Trade facilitation and the COVID-19 pandemic

All paperwork related to the movement of goods, including declaration, assessment and payment of duties, and release and clearance of goods can be carried out without physical contact – given sufficient digital infrastructure. This can be important in reducing the need for face-to-face interactions between traders and border officials, reducing risks of COVID-19 infection.

The TFA requires that all border controls deemed necessary by authorities are undertaken in the most transparent, simplified and streamlined way. This continues to apply to all shipments, meaning that the necessary checks on those from heavily affected regions should still be transparent and as simple and streamlined as possible.

Expediting standard formalities for the movement of goods not only reduces the time spent in physical interactions, but also makes space and time for additional controls and sanitary measures required in light of COVID-19. This is particularly important for perishable products, such as agro-food and time-critical medical products, which are essential in the COVID-19 crisis.

Implementation of the TFA’s requirements on transparency, on enhanced controls and inspections, and on information in case of detention of goods, would enable traders to adjust to the new demands and requirements with the least delay and disruptions. Indeed, in the current environment, G20 Trade Ministers have underscored the importance of transparency in trade regulation3.

Mechanisms limiting physical interaction – such as electronically lodging documents in advance, electronic payment of all trade-related taxes, digital certificates and signatures, or 24/7 automated processing of trade declarations – are already available in Europe and Central Asia, North America, Asia-Pacific, and Latin America and the Caribbean.

Several economies have already implemented trade facilitation measures at their borders to address the current challenges, including “green lanes” or “corridors” for fast clearance of essential goods (such as, for instance, at intra-EU borders) or acceptance of digital trade-related documents, including sanitary and phytosanitary certificates, in place of physical copies.

Those economies able to implement pre-arrival and 24/7 processing can also maximise use of special lanes for time-sensitive medical products and food stuffs.

Single Windows also play an important role in speeding up border procedures, allowing “one stop shop” processing. Many economies across Asia-Pacific, Europe and the Americas already have trade Single Windows in place and can increase their use by making available more targeted user manuals for both border officers and traders.

With lower availability of personnel due to confinement and social distancing measures, agencies need to make full use of their interconnected or shared computer systems and real-time availability to share relevant data among themselves to facilitate cross-border data exchange or clearing of export and import declarations electronically.

Given the differences in capacities among countries, and the global nature of the crisis, enhanced international co-operation in risk management is key at this stage, requiring the sharing of inspection and control results among border agencies.

With lockdown measures seriously restraining brick and mortar commercial activity, cross-border and domestic e-commerce can be important means for meeting essential needs, as well as sustaining demand and thus economic activity in all sectors. Moreover, given the significant difficulties already faced by the logistics sector in ensuring timely distribution, increased efficiency of government controls is even more important.

TFA provisions allow for pre-arrival processing and electronic payment and for appropriate risk management mechanisms to be maintained. They also require that fees and charges applied are proportional to the processing cost. These are all important in keeping essential controls in place, while keeping costs down so that e-commerce can help fill the gap created by containment measures on conventional commercial activity.

For both individual consumers and firms in e-commerce, transparency and availability of information are essential – to know what taxes need to be paid, how they can be paid, or which documents are necessary. To help enable e-commerce, agencies should improve what – and how – information is made available online.

Firms of all sizes – but especially MSMEs – and from all sectors of the economy are severely affected by the current crisis. Governments have rightly taken a wide range of measures to support firms, notably MSMEs including suspending or deferring payment of customs duties and tariffs. However, there is scope to do more to help MSMEs via trade facilitation.

While trade facilitation helps all firms, OECD work shows that improvements in the trade facilitation environment benefit smaller firms more than they benefit larger firms. Trade facilitation reforms reduce fixed and variable trade costs, helping MSMEs not only become importers and exporters, but also helping MSMEs that already export and import increase their volumes.

Especially in developing countries, trade facilitation can have an important impact on the propensity of MSMEs to engage in exporting and importing (Figure 3).

Similarly, while more efficient customs procedures help both large and small firms integrate into global value chains (GVCs), they also help MSMEs more (Figure 4).

Of the range of trade facilitation reforms, measures such as streamlining of procedures, automation of the border process, simplification of fees, inclusion of MSMEs in consultation processes, or efficiency of appeal procedures have the largest differentiated impacts on MSMEs relative to larger firms. This is true across both developed and developing countries (Figure 5).