Advancing cross-border paperless trade

Asjadul Kibria | Published: June 22, 2024 21:15:42 | Updated: June 22, 2024 21:17:39

For the last eight years, a regional commission of the United Nations (UN) has been working to introduce an electronic documentation system to replace paper-based ones in clearing customs processes in international trade by countries. The idea behind the move is to cut trade costs by reducing customs clearance time at border points and making the movement of goods smoother. Though shifting from the paper-based to a paperless way of customs settlement sounds simple, yet it requires a lot of technical work. It also demands proper coordination across borders as well as international cooperation.
It is the UN Economic and Social Commission for Asia and the Pacific (ESCAP) that initiated the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (CPTA) eight years ago, on May 19 in 2016 to be precise, to facilitate the electronic trade settlement mechanism in the region. The declared objective of the treaty is "to promote cross-border paperless trade by enabling the exchange and mutual recognition of trade-related data and documents in electronic form and facilitating interoperability among national and sub-regional single windows and/or other paperless trade systems, to make international trade transactions more efficient and transparent while improving regulatory compliance." This vision of a more efficient and transparent trade system should inspire optimism and hope for the future. Eight years later, most regional countries are yet to join the treaty as only 13 countries, including Bangladesh, have become the parties. The treaty entered into force on February 20 in 2021.
Against the backdrop, the ESCAP hosted the first Paperless Trade Week in Bangkok in the first week of this month to foster deeper cooperation among regional public and private stakeholders to adopt and implement the CPTA. Through the event, ESCAP has repeatedly urged Asian and Pacific countries to join the treaty. Currently, there are 53 members and nine associate members. The members include the United Kingdom (UK) and the United States (US). The UN regional commission supports inclusive, resilient and sustainable development in the region. It was of the view that sustained commitments from the governments to develop the essential foundations for national and cross-border paperless trade are necessary. It also stressed implementing the framework agreement and actively promoting the treaty's benefits.
The framework agreement may be considered as a complementary deal of the World Trade Organization (WTO) Trade Facilitation Agreement (TFA). According to some analysts, the TFA has some limitations, especially regarding cross-border paperless trade, as the multilateral agreement has only a provision on a single window at the national level, either paper-based or electronic. The CPTA, despite being a regional treaty, is entirely dedicated to facilitation of cross-border paperless trade where the systems of interoperability and mutual recognition of documents across the borders are strongly inserted. However, not everyone is ready to accept the CPTA as complementary to the TFA, and many think that the regional framework agreement is supplementary to the WTO deal. Moreover, some analysts pointed out that the TFA contained several provisions relevant to paperless trade. These are the electronic exchange of data and documents, the electronic submission of trade-related documents, e-payment systems, electronic single window systems and international standards for paperless trade. They also argued that TFA left room for WTO Members to shape their own systems and legal frameworks regarding paperless trade or cross-border trade digitalisation.
Taking a visual snapshot of a paper document, either a scanned or a PDF version, is part of paperless trade processing. It is, however, a simplistic solution with a lot of limitations. For instance, it is time-consuming to scan a bulk amount of documents. Data-trader interface (DTI) is a better option, while using fully electronic messages, known as electronic data interchange (EDI), is also efficient. Generally, these systems provide an application-programming interface (API) to facilitate interaction with the database.
Bangladesh is one of the first three signatories of CPTA, and the country ratified the treaty much earlier than many other parties. Thanks to the advancement in digital infrastructure, it has now become easier for Bangladesh to conduct paperless business with its trading partners provided that they reciprocate accordingly. The country has already implemented some crucial measures regarding paperless trade. These include automated customs systems, electronic application and issuance of import and export permits, and e-payment of customs duties and fees. This means that the country is consolidating the ground for paperless trade. In his budget speech, delivered in the first week of June, the finance minister Abul Hassan Mahmood Ali said that to introduce paperless customs and Ease of Doing Business, initiatives such as National Single Window (NSW) for fast clearance and accelerated imports and exports, Automation of Bond Management, introduction of Authorized Economic Operator (AEO), non-intrusive inspection, Advance Ruling, Pre Arrival Processing of consignment and E-auction program have been implemented. He also added that the Customs Risk Management Commissionerate has been established to introduce an automated risk management system.
Nevertheless, the country still needs to take some more steps to make the digital infrastructure sound, secure, and robust to facilitate the efficient settlement of international paperless trade. According to the fifth United Nations Global Survey on Digital and Sustainable Trade Facilitation, Bangladesh still needs to catch up with others in the cross-border paperless trade. Though it has partially implemented electronic commerce laws and regulations, it has yet to implement the electronic exchange of certificate of origin and sanitary & phytosanitary (SPS) certificate. Measures like recognised certification authority, electronic exchange of customs declaration and paperless collection of payment from a documentary letter of credit are still at the planning stage, as per the UN survey report.
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