Trade costs – the costs of moving cargo from one country to another – are a leading constraint for companies wanting to engage in trade. A significant share of these costs stems from the time and money that companies spend on paperwork as various government border agencies require the same information in differing formats in order to release goods for export and allow them to enter the importing country.
Trade ‘single windows’ are electronic platforms that allow registered users to lodge the required import and export trade documents into a single source cutting time, money and improving efficiency. Introduced in the late 1980s in Sweden and Singapore, trade single windows have helped reduce border clearance times from four days to 15 minutes and significantly reduced corruption in the customs process. Supported by the United Nations Economic Commission for Europe and the World Customs Organization, by 2017, trade single windows had been adopted in full or in part in 63 countries, bringing together dozens of government agencies such as health, agriculture, quarantine, immigration and technical standards.
Single windows offer a notable return on investment, facilitating inclusive trade by considerably lowering companies’ international trade costs. The digitization of trade documents obviates the need for exporters and importers to spend time filling out paper documents, re-entering the same data multiple times and visiting government agencies in person to secure signatures and stamps. For example, in Uruguay, the digital ‘single window’ platform brings together 27 agencies such as tax and customs authorities and ministries of agriculture and fisheries, environment, energy and mining, and enables traders to submit 127 different types of documents required by the various border agencies. As a result, they have become a centrepiece of trade facilitation efforts around the world.
Such efficiency gains can be even greater when trade single windows are combined with port community systems (PCS) that enable the exchange of information between port environments. For example, in Benin, Togo and Democratic Republic of the Congo, traders receive a single invoice, where all costs at the port (such as terminal handling charges) and regulatory costs (for instance, duties and taxes) are combined into a single invoice that is automatically sent to the importer or relevant party. Once the full invoice is paid, the bank pays all of the individual stakeholders and goods are released. Sector experts are now looking at blockchain solutions to delivering a single platform that is secure, accountable and immediate, allowing the whole of a supply chain to track the movement of goods internationally.
Blockchain, a technology that has emerged as a result of the fourth industrial revolution. It is essentially a database that retains information on all transactions on a ledger visible to all stakeholders. Its potential is significant as it could be a useful enabler of inclusive trade by allowing smoother export and import paperwork, it can also deliver smart contracts built on a blockchain to automate stakeholders’ compliance with contractual obligations; and collect and store data on past transactions.
Whilst the potential for blockchain in helping facilitate trade is significant, the technology faces a number of challenges in being rolled out, especially in developing countries. For example, surveys have revealed issues such as the continued reliance on paper-based documents for many trade-based agencies and the cost of acquiring the blockchain technology and training staff to use it.
Such challenges undermine progress in facilitating trade, particularly where governments are trying to enable small- and medium-sized enterprises (SMEs) to engage in trade. However, there is a compelling case for improving single windows due to the growth of e-commerce. Where historically border agencies mostly dealt with a limited number of large companies doing regular, container-based transactions, now they have to contend with a vast number of parcel-based shipments and new traders. However, as international trade evolves away from being an activity of large companies only, to a world where even a sole trader can export internationally if these audiences can be reached, governments around the world must consider using technologies of the Fourth Industrial Revolution such as blockchain, to improve the operation, data quality, risk management and user experience in trade logistics, supply-chain management, customs and border regulatory processes, cross-border payments and trade finance. The key to driving inclusive trade is to ensure that all businesses have access to revolutionary technology. Therefore, governments of all nations must find a way to improve accessibility of this technology to business around the world – big and small.
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