Connect to trade

Connect to trade

Pandemic has exposed numerous roadblocks to global trade and could even hasten the end of inefficient, paper-based customs procedures.

Every country trades in goods and services. Not only does trade fuel economic growth and provide jobs, it also raises the living standards of citizens.

However, the prolonged Covid-19 pandemic has had a ripple effect throughout global trade and related activities, forcing governments and international organisations to put their heads together to build back a better future.

After the deep slump brought on by the pandemic in the second quarter, global merchandise trade rose 11.6% in the third quarter of 2020 thanks to eased lockdowns and production resumption in electronics, textiles and automotive parts, according to World Trade Organization (WTO) data.

Despite the rebound, the volume of trade between July and September 2020 was still 5.6% lower than in the same period of 2019.

The WTO now estimates that overall trade volume fell 9% in 2020. It predicts 7.2% growth in 2021 but volume would still be well below the pre-crisis level.

Covid-related transport and travel restrictions, business closures and reduced workforce capacity have exposed many weaknesses in trade and transport connectivity, while also underscoring its importance to the smooth functioning of the world economy.

Among the weaknesses is the region's high dependence on paper-based documentation, said Bambang Susantono, vice-president for knowledge management and sustainable development at the Asian Development Bank (ADB).

"Asia Pacific has done well in facilitating general trade measures over the past decades; however, it has lagged on digital trade facilitation," Dr Susantono told an online panel on trade and transport connectivity held by the United Nations Economic and Social Commission for Asia and the Pacific (Escap) and the ADB.

Not only did the pandemic exacerbate the difficulty small businesses face when seeking trade finance, it also had a devastating impact across the transport sector.

"An estimated 17% of households in our region depend on income from the transport industry," Dr Susantono said, leading to serious economic hardship for the millions who work in the sector.

Flight schedule disruptions also affect sea-locked countries, particularly small island nations in the Pacific that rely heavily on aviation for supplies and tourism.

"It's not an exaggeration to say that trade and transport connectivity has become a key aspect of a country's response to the pandemic," said Azhar Jaimurzina Ducrest, chief of the transport connectivity and logistics section in the Transport Division at Escap.

As they seek to create a more sustainable future, countries in the region are adopting trade and transport facilitation practices that can be categorised in five areas, she said.

The first area is ensuring and enhancing transparency and institutional coordination through portals that provide information on trade and transport rules and recommendations.

The countries have established a governing body for a Covid-responsive coordinating mechanism involving the relevant government agencies.

As the pandemic progressed, over 90% of surveyed countries said they had sped up efforts to simplify customs procedures and expedite clearance. "Great headway, unexpected and always wished for progress," Ms Ducrest noted.

Commonly applied measures include reducing tariffs, value-added tax (VAT) and customs fees, expediting clearance of essential goods, and simplifying import, export and transit document requirements.

Third, more progress has been seen in digital trade and transport facilitation, including submission of electronic documents and e-registration of travel documents.

And while the pandemic has increased transport and travel costs, many economies are doing their best to ensure movement of international freight. Members of the Trans-Asian Railway Network and Asia Highway Network, for example, have kept a significant portion of land border checkpoints open, developed Covid prevention guidelines for border-crossing, and designated priority lanes for essential goods.

Finally, business facilitation is being stressed through stimulus measures such as reducing income taxes, offering financial relief and reducing fees.

"Supporting people on the ground, giving them recovery packages, and maintaining their access to finance will certainly be at the heart of our efforts in building back better," said Ms Ducrest.

The pandemic had the "unexpected" and welcome benefit of forcing countries to simplify customs procedures and expedite clearance, says Azhar Jaimurzina Ducrest of the Transport Division at Escap. Photo: Sebastian Bolesch


All countries agree on the importance of trade and transport connectivity, though their approaches differ according to their economic, political as well as geographical status.

"We all are aware that the importance of seamless and resilient trade and transport connectivity cannot be overemphasised," said Tipu Munshi, the commerce minister of Bangladesh.

The South Asian nation uses the Automated System of Customs Data (Asycuda), a computerised customs management system developed by the UN Conference on Trade and Development (Unctad), to make customs formalities and procedures simpler, more transparent and efficient.

The country has also introduced an e-payment system for taxes and charges at Chattogram Port, the country's biggest port, Mr Munshi said. "Those measures have helped Bangladesh to ensure smooth and the speedy clearance of essential goods."

Meanwhile, a single window system allows traders to lodge information with a single body to fulfil all import, export regulatory requirements.

In landlocked Uzbekistan, "the transport logistics sector is a strategic part of development from a political, economic and geographical point of view", said Deputy Transport Minister Jasurbek Choriyev.

And while the country has had to impose some Covid restrictions, it has made sure they do not impede the path of international cargo. The volume of cargo transport in Uzbekistan actually increased by an estimated 6% last year.

While rail transport was able to carry on without interruption, road transport was delayed because of varying restrictions in different states bordering Uzbekistan, such as testing required at the border and use of protective suits.

While providing access to Covid tests for those crossing its land borders, the country has been working to sort out problems related to different weight and dimensional standards and limited operating times of some checkpoints, Mr Choriyev acknowledged.

"Asia Pacific has done well in facilitating general trade measures ... [but] has lagged on digital trade facilitation," says Bambang Susantono, an Asian Development Bank vice-president. SUPPLIED


With many small Pacific island countries as neighbours, Australia has played a key role in trade in Oceania through its regional organisations including the Pacific Humanitarian Pathway on Covid, Oceania Customs Organisation (OCO) and Pacific Agreement on Closer Economic Relations (Pacer Plus), a free trade agreement.

"I think regional cooperation can play a valuable role, especially in helping to deal with the prolonged uncertainty and unpredictability," said Sabrina Varma, a trade and development adviser with the Australian Department of Foreign Affairs and Trade.

Smooth and seamless trade must also be balanced with the reality of increased control measures such as temporary disruptions and social distancing, she noted.

Apart from the tourism sector, maritime transport is crucial for small island nations.

However, they have had to cope with logistics issues including port closures, physical examination and quarantine restrictions, to additional documentation requirements, all of which have led to delayed access to goods, she pointed out.

The Pacific humanitarian pathway ensures the movement of essential goods and services, particularly technical and medical supplies, with Australia as a transport hub.

A system developed by the OCO encourages members to use automation, electronic data processing and e-payment as well as risk assessment to release all priority and low-risk shipments on arrival.

Placer Plus, meanwhile, supports trade digitisation through a regional trade portal and nine national portals that are being used to share information on procedures related to Covid.

"The trade portals have huge potential to serve as an important regional mechanism for enhanced cooperation, transparency and to facilitate trade going forward including from an increasing trade perspective," said Ms Varma.

Special guidelines have been developed to help customs authorities ensure swift clearance of essential medical supplies, says Kunio Mikuriya, secretary-general of the World Customs Organization. SUPPLIED


Among the leading international organisations tackling the repercussions of Covid on trade and transport connectivity is the World Customs Organization (WCO).

In close consultation of the World Health Organization (WHO), the WCO quickly developed two timely new sets of guidelines: a harmonised classification list for Covid medical supplies and a list of priority medicines.

"[The guidance] assisted customs and economic operators in classifying related medicines and medical supplies to ensure these essential goods are cleared through borders as swiftly as possible," said WCO secretary-general Kunio Mikuriya.

Every nation has different essential goods requirements, besides medicine and medical supplies. For example, Gulf countries consider chemicals that can transform seawater into drinkable water an essential good. Thus, the WCO has developed "guidance on how to establish and utilise an essential goods list during the disaster to address the lack of an internationally recognised depiction of essential goods", he explained.

Smooth movement of goods also requires cooperation with and by the private sector.

"It's a lot about transparency and data sharing," said Norbert Kouwenhoven, world wide authorities leader with TradeLens, an open supply chain platform based on blockchain technology developed by IBM.

Every stakeholder needs to be connected, with a device as basic as a mobile phone sufficient in many cases. A global data-sharing platform will further enhance regional transparency.

"If we connect, we need to speak the same language: digital," Mr Kouwenhoven said, adding that all parties need a clear and shared understanding of data sets and standardised data models.

A little nudge and rewards from governments, such as providing fast lanes to simplify customs procedures, can encourage companies to adopt and utilise digital tools. The elimination of hard-copy forms, documents and stamps at borders could be an engine to drive greater global digitisation, he added.

Norbert Kouwenhoven, world wide authorities leader with TradeLens Photo: Marco Urban


As countries starts rolling out Covid vaccines, the WCO has published guidance to ensure their smooth distribution on both international and domestic levels.

Pre-arrival clearance based on the provided data must be applied even before vaccines reach borders, said Mr Mikuriya.

Since vaccines require specific storage conditions, with temperatures from -20 to -70 Celsius, vaccine containers and related devices such as data loggers, must be treated separately so they can be reused. Coordinating with other agencies on the ground as well as ensuring the preparedness of customs officers and related agencies is also important.

"One point we shouldn't forget is that organised crime will try to exploit the situation, to distribute fake medicines to get illegal profit," he explained. "Customs agencies will have to enhance the fight against these crimes".

To address the crisis and sustain connectivity in the future, further actions are focused on four main pillars: coordination, digitisation, harmonisation and partnership.

All of these measures entail mobilising existing cooperation mechanisms as well as bilateral and regional agreements, said Ronald Butiong, chief of the regional cooperation and integration group at the ADB.

Coordination measures include facilitating border formalities through green lanes, simplifying protocols for entry and exit screening, and prioritising the clearance to transport of essential supplies.

Measures to enhance digitisation involve robust technical infrastructure and end-to-end digital processes, accelerating the use of ICT and paperless trade through national and regional single window programmes and electronic document exchange.

Harmonised multilateral measures, meanwhile, can further strengthen crisis response capacity and enable resilient connectivity.

"Business and trade chambers, transport associations, forwarders' associations and customs brokers could play significant roles in enhancing information flows, developing and implementing business continuity plans, promoting transparency and ensuring supply chain connectivity," said Mr Butiong.

"The importance of seamless and resilient trade and transport connectivity cannot be overemphasised," says Tipu Munshi, commerce minister of Bangladesh. SUPPLIED

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