Mechanisms of Co-operation - The Role of the Business Community

How to Achieve Maximum Trade Facilitation in a Regulatory Environment

SGS Société Générale de Surveillance S.A., Geneva

15 May, 2003

UN ECE SECOND INTERNATIONAL FORUM ON TRADE FACILITATION

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Keys to Trade Facilitation

Compliance by trade

Government-trade and government-government co-operation

Tools to facilitate communication, verification and validation

Infrastructure

Simplified regulations and procedures

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Opportunity to accelerate trade facilitation

UN ECE and various trade facilitation organisations and consultants have been recommending certain trade facilitation measures for years but the extent of implementation is, in many cases, very limited.

Recent additional security and compliance measures provide a window of opportunity to accelerate long awaited trade facilitation measures to ensure that compliant traders benefit from facilitated trade.

There's increasing demand for :- ADVANCE VALIDATED INFORMATION: to facilitate early risk

profiling and identification of high risk transactions EXCHANGE OF INFORMATION: between the parties in the supply

chain for both regulatory and facilitation purposes

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The need for greater use of key trade facilitation measures

Authorised Trader or Authorised Supply Chain : simplified procedures for parties with good compliance records

Risk profiling : to facilitate low risk and target high risk

Single Window : single authority receiving import/export information from trade/transport operators and co-ordinating exchange of information between applicable government departments

Seamless integrated international trade transaction : key information submitted to customs in country of export to be used by customs in country of import

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How can the business community help ?

Private sector service providers can assist be offering a variety of services and tools including :- Certification Services Risk profiling systems and information Communications and management systems Validation, verification and information services

Traders and supply chain parties can :- Voluntarily demonstrate compliance with security and

import/export requirements Co-operate with information exchange Simplify and align their systems and procedures e.g. taking

into account UN ECE Recommendations.

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International Supply Chain Compliance Standard

Existing supply chain security standards, such as those of the Business Anti-Smuggling Coalition (BASC), US Trade Partnership Against Terrorism (C-TPAT) and the Technology Asset Protection Association (TAPA) could be used as a basis for establishing one international standard for the whole supply chain.

Such a standard could have a general section applicable to all parties and specific sections applicable to each individual party (manufacturer, seller, forwarder, transporter, importer, etc.).

For trade facilitation purposes, the Standard should cover not only security but other compliance issues relevant for import / export clearance such as health, phyto-sanitary, safety, customs classification, valuation, rules of origin, etc.

Compliance with such a standard could be verified by Customs and/or accredited certification bodies.

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Certification services to demonstrate compliance

Parties in the supply chain should have the opportunity to voluntarily demonstrate their compliance with governmental requirements in exchange for trade facilitation benefits.

Such compliance can be demonstrated by requesting accredited certification bodies to conduct periodic audits and certify the party's premises / systems / procedures against a new international supply chain compliance standard.

Some accredited certification bodies already have experience in supply chain security audits

Such certifications of supply chain parties would be recognised by customs and other authorities for granting simplified clearance procedures.

Certification procedures could be similar to those currently used for ISO 9001, ISO 14001, SA 8000, OHSAS 18001, etc.

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Validation of export data

India, with support from some developing countries, has proposed to WTO that customs administrations in importing countries may request customs administrations in exporting countries to provide export data, in specific doubtful cases, to assist in combating valuation fraud.

Problem

Generally, Customs administrations are not concerned with, or staffed for, verification of the accuracy of data declared by the exporter.

Frequently, the level of detail contained in export declarations is inadequate for customs valuation purposes.

Solution

Customs administrations to be provided with additional resources to carry-out the required investigative work to validate the export data, or

Customs out-source the validation to accredited verification companies

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Risk Profiling

One tool is "SGS Profiler" which is a knowledge based risk management system to provide government agencies with a transparent, efficient and rapid means to:- target high risk shipments for further examination and provide trade facilitation for low risk shipments.

Builds up risk databases from global knowledge of trade practices and historical information on detections of smuggling, fraud, mis-declarations, violations, etc.

Oracle based and web-enabled

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Transaction Data

SGS ProfilerRisk

Message

Risk Information

Risk Databases

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SGS Profiler – How It Works

Risk information is collected world wide and is stored in SGS Profiler’s risk databases

Transaction data is then sent to Profiler. This can be in any form provided that it is electronic. It can be sent as flat files attached to an email or entered online.

The same attributes in the transaction (names etc) are then filtered past the same attributes in the risk information databases

The final output is a risk message tailored to the client’s requirements.

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Risk Database

Entity High

Entity Low

Goods High

Goods Low

Vessel

Generic

Container

Truck

Technical RisksPhysical Risks

Risk information within these databases is sorted according to the types of risk. Risk information can be low risk and high risk

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Taiwan – False Engine Number Photo by SGS Taiwan

Hong Kong – Concealment Photo by SGS Security

Taiwan – False Labeling and Misclassification

Photo by SGS Security

SGS Profiler – How it Works

The risk information is of a qualitative nature reflecting actual risk situations that have occurred in historical trade transactions

Singapore – Smuggling Photo by SGS Security

Hong Kong – Goods Substitution Video by SGS Security

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DIS

AFGO

Banks

Freight Fwdr

Customs

GPHA

MOF

Freight Station

Shipping Lines

MOTI

Traders

Ghana Communications Network : undergoing change

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DIS

AFGO

Banks

Freight Fwdr

Customs

GPHA

MOF

Freight Station

Shipping Lines

MOTI

Traders

Networking all parties to a common platform ...

Ghana Communications : future network

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Ghana Community Network Services

Ghana Community Network Services Ltd. is a Government /private sector joint venture with mandate to provide an EDI service with a customs management system

Ghana TradeNet is the EDI system

GCMS is the customs management system

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Premier Towers CEPS HQ

CEPS Officers interfaced to GCMS

GCMS Server

TradingCommunityInterfacedto TradeNet

Banks interfaced To GCMS

Shipping Lines

TradeNet Server

All other AgenciesInterfaced to TradeNet:MOTIMOFStatistical ServiceVAT, BOG…

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GC Net Objectives

improve speed of import clearance

protect Government revenues

improve transparency

reduce customs officer discretion

enhance management information and trade statistics

initial focus on customs process

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Ghana TradeNet / GCMS Implementation

Phase 1 : focus on Customs Clearance process

Implementation: Accra airport : November 2002 Tema port : April 2003 Takoradi port and land entry points : August

2003

Clearance can now be achieved in hours instead of days