Paperless trade measures can cut costs by 30pc: UN
Full implementation of the World Trade Organisation's digital trade facilitation agreement will slash trade costs by more than 30 percent for Bangladesh, according to a recent United Nations report.
Digital trade facilitation refers to the application of modern information and communications technologies to procedures involved in moving physical goods across borders.
The least-developed countries and the Pacific Island countries such as Bangladesh and Samoa have the most to gain from the WTO's Trade Facilitation Agreement (TFA), said the UN Economic and Social Commission for Asia and the Pacific (Escap).
Implementing digital trade facilitation to the level currently seen in China could increase the region's annual gross domestic product by more than 3.8 percent and its exports by 11.2 percent by 2030, said the Escap's Digital Trade Facilitation in Asia and the Pacific report.
Full implementation of the TFA together with other paperless trade measures is projected to reduce trade costs in Asia and the Pacific by 26 percent or yield $673 billion in savings every year.
“The costs associated with trade will reduce significantly if it is implemented properly,” said Ahsan H Mansur, executive director of the Policy Research Institute. The implementation will reduce time and trade costs as all transactions would be done digitally and the documentation would be available to both parties at once, doing away with the bureaucratic tangles.
For example, if any trade takes place between Bangladesh and India, both the countries would have its record on their servers as and when it happens, so the goods could be released without any delays.
The report shows that potential trade cost reductions for all ASEAN (Association of South East Asian Nations) countries exceed 15 percent, with Indonesia, Cambodia and Vietnam seeing the sharpest reductions.
Potential trade cost reductions in South Asia exceed 20 percent in all countries of that sub region, including India and Sri Lanka. At the same time, the report notes that achieving cross-border paperless trade is expected to be a long and complicated process, and it cannot be achieved without close collaboration between countries.
The report also found that more than half of the regional trade agreements (RTAs) that have taken effect globally since 2005 include paperless trade provisions.
A large majority of the agreements now feature one or more commitments aiming to exchange trade-related data and information electronically.
Recent RTAs such as Korea-Vietnam Free Trade Agreement (FTA), Australia-China FTA, among others, are found to go further than the WTO TFA in promoting digital trade facilitation and the application of modern ICTs to trade procedures.
“Trade facilitation is about making trade easier for all,” said UN Under-Secretary-General and Executive Secretary of ESCAP Shamshad Akhtar.
The countries need to work closer together to streamline and digitalise trade procedures and the UN's Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific can support the process.
Bangladesh, Cambodia, China, Armenia and the Islamic Republic of Iran formally signed the UN treaty in 2017.
“I am pleased to see so many countries coming together to support drafting of an implementation roadmap for this agreement,” she said at the unveiling of the report last week in Bangkok.
Earlier in October 2016, Bangladesh ratified the TFA that the WTO adopted in its ninth ministerial conference in the Indonesian resort city of Bali in December 2013. “We are not getting the paperless facilities yet as we are continuing our business in the old system,” said Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association.
Garment exporters account for more than 80 percent of Bangladesh's outbound shipments. He went on to urge the government to implement the TFA soon to reduce the trade cost.