Trade experts shout out for 'paperless trade'

Trade experts called for 'paperless trade' at the fourth Asia Pacific Trade Facilitation Forum held in Colombo recently.

Drawing from his experience, Don Lee, representing KTNET (Korean Trade Network) at the first technical session which was on 'Paperless Trade and Single Window in Sri Lanka - Single Window Readiness' noted that the economic impact of paperless trade in Korea in 2006 was US$2.26 billion (as per Hyundai Research Institute, 2006) while in 2010 it was $5.42 billion. He added that the profit of paperless trade in 2006 was some $2.34 billion, while four years later it was $5.57 billion.

He said that paperless trade systems eliminate hassles in the complex foreign trade process, which encompasses financing, certification and licensing, logistics and customs clearance related to off-line paper documents, and makes the entire procedure simpler and more efficient.

The cost of paperless trade in 2006 was $0.08 billion while in 2010 it had risen to $0.15 billion, Mr. Lee said, stressing that this was well worth it when compared to the profitability it brought in. "Paperless trade reduces 57,000 tonnes of carbon dioxide which equals to saving 1.45 million trees per year," he noted.

He said that with the participation of diverse stakeholders, trade business is evolving further to trade networking from digitized paper documents, including letters of credit (L/C), i.e. paperless trade, and facilitation of trade procedures, including customs clearance.

Dr. Sarath Amunugama, Senior Minister, International Monetary Cooperation who was the Chief Guest at the forum called for a one-stop shop for both import and export facilitation.

"There is a growing realisation that the developed economies are unlikely to return to a 'growth as usual' or 'trade as usual' scenario in the near term," said Ravi Ratnayake, Director Trade and Investment Division United Nations Economic and Social Commission for Asia and the Pacific in his opening address at the inauguration. There is also a growing realisation that the Asia-Pacific region should search for new drivers of economic growth in the earnest, he said adding, "It is our belief that deeper regional connectivity can be a strong driver of growth and poverty reduction."

He pointed out that the somewhat shocking reality is that Asia-Pacific is still better connected to Europe and America than with itself. "Our latest research shows that, on average, trade costs of the region with NAFTA and the EU are 20 per cent less than those with itself.

With cumbersome border procedures, sometimes requiring literally hundreds of approval documents, for many countries in the region, it is easier and cheaper to trade with far away developed countries than it is to do business with the country next door," he said.

Inadequate transport and logistics infrastructure is a major issue, and one that will require massive amount of investments over the coming decades in many of our developing countries, he observed, adding that what all countries can and should readily focus on is ensuring that whatever hard infrastructure" issues are addressed. "I am talking here about the many forms of institutional barriers, regulatory procedures, and bureaucratic red tape. They affect international trade and limit the competitiveness of many of our developing countries," he added. In fact, it is estimated that the hidden cost of red tape amount to as much as 15 per cent of the value of goods being exported - over $350 billion a year in the developing Asia-Pacific region.

"On average, in the ESCAP region, it still takes 30 days to move goods from factory to the ship deck at the port - compare that to just 10 days for OECD countries. Many countries in the region have made significant progress in reducing trade transaction costs and time in absolute terms but what really matters is how much progress a country makes relative to other," Mr. Ratnayake said on relative terms, many countries in Asia have not made much progress.

In South Asia intraregional trade costs to be almost 50 per cent higher than those among neighbouring ASEAN countries. "In that context, it is urgent to shift attention from negotiation on tariffs, which are often already low, to negotiating on simplifying and harmonising intraregional trade and transit procedures," Mr. Ratnayake said.

Facilitating trade means looking beyond your borders to develop systems that can facilitate information exchange between all the parties involved in the international supply chain, he said. He said that many countries in Asia and the Pacific have developed automated customs or port systems, and many are now moving towards implementation of full-fledged national single windows. "However, these systems can often handle electronic documents generated within the national territory only, as the electronic data and documents generated by them are often not recognised across borders. The full benefits from developing these e-trade systems are therefore not yet captured, and I hope we can address this issue going forward through enhanced regional cooperation."

Minister of Industry and Commerce Rishad Batheiudeen said that trade facilitation is an extremely important mechanism to all countries, particularly for developing countries that are dependent on international trade for their economic development.

"Increase in trading opportunities, potential for trade across markets, diversification of exports - while all of these are extremely important for the enhancement of global trade, these would be un-achievable if the procedures in place for movement of goods prove to be so burdensome as to amount to impediments to trade."

Sustainable economic development through trade can only be meaningfully achieved by the smooth movement of goods every stage of its progress, he said. "For Sri Lanka itself, trade facilitation is an extremely important issue, given its small size, high dependence on international trade, and its strategic geographical location."