The World Trade Organisation (WTO) has defined trade facilitation as meaning the simplification and harmonisation of international trade procedures. In late 2013 WTO members agreed on the initial text of a trade facilitation agreement (TFA), which was further refined during 2014. The document focuses on actions to ease the movement, release and clearance of goods across national borders, including streamlining Customs procedures and the management of goods in transit. It was agreed that the TFA would come into effect when two-thirds of WTO members had ratified it. By early 2017 that objective was close to being met. WTO research suggests that implementation of the TFA could increase global merchandise exports by up to $1trn, with developing countries capturing more than half of the gains. Trinidad and Tobago was one of the first countries to ratify the TFA, submitting the necessary documentation in July 2015.
Time To Trade
It is widely agreed that the removal of obstacles to trade could deliver important benefits for T&T. A global study by the OECD has identified trade facilitation indicators, which give a sense of national strengths and weaknesses in the management of trade flows. Based on information gathered in 2013, the study says that T&T performs best – relative to its peers – in areas such as appeal procedures, simplification and harmonisation of documents, and streamlining of procedures. But it scored below the Latin American and Caribbean average in the area of information availability and automation. Perhaps significantly, the study found there was insufficient information to give a ranking for a number of trade facilitation indicators. These included involvement of the trade community, advance rulings, fees and charges, border agency cooperation, and governance and impartiality. While this information was lacking for T&T, the OECD said its research in the rest of the region showed that the areas with the greatest impact in increasing bilateral trade flows and reducing costs were those related to streamlining of procedures, documents and information availability. Anecdotally, many T&T business lobbies complain of excessive red tape in the management of imports and exports, and of slow and time-consuming Customs procedures.
Another broad measure of T&T’s trade facilitation environment can be found in the World Bank’s “Doing Business 2017” survey. This annual report measures the ease of doing business across 10 selected activities, one of which relates to trading across borders. According to the 2017 report T&T tended to lag behind in this specific area. Across all 10 categories the country was ranked 96th in the world in terms of the overall ease of doing business, but it was ranked 123rd globally in terms of the ease of trading across borders. The report estimated it took an average of 92 hours of administrative effort to export. Administrative costs to export averaged $749. The hours taken and costs involved in importing were somewhat higher.
In March 2016 Paula Gopee-Scoon, the minister of trade and industry, announced the appointment of the National Trade Facilitation Committee of (NTFC), which has a brief to oversee domestic implementation of the TFA. She was frank about the issues facing local businesses. “The government is aware of the many challenges faced by traders on a daily basis, namely burdensome procedures, time lags in importation and exportation, loss in perishable goods and lack of transparency,” she said. She hoped that implementing the TFA would alleviate these issues and help build “a fast, reliable and cost-effective trade environment.” The majority of NTFC members are civil servants from government ministries and public sector agencies, although there is some private sector representation, from the T&T Manufacturers’ Association and the Chamber of Commerce.
There have been a number of initiatives to ease trade procedures. One of the most important has been the development of the single electronic window (SEW), a business-to-government portal designed to simplify foreign trade and other processes. The SEW is regarded as part of a wider move in the direction of e-government. In 2016 it won a trade and business facilitation award for public service improvement from the network of e-Government Leaders of Latin America and the Caribbean. In 2015 the Inter-American Development Bank (IDB) lent $25m to further develop the SEW.
According to exporTT, the agency responsible for promoting exports, one example of the benefits of the SEW is the ease with which it enables origin to be certified. Under the terms of free trade agreements (FTAs) with countries such as Colombia, the Dominican Republic and Costa Rica, companies in T&T can export duty free to those markets – providing they can obtain a certificate of origin establishing the goods in question were produced in the country. In the past, the process of obtaining a certificate of origin was time consuming, but now the SEW platform provides an online certificate of origin in a matter of minutes.
Despite a promising start, there is still room for improvement in the SEW’s functionality. While the number of procedural steps required for certain transactions has been reduced and centralised in one online portal, it is still not possible to make online payments to the government for licences and other services, with the companies involved having to send someone in person to the appropriate government offices to make payment. On the upside, the IDB has maintained that the SEW is already making a significant impact on the competitiveness of the country. The loan and technical assistance it is providing is designed to take the SEW to the next level of development. This is described as including an integrated platform for the synchronisation of multimodal logistics services for all cargo coming into or out from T&T, as well as a cross-border document exchange model to pilot better sharing of trade-related information with trading partners, further automation of back-office processes and the creation of a new model for business licensing.
In August 2016 the government announced a further initiative to help promote trade in general and exports in particular. According to the Ministry of Trade and Industry, a national quality policy (NQP) covering the non-energy sector would be introduced. The aim was to implement minimum quality standards to help increase the country’s competitiveness in export markets. The ministry said implementing these standards would help build a more diversified economy and improve the economic outlook. It noted that local businesses faced the double challenge of meeting stringent quality standards abroad, while competing with sometimes poor-quality imported products on the local market. The NQP would seek to standardise scientific measurements, define industrial and legal frameworks, and cover inspection, testing and product and system certification. It would work with the Bureau of Standards and come under the umbrella of the Standards Act of 1997.
The issue of food standards is particularly important in the context of the government’s interest in reviving agro-processing. Officials said that food and beverage (F&B) standards would not come directly under the NQP, but would be the responsibility of the Chemistry, Food and Drug Division. To be able to export F&B products to developed markets, local companies need to be able to meet demanding health and safety standards. The EU, under its Economic Partnership Agreement with the CARICOM countries, helped fund a private sector workshop in Trinidad on hazard analysis critical control points (HACCP) plan development and implementation. The HACCP approach has been described as the internationally accepted standard of food safety, and includes meeting required sanitary and phytosanitary (SPS) measures. According to the Inter-American Institute for Cooperation on Agriculture, all countries must be compliant with SPS measures in order to successfully export to international markets. Companies involved in the manufacturing, processing or handling of food products need to meet the standard to eliminate food safety hazards in their products.
Looking To Markets
Improved trade facilitation is only part of a bigger story involving the quest for a better and more diversified trade performance. To this end, exporTT has been looking at two different types of markets for increasing the country’s overseas sales outside of the CARICOM countries. Central and Latin American markets – particularly those with which T&T has already signed FTAs – are attractive, but present two major challenges. One is that they tend to be more competitive on price. The other is that they generally want larger volumes than CARICOM companies can typically provide, meaning the exporter needs to find ways of rapidly scaling up to meet demand.
In the developed economy markets, such as the US, Canada and the UK, T&T businesses are more likely to be selling niche food and beverage products. Here price competition is much less of an issue, but the big challenge is to meet quality and SPS standards. For small and medium-sized companies this could imply major investment to upgrade equipment and processes.
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