Interview: APEC Leading Way on Trade Facilitation for All

The challenge for the leadership in an economy trying to implement the Trade Facilitation Agreement is you have to get support not only within the bureaucracy but even outside. You have to get all the actors in the supply chain to buy into the change.

APEC member economies were instrumental in clinching the Trade Facilitation Agreement under the World Trade Organization, a deal that could add up to USD 1 trillion to the global economy annually through the cutting of red tape for goods crossing borders and reduction of costs for exporters. Their attention is now on the important task of implementation to ensure that the benefits actually materialize.

In an interview addressing new directives from APEC Trade Ministers, Agaton Uvero, Chair of the APEC Sub-Committee on Customs Procedures and Deputy Commissioner of the Philippine Bureau of Customs, explained the mechanics of the agreement, the steps APEC’s diverse member economies are taking to build capacity for adoption and its potential to create value for the region’s businesses, including small and medium enterprises.

See video: APEC Championing WTO Trade Facilitation Agreement

APEC: Please talk about the role of customs authorities in promoting regional integration and trade among APEC member economies. 

Uvero: When you talk about APEC in general, you talk about regional integration, you talk about movement of goods and services. And when you talk about movement of goods and services, or especially goods, you talk about customs.

The role of the APEC Sub-Committee on Customs Procedures is to work on programs and activities that help promote the movement of goods across borders—ensuring that they move seamlessly; they move efficiently; and they move with less cost for the trading community.

So, for the SCCP, or the sub-committee, our work is, among other things, making sure that we are able to harmonize and simplify the rules and regulations that govern the movement of goods across borders.

APEC: How does the global Trade Facilitation Agreement fit into APEC’s agenda?

Uvero: One of the big things that happened in the WTO is the approval of the Trade Facilitation Agreement. And part of the initiative of APEC for this year is to smoothen the implementation of the Trade Facilitation Agreement among member economies. A big priority of the committee is to help out the economies in one, ratifying the agreement; second is helping them implement it. We all know that not all economies are capable of fully implementing the agreement. It may take time.

Why exactly are we promoting the agreement? For one, when we talk of movement of goods, we want them to move seamlessly at less cost for the business community. A big issue for the trading community is the complicated rules across borders. The requirements for a lot of documents. And the role of the agreement is mainly to provide simplified, harmonized rules for the economies within APEC. And when you have simplified, harmonized rules, and when you put that within an electronic platform, goods will come in freely, seamlessly and you’ll have trading communities connect with each other.

APEC: What the prognosis for implementation of the Trade Facilitation Agreement within APEC?

Uvero: The first step is the ratification. As of today, we understand from the WTO that at least three already have ratified—Hong Kong, China; Singapore; and the United States. At least 52 have already submitted their ‘category A’ ratifications. So, we need to push strongly within APEC, within the sub-committee, the submission of all these ‘category A’ commitments—the preparation for the ratification and the submission of the notice of ratification to the WTO. That is a big initiative and a big agenda for the community this year.

APEC: There is no specific implementation deadline for the agreement. It’s more open-ended now. Does that impact the pace of things for APEC and the WTO or is it business as usual?

Uvero: While there’s no date for the submission of the ratification there is a big push among many of the economies to really ratify it. When more economies ratify it, when more economies, even without ratification, document the commitments within the agreement, the benefits within the economy and with their trading partners will be very big and that will push the others economies that have not ratified, that have not implemented the agreement to implement the agreement.

APEC: To what extent are economies in APEC prepared to move ahead with trade facilitation?

Uvero: The good thing with the sub-committee is that while the commitments aren’t binding, the environment is that the members are challenged when they see another economy improving, reforming or are able to implement the programs. The other economies are challenged. For those that have done the reforms or have done the initiatives, they push the other economies to do it also.

It’s really more of a self-help group and the environment within APEC and the sub-committee is that there’s really an effort to mutually share, mutually help each other within the committee.

APEC: Tell us how APEC programs contribute to the process of Trade Facilitation Agreement implementation among member economies?

Uvero: In terms of helping out the ratification of the agreement, for one, you need to have all this categorization of all the commitments. We know for a fact that at least 52 economies have already submitted their ‘category A’ commitments. Not all the economies within APEC are technically capable of reviewing the agreement.

The assistance that APEC can provide, with the WCO, the World Customs Organization, is help them review the agreement; help them check on the capabilities to comply with all the commitments; help them push for activities to make them prepared to ratify and implement the agreement.

APEC: Within APEC, trade transaction costs for businesses were reduced by about USD60 billion between 2007 and 2010 alone, supported by measures under an APEC Trade Facilitation Action Plan. Such work has carried on in the region since that time, of course.

At this stage, how much more value is there to get out of simplifying and harmonizing customs procedures, from the standpoint of businesses in APEC economies?

Uvero: When you talk of customs rules and procedures, for the more developed economies, they are able to clear goods very quickly. They do that using a digital platform. But the majority of economies within the WTO, within APEC, actually have complicated procedures, still use manual processes and the impact, the result, is they have longer time to process goods and when you talk of longer time to process goods within borders, you pay, you have additional storage costs.

With complicated processes, you have a lot of documentation required, you need more people to work the clearance of the goods and the fact that the majority are still within that environment and with the push towards more trade facilitation initiatives and with the push towards ratification of the Trade Facilitation Agreement, economies are forced to simplify their procedures, are forced to go digital, are forced to clear goods quickly.

The impact is not going to be minimal. It’s going to be very substantial—whether you talk of a small economy or a big economy. Because trading always involves two or three economies and the impact will always be across all the economies involved in the supply chain.   

APEC: Is trade facilitation something that small businesses can take advantage of too?

Uvero: There is a perception that all this work that we are doing simply favors the big companies. So, the focus for this year is to help the small and medium businesses avail of all the benefits.

APEC: That includes the agreement?

Uvero: Yes. The Trade Facilitation Agreement will benefit everyone. With the additional programs that we are pushing, it should also benefit the small and medium enterprises.

APEC: Please describe APEC’s capacity building priorities in support of Trade Facilitation Agreement implementation and how they apply to small firms in real world terms?

Uvero: One of the priorities would be to involve and ensure that the small and medium enterprises are able to avail of the benefits of the Authorized Economic Operator program. What is the AEO program? The AEO program is a program that promotes security in the supply chain, but also the trade facilitation of goods.

We all know that when we talk of security in the supply chain, that may entail costs, and small and medium business may not be able to afford additional cost. The role of the committee is to provide for programs, activities that may be able to help these small businesses to involve themselves, to be able to avail of the benefits of the Authorized Economic Operator program.

APEC: How does technology figure into the equation?

Uvero: Single Window program is one of the main cogs of trade facilitation. When you are doing everything electronically, decisions are almost real time. When you talk of import and export, there are a lot of actions in that transaction. It involves shipping lines, forwarders, customs brokers, importers, exporters, customs authorities in the country of origin, customs authorities in the country of destination. All these departments and agencies that regulate importation. You have the health authorities, sanitation authorities, security authorities—all these regulating agencies that may delay the movement of goods across borders.

When you have all of that electronically. When decisions are made electronically, the impact on the releasing time, on the processing of goods is substantially reduced. And it’s not only the time being reduced, it’s the cost being reduced—the cost of having all those documents and printing it out; the amount of papers involved—if it’s done digitally, it helps the environment. It makes decision-making easy. It makes the process transparent. It will reduce cost for the transacting community. All of that, if in place, can impact very well. It can result in millions and billions of dollars saved.

APEC: What are the key challenges that economies face in adopting trade facilitation measures?

Uvero: As member economies move towards the digital platform, there is a disparity between the level of development among the economies. The less developed are less evolved in the digital platform. The more developed economies are now almost fully digital. So, the challenge for the sub-committee is how do you get the less developed economies to go towards a digital platform?

When you say doing transactions electronically, doing export-import electronically, it’s not enough that you have the money to buy the software, the money to buy the hardware. You need training for the people; you need change management for customs; you need them to be on board the direction of customs; you need the trading community to start using the new electronic system. It doesn’t come overnight. It takes time. It needs effort, resources and a lot of pushing within and among the stakeholders.

APEC: What is being done to make up for the resources gap between developed and developing economies when it comes to implementation?

Uvero: The good thing about APEC and the Sub-Committee on Customs Procedures is that it is not only a forum where the economies have dialogue—it’s a forum where the economies are able to talk to each other; it’s also a forum where, on the sidelines, the developed economies can assist. There have been cases where the bigger economies are, on their own, on the sidelines, willing and have provided assistance to the developing economies.

The forum and the committee provide a venue where the economies are able to benchmark their practices. Are we better off now than before? Are we better off now when we compare each other to the other economies? It puts a challenge to the economies to do better every year. The regular meetings allows exchanges in ideas, exchanges in experiences and the support of APEC in terms of funding the activities in the capacity building of the less developed economies is there.

It’s not enough that we have funds. You have to know where it should be given and how it should be done. The sub-committee provides the standards on how it should be done.

APEC: Is APEC’s work on trade facilitation helpful for economies that are outside of APEC?

Uvero: Many of the programs, in fact, almost all of the programs being pushed by APEC and the sub-committee, in particular, are actually global best practices; global initiatives by the World Trade Organization, by the World Customs Organization. While we under APEC are biased towards helping the member economies, the impact is not only within APEC. It impacts all the other trading partners of the member economies.

APEC: There seems to be a view from the upper echelons that trade facilitation is the way to go, that the benefits are there. Is it enough for this to come from the top down—for the commissioner or the leadership to simply give the order. At the same time, you have the people at the border, at the field offices that have to follow through. How does this dynamic work in practice?

Uvero: There is always that disconnect between what is on top in terms of moving for reforms and what is on the ground. The challenge for leadership within the economy is how do you get the structure, the bureaucracy to buy into the reforms, to buy into the changes? How do you get the stakeholders to buy into, to take ownership of the developments? That is a very big challenge for each economy and it doesn’t happen overnight. It will take time. It will take the support of all the actors within the trading community.

The challenge for the leadership in an economy trying to implement the Trade Facilitation Agreement is you have to get support not only within the bureaucracy but even outside. You have to get all the actors in the supply chain to buy into the change.