Trade facilitation
Encyclopedia
Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives. Business costs may be a direct function of collecting information and submitting declarations or an indirect consequence of border checks in the form of delays and associated time penalties, forgone business opportunities and reduced competitiveness.
Understanding and use of the term “trade facilitation” varies in the literature and amongst practitioners. "Trade facilitation" is largely used by institutions which seek to improve the regulatory interface between government bodies and traders at national borders. The WTO, in an online training package, once defined trade facilitation as: “The simplification and harmonisation of international trade procedures” where trade procedures are the “activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade”.
In defining the term, many trade facilitation proponents will also make reference to trade finance
and the procedures applicable for making payments (e.g. via a commercial banks). For example UN/CEFACT
defines trade facilitation as "the simplification, standardization and harmonisation of procedures and associated information flows required to move goods from seller to buyer and to make payment".
Occasionally, the term trade facilitation is extended to address a wider agenda in economic development
and trade to include: the improvement of transport infrastructure, the removal of government corruption, the modernization of customs administration, the removal of other non-tariff trade barriers, as well as export marketing and promotion.
Collection of customs duties, excise duties and other indirect taxes; payment mechanisms
Safety and security:
Security and anti smuggling controls; dangerous goods; vehicle checks; immigration and visa formalities
Environment and health:
Phytosanitary, veterinary and hygiene controls; health and safety measures; CITES controls; ships’ waste
Consumer protection:
Product testing; labelling; conformity checks with marketing standards (e.g. fruit and vegetables)
Trade policy:
Administration of quota restrictions; export refunds
and supply chain management
. Trade facilitation looks at operational improvements at the interface between business and government and associated transaction costs. Trade facilitation has become a key feature in supply chain security
and customs
modernisation programmes. Within the context of economic development
it has also come to prominence in the Doha Development Round. However, it is an equally prominent feature in unilateral and bilateral initiatives that seek to improve the trade environment and enhance business competitiveness. Reference to trade facilitation is sometimes also made in the context of "better regulation". Some organisations promoting trade facilitation will emphasis the cutting of red tape
in international trade as their main objective. Propagated ideas and concepts to reforming trade and customs procedures generally resonate around the following themes:
Understanding and use of the term “trade facilitation” varies in the literature and amongst practitioners. "Trade facilitation" is largely used by institutions which seek to improve the regulatory interface between government bodies and traders at national borders. The WTO, in an online training package, once defined trade facilitation as: “The simplification and harmonisation of international trade procedures” where trade procedures are the “activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade”.
In defining the term, many trade facilitation proponents will also make reference to trade finance
Trade finance
Trade finance is related to international trade.While a seller can require the purchaser to prepay for goods shipped, the purchaser may wish to reduce risk by requiring the seller to document the goods that have been shipped. Banks may assist by providing various forms of support...
and the procedures applicable for making payments (e.g. via a commercial banks). For example UN/CEFACT
UN/CEFACT
UN/CEFACT is an organisation that makes international EDI Electronic Data Interchange standards for electronic trade documents in XML format.- UN/CEFACT History, A UN mission to support trade:...
defines trade facilitation as "the simplification, standardization and harmonisation of procedures and associated information flows required to move goods from seller to buyer and to make payment".
Occasionally, the term trade facilitation is extended to address a wider agenda in economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
and trade to include: the improvement of transport infrastructure, the removal of government corruption, the modernization of customs administration, the removal of other non-tariff trade barriers, as well as export marketing and promotion.
Examples of regulatory activity in international trade
Fiscal:Collection of customs duties, excise duties and other indirect taxes; payment mechanisms
Safety and security:
Security and anti smuggling controls; dangerous goods; vehicle checks; immigration and visa formalities
Environment and health:
Phytosanitary, veterinary and hygiene controls; health and safety measures; CITES controls; ships’ waste
Consumer protection:
Product testing; labelling; conformity checks with marketing standards (e.g. fruit and vegetables)
Trade policy:
Administration of quota restrictions; export refunds
Topics and issues in trade facilitation
Trade facilitation has its intellectual roots in the fields of logisticsLogistics
Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and...
and supply chain management
Supply chain management
Supply chain management is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers...
. Trade facilitation looks at operational improvements at the interface between business and government and associated transaction costs. Trade facilitation has become a key feature in supply chain security
Supply chain security
Supply chain security refers to efforts to enhance the security of the supply chain: the transport and logistics system for the world's cargo. It combines traditional practices of supply chain management with the security requirements of the system, which are driven by threats such as terrorism,...
and customs
Customs
Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, transports, personal effects and hazardous items in and out of a country...
modernisation programmes. Within the context of economic development
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...
it has also come to prominence in the Doha Development Round. However, it is an equally prominent feature in unilateral and bilateral initiatives that seek to improve the trade environment and enhance business competitiveness. Reference to trade facilitation is sometimes also made in the context of "better regulation". Some organisations promoting trade facilitation will emphasis the cutting of red tape
Red tape
Red tape is excessive regulation or rigid conformity to formal rules that is considered redundant or bureaucratic and hinders or prevents action or decision-making...
in international trade as their main objective. Propagated ideas and concepts to reforming trade and customs procedures generally resonate around the following themes:
- Simple rules and procedures
- Avoidance of duplication
- Memoranda of Understanding (MoUs)
- Alignment of procedures and adherence to international conventions
- Trade consultation
- Transparent and operable rules and procedures
- Accommodation of business practices
- Operational flexibility
- Public-service standards and performance measures
- Mechanisms for corrections and appeals
- Fair and consistent enforcement
- Proportionality of legislation and control to risk
- Time-release measures
- Risk management and trader authorisations
- Standardisation of documents and electronic data requirements
- Automation
- International electronic exchange of trade data
- Single Window SystemSingle Window SystemThe single-window system is a trade facilitation idea. As such, the implementation of a single window system enables international traders to submit regulatory documents at a single location and/or single entity...
External links
- AUSTRIAPRO: AUSTRIAPRO is an association affiliated with the Austrian Federeal Economic Chamber.
- Asia-Pacific Research and Training Network on Trade (ARTNeT)
- Global Facilitation Partnership: A collaborative tool for practitioners and policy makers involved in trade facilitation and transport facilitation (TTF).
- SITPRO: United Kingdom's Trade Facilitation Agency dedicated to making international trade simpler by cutting red tape.
- SWEPRO: SWEPRO is Sweden's forum for discussion and information on international work for all issues related to simplification of trade procedures.
- TFC Publications Database Collection of trade facilitation papers
- Trade Costs and Facilitation: The Development Dimension: A World Bank research project on trade facilitation and development.
- United Nations Centre for Trade Facilitation and Electronic Business Webage with links to UN Trade Facilitation Recommendations
- World Customs Journal: Special Issue on Trade Facilitation (free access)