Place of modern port systems in trade facilitation
BY OKEY OGOKE
Trade facilitation is defined as the simplification and harmonisation of international trade procedures, while trade procedures refer to the activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods across borders. The International Chamber of Commerce ICC defines trade facilitation as the simplification of Customs procedures by reducing the cost of international trade transactions and ensuring that the relevant activities take place in an efficient, transparent and predictable manner based on internationally acceptable norms and standard best practices. Trade facilitation should not be perceived as the Customs responsibility alone but a broader issue, which includes many aspects of which capacity is lacking in many developing countries including Nigeria. This lack of capacity inhibits effective participation in international trade.
Trade facilitation is also being promoted by developed countries. The World Trade Organisation WTO, which membership draws from both developed and developing countries is also at the fore of enhancing efficient and free flow of trade and commerce across borders. This is primarily because the international business community is increasingly expecting greater transparency efficiency and procedural uniformity of cross-border transportation of goods as well as the need for an efficient redress mechanism,
At the home front, for the Nigeria Customs Service to stimulate increased revenue, it must be able to encourage private sector participation. The service should seek for assistance in terms of helping it modernise and simplify its operations to be able to make the path attractive. Currently, the service has a lot of outdated and cumbersome procedures that are not transparent and complex and therefore encourage corruption with the attendant harassment of importers.
Information Technology IT support for basic Customs functions should be further deepened.
Also, interconnectivity with other agencies such as the Nigerian Ports Authority NPA, shipping companies and terminal operators should be reinforced to compel all agencies to conform to rules. This would to a large extent to curtail port congestion and demurrage accumulation. Information technology in place should be reinforced to reflect the technological sophistication required to achieve internationally acceptable norms and standards best practices.
The general belief today is that trade should be a win-win game as all countries tend to benefit from the gains of trade that makes the world a safer place by reducing poverty and creating shared interest in stable and international relations.
Trade also creates better economy because it encourages specialisation and job creation; especially in the export industries tend to be those with the best prospects.
Imports are also known to play a vital role in creating job opportunities and improving economic prospects as they provide incentives to innovate, improve product quality and to be more efficient. Import of capital goods and raw materials tend to make industries more competitive, leading to a positive impact on the price level, consumer choice and wages.
The WTO came into being as the successor to the General Agreement on Trade and Tariffs GATT which was established in 1947 after the Second World War.
The purpose of GATT was to respond to the devastation caused by the war, as well as an important tool for economic recovery, growth and development. Also, another reason for the establishment of the GATT was the need for a multilateral discipline in the field of international trade following the imports imposition of trade protection measures by trading nation as a result of great depression of the late 1920s and early 1930s.
WTO AGREEMENTS ON TRADE FACILITATION
These agreements are to ensure transparency and predictability, which are necessary for the promotion of international trade.
- Agreement on Customs Evaluation: Rules for determining the value of imported goods for the purpose of leveling ad valorem Custom duty intended to ensure a fair and natural system for the valuation of import or Customs purposes.
- Agreements of Rules of origin: Where a product is made to be important to the smooth flow of international trade, they are an essential part of trade rules because a number of policies discriminate between exporting countries.
- The agreement on technical barriers to trade and on the application of sanitary and phyto-sanitary measures.
These agreements seek to ensure that rules and procedures adopted at the national level in the areas covered by the agreements do not constitute barriers to trade. This is to ensure that as much as technical regulation and in the industrial standard are important and vary from one country to another set as an excuse for protectionism does not become obstacle to trade, therefore the exclusion of technical barriers to trade is to ensure that regulations, testing and certification procedures do not create unnecessary obstacles. The TBT recognises countries’ rights to adopt a system they consider appropriate for human, animal or plant life or health for the protection of the environment or to meet for the customer entrance. As much as these standards are localized, there is room for recognition of international standard where appropriate and members are encouraged to recognise each other testing procedures.
ESSENTIAL INGREDIENTS OF TRADE FACILITATION
1. Public-private sector partnership PPP
The crucial role of agencies such as the Nigeria Customs Service, Standards Organisation of Nigeria, National Agency for Food, Drug Administration and Control, National Drug Law Enforcement Agency, the Central Bank of Nigeria CBN and Federal Inland Revenue Service FIRS etc in national economy can be appreciated when it is recognised that international trade is the key to economic growth and development..
Proper collection of revenues and the protection of domestic economy through effective administration of trade policies are critical responsibility of above-mentioned agencies.
Also business operators such as importers, exporters, concession companies, bonded warehouse operators and Inland Dry Ports IDPs are essential parts of the larger chains in international trade.
Understanding that each of these of the stakeholders as enumerated above play a critical role in trade facilitation, therefore capacity building is key for effective and efficient inter-agency synergy.
2. Provision of favorable business friendly environment that will support the growth of businesses and the economy including attitudinal change for private and public sector operators that issue licenses to bonded warehouses and IDPs with the aim of checking congestion.
3. With the ASYCUDA ++ module in place, Customs has endeavoured to reduce trade documentation procedures, but the other agencies should be connected to make for one- step clearing process.
4. Modern equipment such as scanning machines should function effectively and Customs will do away with physical examination of cargo and by so doing, reduce cargo dwell time and increase vessel turnaround time, which ultimately leads to higher revenue.
5. By setting minimum standards for licensed freight forwarders and shipping agents at the ports and border stations, there will be prompt handling of issues as they arise and prompt articulation of ways and manners to deal with them.
6: Privatisation of ports has to a large extent led to greater efficiency, more efficient handling equipment and the introduction of IT in clearing operations. However there has to be a line between profitability and national objectives.
7. Capacity building for officers to bring them up to date with modern realities / trade practices.
8. In other to conform and comply with the provision of Article 5, 7 and 10 of the WTO, GATT agreement which is designed to forge greater collaboration with the trading community, streamlined clearance procedure increased revenue compliance and create a more transparent and predictable trading environment. The service migrated to ASYCUDA ++.
The service objective of the migration project was to improve the revenue through capacity strengthening and boost effectiveness and border security.
Other objectives include the following:
- To secure the collection of Customs revenue and improve the efficiency and effectiveness of customs operations.
- To strengthen the government’s capacity in the formulation and implementation of effective economic and fiscal policies through provision of accurate and timely data.
- To strengthen the institutional capacity of the Custom service
- To enhance the service capability of disseminating trade-related information to relevant users
- To provide standardised data extraction from ASYCUDA ++
Overall, these innovations have enhanced trade facilitation but there is still need for improvement.
*Okey Ogoke, our guest writer and a supply chain expert, writes from Lagos