Statement on the WTO Trade Facilitation Negotiations

(Results from third and fourth focus Groups, 18th, 19th July 2007)

The Boksburg Group is an independent think-tank of developing countries comprising government (trade policy and customs) and private sector representatives, formed to discuss issues related to trade facilitation (TF) and to offer considered developing country opinions on this topic and more particularly the WTO Trade Facilitation negotiations.

The Group recently established small Focus Groups to deepen its considerations of spec ific TF issues. Based on discussions in a recent Focus Group meeting on issues relating to implementation, LDCs and land-locked countries, the Group reaffirms that an agreement on trade facilitation in the current WTO negotiations is absolutely vital and needs to ensure benefit to all, especially developing countries.

The Group believes that trade facilitation is of universal benefit, and particularly for developing countries and least developed countries as a means of achieving simpl ified border procedures leading to faster trade flows, increased revenue for governments, reduction of costs for business, and enhancing development and poverty reduction.

Technical assistance and capacity building

• The Doha Development Agenda commits WTO members to "ensuring adequate technical assistance and support for capacity building in this area," which is part of the broader commitment to technical assistance and capacity building for trade-related purposes in this negotiation.
• Globalisation and the need for countries to develop competitive strength in trade in order to increase their wealth is a key driver.
• The Boksburg Group’s ‘ladder’ approach to the categorisation of commitments according to the capacity and capability of developing countries to implement them. We support an approach based on commitments that can and should be implemented immediately, those that are no less important but require more time, and those that require more time and necessary technical assistance.
• The Group recognises the importance of all developing countries conducting self-assessments to determine their needs and capabilities with regard to a TF agreement. It is important that this needs assessment be a continuous process in partnership with developing and developed countries. The provision of TACB should be based on requests emanating from these self-assessments and should be characterised by transparent performance measurements to be agreed to by both recipient and donor countries in partnership, to ensure the delivery of effective TACB.
• It should be recognised that in some instances the state of the infrastructural development of a country will completely neutralise the benefits of a trade facilitation agreement. Whilst it is also recognised that the WTO agreement cannot be used as a precedent for wholesale infrastructural improvement there should be a best endeavour clause in the agreement that ensures that capacity building donors take into account the state of infrastructural development when funding the implementation of an agreement. Infrastructural improvement should be covered by ‘Aid for Trade’.
• The piecemeal approach to capacity building that has prevailed in the past is no longer acceptable. Governments and international organizations responsible for the disbursement of funds and technical resources must adopt a coherent approach to capacity building, which ensures that programmes are based on agreed best practices, designed to suit the spec ific needs of individual recipient countries and are not a short term measure, but are instead aimed at producing sustainable benefits.
• Capacity Building and technical support must be an integral part of any agreement. The WTO should own the capacity building process to underpin the political links between commitment – capacity building – credibility/sustainability of the trade facilitation agreement. Whilst a binding commitment to capacity building would be extremely unlikely the intent must be similar.
• The requirements of individual countries to implement a Trade Facilitation Agreement need to be assessed before the implementation of an agreement. Appropriate and spec ific programmes should be developed for each developing country requiring Capacity Building and Technical Assistance.
• A primary requirement of capacity building is that it should develop a sustainable capability to manage international transactions more effectively. It is vital to ensure that border authorities are not only committed to short-term improvement but long-term sustainable improvement in the border management process is also their goal. Establishing reward systems that do not just cover short-term improvements but where the full reward is only achieved if the process of improvement is self-sustained over, say 5 years.
• In view of thelarge number of donor organizations and consultants active in capacity building it will be vital to ensure that the capacity building programme utilises the same overall approach being offered and promoted by the WTO in conjunction with the World Customs Organisation (WCO). Common standards, compatible practices, and interoperability are three core requirements for a coherent approach to capacity building. Donors should provide common training modules that are politically neutral. Technical training should reinforce global standards, not national or regional variations.
• The WCO and UNECE are vital in the development and dissemination of standards for Customs practices and border management. Other donors should also promote these and other recognised international standards. A centre that collects, collates and analyses best practices related to the management of the international supply chain would be of immeasurable value for all concerned with international trade.
• Consideration should be given to the establishment of permanent regional training centres modelled on the WTO's prototype on regional trade policy training courses in Kenya and Morocco. Combined with distance learning technologies, such centres would enhance both the sustainability and the un iformity of training. One critical area is the need for interoperability of electronic documentation systems and an international standard should be adopted.
• Border management is not a single activity. It covers a number of d ifferent government departments, a whole range of d ifferent types of goods and procedures. To be effective there should be a holistic approach to border management and modernisation. This avoids the development of silos of activity where more appropriately they should be joined up with other management processes. To illustrate this, it is of little value improving the legal basis of customs regulations if the judicial system is not effective. Also the release of goods in advance of final settlement of duty obligations is not possible where a country's financial system does not accommodate an adequate guarantor payment.
• The efficiency of the trading process has a direct impact on business. Any improvement or deterioration in the process will be detected by businesses undertaking international trade. In view of this it would be only right to involve business in the process of reform of the trading process and measurement of performance.
• The competitive environment in which international businesses operate ensures that they constantly seek to improve their competitive performance and one way of doing this is through an improved supply chain. They can readily detect the impact of improvements and deficiencies in the management of cross border transactions. In view of this companies will be keen to assist the process of capacity building and technical assistance
• Companies could contribute significantly to a capacity building programme and contribute to assessment of capacity needs by:
  • helping to establish an effective coordinated funding process for capacity building and the standards/best practices that should be adopted;
  • providing expertise in the development of free market economies, private enterprise and in supply chain management;
  • providing expertise in international law;
  • providing expertise in managing border transactions;
  • sharing experience in the management of change;
  • assisting in the use of measurement to improve performance.
• A framework for capacity building must be agreed to amongst the major donors and likely recipients before a WTO agreement on trade facilitation is implemented.
• Well before the WTO agreement is implemented, work must start on a coordinated approach to funding and managing capacity building.
• Capacity building programmes should becountry spec ific, based on individual country needs. They should use tried and tested best practice and incorporate a range of appropriate international standards. National programmes should include reengineering, simpl ifying and harmonising the existing procedures, upgrading the infrastructure (including computer networks, scanners etc.) training personnel, risk assessment, post-importation audit, appeal procedures etc.
• Whilst capacity building is related to the requirements of individual countries there is benefit in establishing regional programmes so that neighbouring countries can work together and develop a coherent approach to border management and transit procedures in the region.
• Whilst the facilitation of trade is not dependant on the use of high technology. A lot can be achieved through analysis and simpl ification of current procedures however the use of information technology and modern systems is certainly beneficial. The use of information technology whilst being beneficial should not be driven by information technology alone.
• Regional Agreements can add substantial value to multilateral agreements. This is especially the case for regional agreements covering transit. It is vital that sufficient TACB is provided to ensure that the regional implementation of trade facilitation can be undertaken both timely and effectively. This is particularly important for landlocked countries and those with spec ific border challenges.

Least developed countries

• We believe that LDCs should be the top priority for technical assistance and capacity building.
• We recognise that LDCs have an urgent need for more access to information, leading to a greater ability to participate in the negotiations and ultimately to implement commitments.
• This can be partially achieved through better access to and use of technology such as Internet services and information. Indeed, we support the introduction of ICT based on international standards.
• Poor infrastructure can be a major inhibition to international trade. As TACB is importantly focused on improving the border management process and facilitating trade, the Group were concerned that infrastructure should not negate progress made on trade facilitation. In view of this, the Group believes that ‘Aid for Trade’ should be focused on potential restrictions to the trading process caused by infrastructure.

Land-locked countries

• We note that 43 countries of the 193 internationally recognised sovereign states are land-locked (and 20 out of 54 low income economies).
• We consider that the key issue concerning land-locked countries is the need for non-discriminatory and transparent transit arrangements.
• Having said that, we believe that the concerns of all countries relating to transit are broadly the same. A country with access to ports within its own territory has similar interests to land-locked countries in ensuring fair and open transit arrangements for any trade involving passage across neighbouring countries.
• We see no need for separate arrangements for land-locked countries, but every need to ensure that the transit concerns of land-locked countries are addressed in the development of fair enforceable rules applicable to all countries.
• The Group felt that regional agreements can add substantial value to a multilateral agreement by eliminating bureaucracy between countries operating within the regional agreement. This is particularly important for landlocked countries and those with special border issues. Both transit agreements and transport agreements are crucial for the effective facilitation of trade throughout a region provided given safeguards are fully implemented.
• The Group recognises that any benefits a land-locked country may achieve with regard to TF may be affected by the TF measures of its neighbouring countries. There needs to be recognition of the shared responsibility with regard to levels of application of TF measures of all countries that are geographically contiguous.

Role of the private sector

• We believe that the private sectors in developing countries have an important influencing role to play in promoting the implementation of border reform through trade facilitation.
• We encourage the creation or development of public/private partnership arrangements in developing countries in order to build an environment of trust between border agencies and businesses leading to better enforcement and compliance, and higher revenue collection. We note that many countries are now considering the introduction of authorised trader schemes, especially within a regional context.
• We note that involvement of the private sector is particularly low in LDCs. We encourage LDC governments to act as catalysts for closer engagement with businesses and traders in their countries, and to recognise that they are part of the delivery of trade facilitation on the ground.

August 2007

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