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Some bureaucrats perceive this as an effort promoted by the affluent member states in the World Trade Organisation (WTO) for their advantage. While some others think of TF, as paperless trade or the automation of trade procedures.
In her inaugural address at the Asia-Pacific Trade Facilitation Forum (APTFF-2014), held in Bangkok, from 24 to 27 September, organised by the UN-ESCAP, the ADB and Thailand, the Permanent Secretary of the Ministry of Commerce, Royal Thai Government stated: “Internationally, trade facilitation, which is also known as ‘soft infrastructure’, is a significant component to ensure that international trade procedures, including the movement of goods across borders, are being exercised with maximum efficiency, and that it is a crucial factor to improve trade environment, enhance business competitiveness and eliminate some excessive regulation in international trade, as well as, to deepen in regional economic cooperation.”
More than 250 delegates from over 40 countries in the Region attended the APTFF-2014, but Sri Lanka was not represented.
Questions
Many questions come to mind that need answers. Who is averse to trade facilitation? Is it policy makers or officials? Is the lack of TF a hurdle to attract Foreign Direct Investment (FDI)? Where should be our focus to develop exports? Is it free trade agreements, trade facilitation or fiscal incentives? Can Sri Lanka develop trade and industries devoid of trade facilitation? Is TF only about automation of current procedures, or paperless trade or introduction of a single window?
Seldom do we hear any references to TF and to World Bank indexes on ease of doing business and the desire to improve our position on such scales. ‘Trade Facilitation’ also appears in our media in connection with seminars led by consultants of international agencies such as the WTO, the World Customs Organisation (WCO), and the International Chamber of Commerce (ICC), organised by our trade chambers.
All references results in ‘NATO’ – No Action Talk Only. Is this ‘NATO’ policy in TF the cause for insufficient Foreign Direct Investment-FDI in trade and industry? Do we need only to talk or do we need a mechanism, a comprehensive programme to implement trade facilitation measures, enabling Sri Lanka to get closer to the level of economic development achieved by countries such as Thailand and Malaysia and then aspire to reach the level of economic development of South Korea and South Africa?
Tea export procedure
As mentioned earlier, Sri Lanka was not represented at the APTFF 2014, but the writer attended in his capacity as a consultant in TF. He made a presentation based on the findings of his recent report on the ‘Impact of the Integrated Paperless System on the Export Procedure of Tea in Sri Lanka’ (May 2014).
One of his observations was that despite making the Sri Lanka Tea Board (SLTB) and the Customs approvals paperless, the time taken at the SLTB to process applications to export tea, has not changed. The tea trade claims if a buyer requests an increase in the quantity to be shipped, they could not quickly respond positively, as they had to go through the entire approval procedure that could take 24 to 48 hours, whereas a trader in Singapore or Dubai could grab that order if they had the stocks in hand.
The SLTB therefore needs to re-consider whether checking blend sheets of all shipments and of all tea exporters is the only way to ensure the high standard of tea we export. An alternative would be to consider exempting reputed exporters with good track records who could be recognised as ‘Authorised Economic Operators (AEO)’ from having to submit blend sheets, or for them be permitted to submit blend sheets periodically, for instance once in three months.
Exporters of tea from Sri Lanka have to make payments to the SLTB, the Customs and the Ports Authority at three different times. These not only add to the cost, but is also time consuming and also causes delays. Countries desirous of export promotion would not collect taxes or other levies at the point of export, except on certain products they wish to discourage exporting.
The CESS (a local charge of the SLTB) for tea bags and tea in packets is Rs. 4.0035 (cents 0035-‘believe it or not’) per kg on the net weight of tea. This example demonstrates the urgent need for a complete revamping of our external trade procedures. Simply applying information and communication technologies (ICT) over the existing cumbersome procedures, or creating a ‘single window’ is not the best remedy. Is bringing officials of the Wildlife Conservation, the Forest Department, and the Agriculture Department under one roof to examine regular shipments of floriculture exports of reputed exporters the only way to implement necessary controls? Couldn’t the Agriculture Department/the Export Development Board (EDB) together with the Customs recognise AEO in this field and exempt them from last minute ineffective examinations? These are just a few examples of TF measures that can be implemented without any extra cost.
Swift response needed
Partners in global supply chains need to respond swiftly to meet buyers’ requirements if they are to continue in business. Therefore if policymakers are serious about making Sri Lanka a trade and logistics hub, a clear vision and a commitment to implement a successful TF program is an absolute requirement.
The Government may seek the guidance of a small ‘think tank’ comprising members with an in-depth knowledge of international best practices of trade facilitation. TF encompasses all operations related to ‘Buy, Ship, Pay’ and the inevitable intervention of regulatory authorities both in exporting and importing countries. Therefore TF has to be a national as well as an international effort involving both the private and the public sectors. The global community has taken many initiatives to provide guidance on best practices for TF. It is evident that several ASEAN countries such as Thailand, Malaysia and Vietnam are prospering economically among others, through implementing TF measures.
Independent Trade Facilitation Unit
During 1980-1999 Sri Lanka implemented a TF program very successful through SRILPRO (Sri Lanka Committee on Simplification of External Trade Procedures), an Advisory Committee appointed by the then Minister of Trade and Shipping, and its Secretariat was at the Sri Lanka Export Development Board (EDB). SRILPRO however ran into problems since 1987s due to private agendas of ICT experts. Today there is no identifiable focal point for TF in Sri Lanka.
The Department of Commerce (DOC) claims that all subjects related to trade comes under its preview; including TF. Sri Lanka Customs recently appointed a ‘National Trade Facilitation Committee’ to accomplish the provisions on TF of the WTO. There is also an advisory committee on TF appointed by the Ministry of Trade and Industry of which the Secretariat is at the EDB. While such initiatives are to be appreciated the absence of an interest to implement TF methodically and overlapping functions have diluted TF activities in Sri Lanka, resulting in inadequate FDI in trade and industry.
SRILPRO received the support of the policy makers, the private and the public sectors which helped immensely to implement TF measures. In Singapore and UAE, the State leaders in the respective countries took a personal interest in TF. The writer endorses fully the proposal to ‘have one independent Trade Facilitation Unit’ as suggested to the Treasury Secretary (Business leaders… ‘Quick Take’ under Shipping/Logistics page 10 of the Daily FT, 15 October 2014).
Since TF cuts across several ministries and institutions, such a unit may best be established under the patronage and guidance of the Secretary to the President if not the President himself.
[The writer served as Chief Technical Advisor (CTA) of Trade and Transport Facilitation and eBusiness projects in several countries on UNCTAD/WB/UNOPS projects and as Consultant in TF since 1982 for ITC, CFTC. He was Director Services, EDB and Secretary SRILPRO from 1980 until he retired in 1999 to take up foreign assignments fulltime. He is a member of the UNNExT-ESCAP Expert Group on TF, and a member of Ex-EDD Sansadaya. He could be contacted at 0777 068 658 and [email protected].]
