implementation of a single window system enables the international traders to submit regulatory document at a single location and/or a single entry. Such documents are typically customs declarations, application for import and export permits, certificate of origin, invoice, packing list, letter of credit and customs transit declarations which are the customary documents used in international trade.
The main advantage of having a single window for a country or economy is a significant rise in time and cost efficiency for traders while dealing with various agencies to obtain relevant clearances and permits for moving cargoes across international borders. Benefits of single window for government would be in correct collection and yield of revenue, improved traders compliance and support in application of sophisticated ‘risk management’ techniques for control and enforcement purpose. Meanwhile, traders would benefit from reduced costs and delays, faster clearances and release of goods from the customs point and predictability in explanation and application of rules. Moreover, the application of single window will help in effective and efficient deployment of resources that in turn would help in achieving competitiveness of trade.
However, the implementation of single window concept requires both physical as well as non-physical infrastructures. Physical infrastructures include transport connectivity, warehouses, dry ports, integrated customs check posts, etc while non-physical infrastructures include simplification and harmonization of information requirements, particularly the data elements, minimization of legally-required data and application of Information and Communication Technology (ICT) in trade procedures. The World Customs Organization (WCO) Data Model, International Convention on Simplification and Harmonization of Customs Procedure (Kyoto Convention) and Facilitation Measures Related to International Trade Procedures (FALPRO) of United Nations Economic Commission for Europe (UNECE) are key initiatives that provide a framework for introducing a single window in the international trade transactions.
Trade facilitation is being increasingly realized as an important step in promoting Nepal’s trade. It has become more prominent in the wake of declining export of major export commodities due to eroding competitiveness of Nepali products in recent years. Requirement of excessive paper works in export and import, port inefficiencies and delays, lack of adequate transport infrastructures, absence of the use of electronic data interchange between port customs and Nepali land customs, and poor development of ICT infrastructures have added to the cost of transactions. Various export and import clearance agencies have their own interest, often contradicting each other and trade is paying off their inefficiency, bureaucracy and red tapism.
Now, time has come to think afresh on how we can bring efficiency in trade by removing these evils. Probably, introduction of single window is the answer that will converge stakeholders of trade and transit transportation together for the benefit of trade.
Writer is Secretary, Ministry of Commerce and Supplies
puruojha@gmail.com
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