Trade Facilitation And Modernising Trade Procedures

Trade facilitation refers to general regularity and harmonization of procedures associated with movements of goods from the sellers to the buyers and the way payment are made. The main idea behind this approach is to remove obstacles related to the movements of goods across borders. The facilitations aim to reduce cost, increase efficacy and optimize both the safety and security of goods and services. Trade facilitation focus on reduction, match rule, and procedures related to the exchange of information and documents shared between various partners in the supply chain. For efficiency of trade facilitation, both Customs and governmental agencies must work together to create and enforce rule and regulations relating to passengers, imports and exports together with passengers’ services. This paper aims to demonstrate how customs help in the improvement of trade facilitation Customs and other agencies in trade facilitation.

Trade is a process dealing with the regularity of observance. It can also be defined as an item that justifies an expectation observed with respect to transactions. This enhances business profits particularly in retail, and wholesale sales or other required special mechanical skills. Within trade, business facilitation, decision-making and organizational development denotes processes that involve planning and running of effective meetings. Thus, facilitation involves tasks required in running of meetings which are both impartial and productive. It then serves coming up with meetings that are focused on a common purpose, dispute resolutions, reasonable decisions and sharing of idea.

Customs in Trade Facilitation

Customs and other government agencies facilitate international trade and their functions such as managing clearance, providing security in cross- borders movement of goods and transportations among others (Kimura & Obashi, 2011). These organizations apply coordination of trans-border management principles to raise cooperation and coordinate their respective regulatory activities. Border formalities must satisfy customs and governmental activities within a country such as through empirical observation assistance and exchange of relevant information. One advantage of this is that it promotes free, smooth and unrestricted flow of international trade.

According to (DiCaprio, Santos-Paulino, & Sokolova, 2017), Regional Trading Arrangements’ (RTA) key objectives are to increase trade between the parties through eliminating tariffs and other non-tariff obstacles that face trade. It is then within RTAs customs come to play the role of trade facilitation. Non-tariff barriers (NTBs) is one of the huge customs procedures to trade. Customs cooperation plays a significant role in the successful implementation of RTAs. The preferred trade agreement includes a provision on customs in the areas of simplification and harmonization of trade procedures, documentation, and customs cooperation. Most of the RTAs contains a specific provision on trade facilitation.

The work of (Uzzaman & Yusuf, 2011) mentions opaque and corruptions as some of the main problems affecting trade facilitations. Others reported are fake invoices which under-invoice, delays that cause cost escalation in clearance, arbitrary decisions, manual operations, inadequate staff and lack of spacious warehouses. Among all these, corruptions as the major problem hiders effective application of rules and regulations. Since customs requires physical inspection regime, for example, every shipment should stop for physical examination, causing delays at the border crossing in the ports (Uzzaman & Yusuf, 2011). The inspection and delays then open an avenue for corruption and informal payments that prevent money from reaching the government.

Possible solutions exist for these problems. For instance, the Revised Kyoto Convention (RKC) stands as the international guideline for formulation of most efficient customs regulations. According to (World Customs Organization, 2008), the RKC insists upon several central principles. These principles being transparent and predictable in Customs actions; simplification and standardization declarations of goods and their supporting documents; maximum utilization of information technology; simplifying measures for authorized personnel; and risk management among others(World Customs Organization, 2008).

According to Revised Kyoto Convention (RKC) as reported in (Orbie, 2016), the government takes a higher responsibility in the implementation of Customs law, tax and duty collection, and enforcement of other regulations that relate to imports, exports, and movement of people across the border. The RKC goals are to simplify trade operations through harmonization and simplification of the country’s rules and procedures relating to Customs. RKC helps streamlining standards and endorsed practices in Customs regulations.

The procedures of KRC requires that any interested country to fill and accept the KRC Forms and the General Annex. Once these forms are filled, that country is bound by all the rules principles of KRC. The KRC principles are; transparency and predictable Customs actions, the partnership with trade, simplify procedures for authorized, maximize information technology, transparency of customs action, and many others. The joining country also need to submit its ratification instruments to Secretary General of the council (SGC), The WCO Secretary General is the guaranteed of the Convention.

The importance of international convection is to implement the WTO Trade facilitation agreements which includes the Harmonization Convention and the Revised Kyoto Convention (Peterson, 2017). The Customs administration facilitates legitimate border crossing, regional cooperation, and integration, facilitate legitimate trade and transport, reduce informal trade, increase government revenues through import duties and taxes, as well as reducing related costs (Jouanjean, Gachassin, & te Velde, 2016). Moreover, the standardized Business-to-Customs electronic messaging for transit simplify the processes of information exchange with business communities. It also simplifies data exchange within customs administration units .

Recommendation

The need for implementation and uses of technology cannot be overlooked. Customs and government agencies need to take advantage of the technology to eliminate cumbersome procedures, automate repetitive tasks, and reduce the layers required in decision making processes. For instance, use of technology in physical inspections can help in efficiency in checkups while still maintaining the right to privacy. Non-intrusive devices and mechanisms such as gamma- and X-rays can reduce delays. Computerization will also enable quicker saving and retrieval of shipping information. Another recommendation is the development of Trade Facilitation Indicators (TFIs) as explained in (Organisation for Economic & Co-operation and Development, 2019). This one will identify specific areas that require attention and enable implementation of reforms.

Conclusion

Trade facilitation focuses on simplifying, harmonizing, standardizing and modernizing trade procedures. The approach aims for reduction of transaction costs involved in trade where there are multiple levels of delay that exist between the government and the business. The establishment of Customs and their proper administration is what makes trade facilitation effective. In addition, it is worth noting that apart from Customs, other governmental bodies should as well be accountable in playing their role on matters affecting trade. For instance, government’s internal and external security agencies should play their role in controlling movement of goods in national borders. This paper aimed at providing and overview of how effective customs in trade facilitation can promote a country’s growth using the article of Md Almas Uzzaman and Mohammad Abu Yusuf. Further, this paper has emphasized on the use of technology in facilitating information exchange and reduction of the delays.