WCO ESA Regional Private Sector Group progress
This Newsletter provides an overview of the progress made by the WCO ESA Region – Regional Private Sector Group (RPSG) over the course of the last couple of months. From the perspective of the ESA-RPSG, key aspects concerning customs and trade related issues being addressed within the region include Customs-to-Customs collaboration, AEO programmes, bond guarantees, ease of doing business and the mandate of the region.
Since the previous report published by the ESA-RPSG, various key public-private stakeholder events have taken place in an attempt to secure and consolidate global trade, whilst at the same time facilitate legitimate trade within the ESA region. Some of these important events have included the SADC Business Council, the Golden Business Forum, AfCFTA Trade in Services Conference, as well as the AU Sub-Committee visit. During this period, the RPSG has also held its third and fourth official online Webinars.
The following table indicates the most important customs and trade related matters that have taken place within the ESA region since June 2019.
SADC Business Council under NEPAD
Transit Management Systems Workshop
6 – 8 Aug
Pretoria, South Africa
Golden Business Forum
Third Official Webinar
AfCFTA Trade in Services
2 & 3 Sept
Cape Town, South Africa
African Union Sub-Committee visit
19 & 20 Sept
Fourth Official Webinar
31st Regional Steering Group (RSG)
6 – 8 Nov
Some of the most important Customs and Trade related matters being discussed at the abovementioned events included: regional customs transit guarantees, the importance of services to trade, risk management and tracking, Private Sector engagement in official discussions, rules of origin and tariff orders and concession.
The official communication platform of the ESA-RPSG takes place on the basis of online webinar conferences. So far, four (4) official ESA-RPSG webinars have been held, with participants from Eswatini, Kenya, Lesotho, Mauritius, Mozambique, Namibia, Rwanda, South Africa, Uganda, Zambia and Zimbabwe. These have included stakeholders from supply chain owners, role players in the extended supply chain such as, Freight Forwarders Associations, Customs Brokers, Truckers and Consolidators.
About the ESA-RPSG
The ESA-RPSG was formed for the purpose of verifying the implementation, monitoring and assistance of various instruments in the WCO Toolkit that will make trade easier without comprising or imposing a higher risk profile. This will also allow Private Sector to articulate their challenges in the Regional integration well and possible solutions for addressing the known obstacles, as we need to address them effectively to ensure we create a safe, fair and compliant environment for all. (Special note: Country specific issues are outside the scope the ESA-RPSG).
AEO Programme needs uptake
The majority of the countries throughout the ESA region currently have an AEO programme in place; however, consensus is that the uptake of AEO needs to increase.
AEO programmes as discussed at the previous Webinar have reached various levels of maturity and implementation with Kenya, Mauritius and Tanzania currently leading the way with the most mature programme. However the benefits of AEO for some stakeholders are not clear, particularly for SMEs. These benefits therefore need to be articulated and linked with the WCO SAFE and the MRA communicated and monitored in order to realize its impact. Customs Administrations will benefit from MRAs. AEO is the programme of the future, however AEO needs to be extended to all in the extended supply chain and must have an impact on border crossings.
An AEO (Authorized Economic Operator) is a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national Customs administration as complying with WCO or equivalent supply chain security standards. AEOs may include manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, distributors and freight forwarders.
The RPSG as a whole is in favour of the AEO programme and commented on the fact that AEO is based on a risk management profile, with certain benefits being available if a supply chain is safe, secure and compliant.
In practical terms however, the RPSG has established that the AEO programme across the 24 member countries is not at the same level of maturity and as a result is not facilitating regional trade optimally.
Nonetheless, in some regions, such as Eastern Africa, moderate progress has indeed been achieved, especially in terms of regional collaboration. In the EAC for example, there are currently more than 100 AEOs, with the programme especially recognizing the fact that benefits are not only confined to large corporations. Efforts are currently being made to branch out to other SADC countries.
Regionally there is a need to consolidate the progress and further promote AEOs through clearly articulating the benefits and providing education and training on AEO matters. In some countries, such as Zimbabwe for example, AEO awareness is not yet at an optimal level. To add to this, the process of AEO registration in Zimbabwe, which is done through the Zimbabwe Revenue Authority (ZIMRA) remains tedious and poorly managed, which discourages prospective AEOs.
South African has proposed migration from the Preferred Trader (PT) programme to an AEO programme, hopefully throughout the entire SACU region. The aim is that the AEO programme can be the platform for Mutual Recognition Agreements (MRAs), since the fact that the PT programme has not taken off.
Private Sector in the SACU region, is nonetheless very optimistic with the pilot project which is currently underway in two industries, automotive and the textile industry. Similar to other regions, the hope of the AEO in SACU is to not only benefit the large corporations, but also the SMEs and possibly even the informal sector.
The South African Revenue Authority (SARS) has engaged with the Private Sector via two workshops. The Private Sector is of the opinion that the standards of various pillars of AEO (such as solvency, record keeping and safety) should not be lowered too much, but simplified.
In Namibia, the PT was initiated through 20 companies but all the excise customers, as well as clearing and forwarding agents within the Private Sector were excluded. The Private Sector pointed out that it is in fact the agents who normally execute the programme, not the traders. Consequently, by excluding the clearing and forwarding agents the programme has not taken off.
WCO instruments and tools
Various important WCO instruments are available and need to be implemented by Customs Administrations and the Private Sector alike.
These instruments include the SAFE (SAFE Framework of Standards to Secure and Facilitate Global Trade), RKC (Revised Kyoto Convention), HS (Harmonized System), ISCM (Integrated Supply Chain Management Guidelines), Risk Management Compendium amongst others. An appeal has been made to countries within the ESA Region to make a concerted effort to increase the uptake of these WCO tools and instruments.
The RPSG has identified the WCO instruments and tools as being a critical factor in promoting the level of knowledge and understanding of the customs environment in the ESA region. The RPSG has done extensive work in the region to see whether the RKC, together with the SAFE uptake can be measured in each member country.
The Private Sector through the RPSG has no authority over Customs Authorities what to do but can draw Customs Authorities attention to how their guidelines impact Private Sector’s commercial realities.
Consequently, the approach was to investigate the effects of the RKC, together with the SAFE, and to engage with the Private Sector. Unfortunately, various obstacles still exist with regards to these matters, since in many cases, the Private Sector is not aware of the content of the RKC and SAFE (as well as other WCO instruments and tools). The aim is therefore to engage with the Private Sector perhaps via a short questionnaire to ascertain how the RKC, together with the SAFE impacts their respective commercial realities. Role players in the greater ESA regions are encouraged to look out for the questionnaires and respond.
The view of previous webinars is that in East Africa there seems to be an approach of ‘harmonize and simplify’, whereas in SADC, there seems to be a ‘collaborative’ approach. The RPSG has expressed concern that the usage of the various WCO instruments and tools are therefore disjointed across the region given these two approaches.
Since the RKC is a blueprint for Customs Authorities, however, the onus still rests on Customs Authorities to respond to the circumstances. This is also the case with the SAFE and the overall security aspects of Customs. This gap can be explored further in the proposed questionnaire which will also be linked to the WCO Research Unit for potential guidance and assistance.
World Bank Ease of Doing Business: Trading across borders
Widespread consensus among members of the RPSG agrees to the importance of the monitoring and evaluation of Customs Administration and Trade related issues in the ESA region. For that, the World Bank’s Ease of Doing Business – Trading across borders index have been an important measure.
However, trade and industry throughout the 24 countries feel that the WB’s methodology is outdated and that there should be a broader participation from an industry perspective, including for example engaging with organisations such as customs clearing and forwarding associations freight forwarders associations, shipping lines, airlines, transporters and cargo handlers.
To this point in time, there has been an engagement with the WB from South African, Botswana and East African but not yet from the ESA. The RPSG, with potential assistance from the WCO, will aim to increase the engagement with the WB. The WCO is also engaging with the WB on ‘Performance Measurement’.
The continued progress on the matter of monitoring and evaluation was discussed at the WCO Policy Committee, which took place in December with the RPSG making suggestions on the matter of the WB ‘Ease of Doing Business -Trading Across Borders’.
In summary, the general feeling of the RPSG regarding the WB ‘Ease of Doing Business – Trading Across Borders’ requires the rankings to reflect the realities on the ground. This matter is of high importance to the Private Sector, since the WB rankings can potentially influence trade and investment in the ESA region. The aim is therefore to create a clear alignment between what is reported by the WB and what takes place in practice.
Therefore, in an attempt to better capture monitoring and evaluation of Customs Administration and Trade related issues in the ESA region, the RPSG proposes conducting time release studies in member countries. It also proposes that these studies include more than the measurement of efficiency across borders as in many cases it is not Customs Administration, but the total value chain from geographical border lines, cross border trade, terminals, transports, customs brokers and other law enforcement agencies, which are individually or collectively thwarting the flow of goods.
IT-Connectivity of Customs in the ESA Region
Customs-to-Customs connectivity and enablement is on the forefront of Customs Administrations’ focus. A WCO initiavite has been to connect two Customs Authorities through IT enablement. Customs Administrations are encouraged to exchange their respective datasets with each other and established the level of agreement and harmonizing between the declarations.
A successful pilot project was run between South Africa and eSwatini in the ESA Region where data matching was as close as 99.99%. Future projects will be between South Africa and Lesotho. Botswana and Namibia have also come on board with live implementation expected by mid 2020. The aim is to drive this project out to the greater region while In addition the AU has also spearheaded IT Connectivity and has held six meetings on IT Connectivity with Customs.
The RPSG has concerns regarding the rationale of enforcing trucks to stand at a border because the import declaration needs to be verified with the Customs Authority on the other side of the border. The RPSG therefore proposes that the WCO work with the different Customs Authorities to ensure that their data fields align thereby addressing the problem of trucks standing in long queues at the borders posts.
Research on this by the RPSG indicates that technological issues often arise, particularly in cases whereby countries operate on different customs interface platforms. Throughout Africa, most countries work on Asycuda, the computerised customs management system developed by UNCTAD. From a Private Sector point of view, the RPSG cannot understand why the verification of declarations sometimes takes so long. Nonetheless, the RPSG is encouraged that many countries use this system which can potentially facilitate mutual recognition with data fields given it’s captured on the same interface platform.
The prescient aim of the RPSG is to establish a Working Group to work on Asycuda with the Private Sector contributing suggestions towards a better working solution around IT-Connectivity.
Namibian which also works on Asycuda raised the concern around data which is shared between countries but not necessarily with the Private Sector. In some countries, a link is created in Asycuda allowing one to work with your own data. Another concern is the fact that not all countries on Asycuda are at the same levels of automation, which sometimes creates a break down. For instance, Eswatini is running a fully automated Asycuda system which is paperless, whereas Namibia still relies on a paper trail system. The fact that all Customs Authorities are not aligned and on the same standard, creates pitfalls.
The RPSG has noted the problem. The WCO Data Model and Globally Networked Customs (GNC) have been developed so data fields can be harmonized for information exchange and inter-operability of Customs systems.
The SACU Connect project, aimed to promote the use of the GNC whereby specific utility blocks for Customs operations were identified to enable exchange information. Progress has been intermitted, especially with regards to country to country level commitment. The aim is to continue working from the regional perspective, whereby the political commitment and authority of the Regional Economic Communities (RECs) can be leveraged as binding instrument to encourage members to implement the measures.
News from the WCO is that the same initiatives are being instituted in the SADC region. The SADC region has a number of corridors which support transit cargo where interconnectivity will be very useful. It was consequently requested that the RPSG provide some articulated narrative to support the promotion of IT-Connectivity.
WTO-TFA and AfCFTA Preparedness
Globally, 145 countries (88.4% of WTO members) have ratified the WTO-TFA, whereas the figure stands at 80% for the ESA Region where some members not yet implemented Category B and Category C of the WTO-TFA.
The ratification and overall readiness of the WTO-TFA can serve as a beacon towards the readiness and implementation of the AfCFTA. To date, nine of the 24 countries within the ESA region have ratified the AfCFTA.
The RPSG collectively voiced their excitement around the progress of the African Continental Free Trade Agreement (AfCFTA). When the respective countries within the region align in terms of the legal framework, the policy and administrative aspects are expected to follow. The Private Sector is also excited that the AfCFTA has highlighted transport as one of the key sectors in the agreement. However, information on exactly how this will be implemented has not been forthcoming.
There has been an engagement with the African Union (AU) on how the ESA can dovetail with the implementation of the AfCFTA. The reason behind this is that Private Sector does not want another trade agreement with all of its potential benefits failing due to implementation constraints.
The onus now rests on Private Sector to seize the opportunity to add support on various matters, especially trade facilitation and capacity building. Awareness on these matters need to be heightened. The Private Sector needs to give an adequate response on the AfCFTA as was done with the Mercator Programme.
Additionally, the AfCFTA was discussed at the Regional Steering Group in Lusaka, Zambia on the 6th to 8th November 2019.
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