Trade Facilitation in Central Asia

Annex A. TFI Methodology

OECD Trade Facilitation Indicators: Overall structure

The OECD Trade Facilitation Indicators (TFIs) provide a structured overview of the trade facilitation policy environment in over 160 individual economies. The indicators follow closely the policy areas covered by the World Trade Organisation (WTO) Trade Facilitation Agreement (TFA). The families of measures covered in the WTO TFA have been re-organised, to consider similarities between measures, underlying shared components, as well as areas where further distinctions were warranted. An additional OECD indicator going beyond the scope of the TFA was added to capture elements of good governance and impartiality of border administrations.

The 11 TFIs (information availability; involvement of trade community; advance rulings; appeal procedures; fees and charges; documents; automation; procedures; internal border agency cooperation; external border agency co-operation; governance and impartiality) (Figure A A.1) are each composed of several specific, precise, and fact-based variables related to existing administrative processes at the border and their implementation in practice (for example, the average time between publication and entry into force of new or adjusted trade-related regulations, the proportion of trade transactions that can be processed in advance to the arrival of goods at the border, or the coverage of certified trader programmes). The TFIs measure the actual extent to which countries have both introduced and implemented trade facilitation measures in absolute terms, but also their performance relative to others.

Figure A A.1. Overview of the OECD Trade Facilitation Indicators (TFIs)

Source: OECD

The TFIs are tools, not rules: they are not designed to assess country compliance with specific TFA provisions, but rather to help policy makers in developed and developing countries alike to assess the state of their trade facilitation efforts, pinpoint challenges, and identify opportunities for progress.

The TFIs take values from 0 to 2, where 2 designates the best performance that can be achieved. The variables in the TFI dataset are coded with 0, 1, or 2. Where variables depend on numerical answers, these are broken down on thresholds to which 0/1/2 scores are applied. A scoring system that assigns discrete numerical values according to some metric of performance requires determining thresholds for what is best, worst or in between. In the cases where no natural thresholds can be identified, if the variable is numerical in nature, the score can be determined by

deviation from the sample mean or by its percentile rank across all economies covered by the dataset. There are no hierarchies between variables; within one indicator, variables are assigned equal weights.

Data collection

The TFI database covers overall 163 countries, including economies at all income levels – 28 low-income countries, 42 lower middle-income countries, 38 upper middle-income countries, 17 high-income economies outside the OECD area, and 38 OECD countries – as well as all geographic regions (namely, Asia-Pacific, Europe and Central Asia, Latin America and the Caribbean, Middle East and North Africa and Sub-Saharan Africa). The TFIs are based on a detailed questionnaire, with the aim of ensuring factual information that is geographically comparable and consistent over time.

Data collection rests on several layers of publicly available information, direct co-operation with countries, and checking of discrepancies. Insights draw on a comprehensive review of all publicly available information, including country official sources, such as websites of Customs and other border agencies, trade information portals, trade Single Windows portals, and trade-related legislation. Two key cross-checks of information are undertaken relative to the World Trade Organization TFA Database and information compiled through the United Nations Regional Economic Commissions (UN RECs) Global Survey on Digital and Sustainable Trade Facilitation. Data collection also includes a comprehensive review of information available from other international and regional organisations, such as the World Customs Organization reports and case studies; the World Bank Logistics Performance Indicators and World Bank trade facilitation case studies; UNCTAD analysis of National Trade Facilitation Committees; Global Alliance for Trade Facilitation case studies; and reports from inter-governmental fora (e.g. ASEAN, APEC). It also includes a review of available private sector survey information, such as the Global Express Association Customs Capabilities Report and the World Economic Forum (WEF) Global Competitiveness Report (GCR). The process also benefits from consultations with WCO, UNCTAD and UN RECs, as well as from regular participation in the WTO Committee on Trade Facilitation.

Policy areas covered and main sub-components

The TFIs cover four main policy areas: transparency and predictability, automating and streamlining procedures, border agency co-operation, and governance and impartiality. Each of these are divided into further dimensions.

1. Transparency and predictability:

TFI (A) Information availability: this area covers publication of customs and trade-related regulations and information, feedback mechanisms, and specific functions for businesses. Key policy measures include:

• Webpage and user-friendliness, information on import and export procedures;

• Documentation easily accessible for downloading;

• Possibility to provide online feedback;

• Publication of rate of duties;

• Enquiry points and timeliness;

• Information on procedures published in advance;

• Publication of agreements, information on procedural rules for appeal, judicial decisions on Customs matters;

• Publication of decisions and examples of Customs classification, necessary information on advance rulings;

• Applicable legislation published on Internet; and

• Interactive page for professional users/companies, user manuals available online.

  TFI (B) Involvement of the trade community – this area covers structures, guidelines, and frameworks for consultations with stakeholders. Key policy measures include:

• Public consultations between traders and other interested parties and government;

• General notice-and-comment framework procedures in place, applicable to trade and border issues;

• Guidelines and procedures in place governing the public consultation process;

• Targeted stakeholders;

• Frequency of public consultations; and

• Drafts published prior to entry into force, public comments taken into account.

  TFI (C) Advance rulings – this area covers the rules and processes applying to prior statements by the administration to requesting traders concerning the classification, origin, valuation method, etc., applied to specific goods. Key policy measures include:

• Issuance of binding advance rulings;

• Number of advance ruling requests;

• Length of time for which the advance ruling is valid (duration);

• Maximum time by which the advance ruling will be issued;

• Percentage of advance rulings issued within the maximum issuance time;

• Information on advance rulings of significant general interest published;

• Possibility to request a review of an advance ruling or its revocation / modification; and

• Refusal to issue or the revocation of advance rulings is motivated.

  TFI (D) Appeal procedures – this area refers to the possibility and modalities to appeal administrative decisions by border agencies. Key policy measures include:

• Information on procedural rules for appeal publicly available;

• Higher level administrative and/or judicial appeal procedures available for customs decision;

• Timeliness of the appeal mechanism – time available for lodging and appeal;

• Timeliness of the appeal mechanism – avoidance of undue delays; and

• Information available on the motives of the administration’s decisions; and

• Average percent of appeals.

  TFI (E) Fees and charges – this area covers disciplines on the fees and charges imposed on imports and exports. Key policy measures include:

• Information published on fees and charges;

• Evaluation of fees and charges;

• Fees for answering enquiries and providing required forms and documents;

• Fees and charges periodically reviewed to ensure they are still appropriate and relevant;

• An adequate time period granted between the publication of new or amended fees and charges and their entry into force;

• Fees for Customs services during normal working hours;

• Implementation of penalty disciplines – transparency and proportionality; and

• Diversity of fees and charges.

2. Automating and streamlining procedures:

TFI (F) Documents – this area covers harmonisation and simplification of trade-related documents, in accordance with international standards. Key policy measures include:

• Acceptance of copies of documents;

• International Standards compliance;

• Number of documents;

• Periodic review of documentation requirements; and

• Time to prepare documents.

TFI (G) Automation – this area covers aspects such as the electronic exchange of data and use of automated risk management. Key policy measures include:

• Percent of import and export declarations cleared electronically;

• Percent of import and export procedures that allow for electronic processing;

• Pre-arrival processing supported by the possibility to lodge documents in advance in electronic format;

• Electronic payment of duties, taxes, fees and charges; integration with the automated declaration/cargo processing systems;

• Risk Management operating in an automated environment;

• IT systems capable of accepting and exchanging data electronically;

• Automated processing system include functions allowing for the release of goods subject to conditions (i.e. guarantee);

• Digital certificates and signatures in place; and

• Automated processing for Customs declarations available full-time.

TFI (H) Procedures – this area covers aspects such as the streamlining of border control (inspections, clearance), implementation of trade Single Windows, or certified trader programmes. Key policy measures include:

• Pre-arrival processing (implementation and transactions covered);

• Pre-shipment inspections;

• Physical inspections;

• Separation of release from clearance (implementation and transactions covered);

• Release times;

• Risk management: Customs and other border agencies;

• Single Window;

• Authorised Operators (AOs), coverage of AOs programmes;

• Perishable goods: inspections, storage, separation of release from clearance; and

• Expedited shipments.

3. Border agency co-operation:

TFI (I) Internal border agency co-operation – this area covers institutional frameworks, mechanisms, and IT systems for domestic co-operation between various border agencies. Key policy measures include:

• Institutionalised mechanism to support inter-agency coordination;

• Regular meetings to develop strategy and oversee implementation of border agency co-operation;

• Domestic coordination / harmonisation of data requirements and documentary controls;

• Interconnected or shared computer systems and real time availability of pertinent data;

• Domestic coordination of inspections, shared results of inspections and controls;

• Control delegation at the national level;

• Coordinated / shared risk management mechanisms;

• Authorised Operators programmes; and

• Coordinated / shared infrastructure and equipment use.

TFI (J) External border agency co-operation – this area covers institutional frameworks, mechanisms, and IT systems for co-operation between various border agencies with neighbouring economies and other trading partners. Key policy measures include:

• Alignment of working days and hours, procedures and formalities;

• Cross-border coordination / harmonisation of data requirements and documentary controls;

• Cross-border coordination / harmonisation of the different computer systems;

• Risk management co-operation, systematic sharing of control results;

• Development and sharing of common facilities;

• Joint controls;

• Mutual Recognition Agreements/Arrangements on Authorised Operators (AOs);

• Exchange of staff and training programmes; and

• Governance and impartiality.

4. Governance and impartiality:

TFI (K) Governance and impartiality – this area covers transparency of customs structures and functions, as well as accountability and ethics policies. Key policy measures include:

• Transparent structures and functions in the border agencies clearly established;

• Ethics policy applied to border agencies;

• Code of Conduct established in border agencies;

• Efficient internal communication about policies and procedures of agencies involved in the border process;

• Internal audit mechanism established in the various agencies involved in the border process;

• Clear provisions for the financing of the Customs administration; and

• Publication of an annual Customs Report.