The Financial Express

Paperless trade requires regional cooperation

| Updated: October 19, 2017 05:55:04

Paperless trade requires regional cooperation

During the last week of August this year, Bangladesh along with Cambodia and China singed the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (FA-PT). It is an initiative taken by the United Nations Economic and Social Commission for Asia and Pacific (UNESCAP) to promote paperless trade among its 53 member countries. The basic objective behind the move is to cut trade cost by reducing time and documentation.



To put it simply, paperless trade is a system where trade information is exchanged electronically based on agreed standards. It reduces the number of paper documents and direct interaction between businesses and customs officials. While exporters and importers or their representatives submit almost all the documents in dematerialised forms, customs officials also do their work electronically.



Developed countries have already adopted paperless trade to a large extent, while developing nations are still struggling. It is mainly due to lack of sufficient know-how on information and communication technology (ICT). Moreover, the traditional approach and conservative mindset within the bureaucracy appear to be a big hindrance to adopt paperless mechanism in these countries.



Nevertheless, advancement in global level has already compelled the developing countries to move towards paperless trade. They are also now realising the long-term benefit of the system. The Trade Facilitation Agreement (TFA) of the World Trade Organisation (WTO) which comes into force in February this year already binds its member countries to reduce trade costs by adopting a series of measures. A core element of the TFA is paperless trade. 



The UNESCAP-sponsored deal is thus an additional tool to implement the TFA by the member countries of the WTO. Though non-binding in nature, FA-PT will definitely help extend cooperation among the countries to adopt paperless trade mechanism. Most provisions of the agreement centre on 'measures for promoting cross-border paperless trade, not on detailed and specific mechanism for engaging in cross-border paperless trade.' Thus, 'most provisions of the agreement are best endeavour' in nature.



The idea of paperless trade is not new to Bangladesh. In fact, the country introduced paperless trade in its stock market more than a decade ago. After the stock market scam in 1997, Bangladesh has adopted a series of reform measures supported by the Asian Development Bank (ADB). Two most successful reforms are dematerialisation of paper-based share certificates and introduction of central depositary system (CDS).  Country's stock market is now fully automated and all the transactions take place electronically. While this has nothing to do with international trade, it demonstrates the ability of Bangladesh to do paperless trade.



Bangladesh has already taken a series of measures to make paperless trade a reality. Different bodies of the government are working in this regard. For instance, National Board of Revenue (NRB) is at the final stage of implementing the Single Window (SW) system. It is an electronic platform through which exporter-importer can complete their document processing electronically. Bangladesh earlier decided to establish the SW by mid-2019 with the financial and technical support from the World Bank. It is a customs-centric SW and NBR is the lead agency. The government has also prepared Digital Signature mechanism. Online Licence Module for the Chief Controller of Import and Export is also nearing completion.  



Slow progress towards full-fledged paperless trade mechanism is a common scenario in South Asia. For instance, India started the Electronic Data Interchange (EDI) project more than two decades ago. Still, around half of the country's ports and customs points are yet to be covered. Again, to fully operationalise the SW, India is working and established the Single Window Interface for Trade (SWIFT).  



What is critical to implement paperless trade is bilateral, regional and multilateral cooperation. If partner countries don't have the sufficient infrastructure to support the paperless mechanism, it will not be useful for others. Thus, countries need to share their knowledge and experience with each other. Moreover, cooperation is a must to maintain common standards in different modes of operation.



The regional trading blocs where Bangladesh is a common member don't have any deal that promotes paperless trade within the bloc. Both the Asia Pacific Trade Agreement (APTA) and South Asian Free Trade Area (SAFTA) agreement do not have any provision regarding paperless trade.  The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is, however, trying to initiate a separate trade facilitation agreement where paperless trade will get some space. Thus regional cooperation on paperless trade has still a long way to go.



The present government has been advocating Digital Bangladesh mantra. Digitisation of different paper works to reduce time and cost is underway. So, paperless trade mechanism easily fits in the concept. The ICT-related infrastructure in Bangladesh has also improved a lot but more improvement is required in near future to support the continuous digitisation process and digital transactions.



There is little doubt that cross-border paperless trade will turn the global trade more efficient and transparent and improve regulatory compliance. Cooperation among countries is thus the key to tap the potential.



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