Trade facilitation … who exactly are we fooling?

Since the year 1997, I have been involved in a countless number of committees of national trade facilitation. The company I worked for then was the first customer of the EDI system that was introduced as a pilot project by the Customs Department, to issue the export customs entry number through a dial up system. 
To date, after 27 years, sadly we have failed to achieve to be compliant as a nation with best practices in international standards of border process through automation and trade facilitation.

Efforts of WCO

The World Customs Organisation’s (WCO) effort is to create a better coordinated border management to increase the co-operation between the Customs and other government agencies. In partnership with trade, the WCO provides the Customs administrations with the capacity to promote regulatory compliance in a manner that facilitates legitimate trade.
The Automated System for Customs Data (ASYCUDA) is a computerised customs management system that covers most foreign trade procedures and celebrated its 40th year in 2021, across 126 countries. The system was developed by UNCTAD to help countries manage efficient border management, with less cost and low investment and to reduce corruption. The system also can be connected to other networks through software interfaces and help build an efficient paperless environment to reduce transaction costs. 

Getting SL to step up its game

The WCO has had many targeted efforts in Sri Lanka but to date, the trade suffers due the lack of will and leadership to fully automate the Customs and to change the legal environment to include new processes, which would be the first step in creating a national single window.
Many international organisations (multilateral and bilateral) have come forward to help Sri Lanka to advance its border control regimes and to help facilitate a transparent and efficient trade management system over the years. A countless number of workshops, seminars and overseas trips have taken place but the fact remains, that the corruption and paperwork are retained and delays remain the same or have got worse in some areas. 

Where does SL stand?

I sadly hear the latest talk of artificial intelligence at various forums but we are yet to take off the ground with basic trade facilitation of linking the Customs, Port and Inland Revenue Departments into one platform, to facilitate trade, where we are ranked 104 among the 125 nations of the Bali Trade Facilitation Agreement rankings in 2023. 
Verite Research published an article in 2023 on a national newspaper highlighting the status of TFA with a practical proposal. (Sri Lanka behind least developed countries in trade facilitation: Verité Research; accessible on https://www.dailymirror.lk/business/Sri-Lanka-behind-least-developed-countries-in-trade-facilitation:-Verit%C3%A9-Research/215-264534)

Simply, the import containers are not traceable from arrival to delivery and have become one of the most corrupt systems in the clearance process. Ask the trade and they will confirm the status that all the procedures that were automated during the Covid-19 period are now reversed, as the pandemic is over, for the authorities to get back to the old system of controls, documents and more documents and in some cases, dual systems of automated data entry by the trade and to submit hardcopies. The last transaction cost study was done in Sri Lanka between 2009 and 2011, at the Finance Ministry, which was a high figure of 14 percent. Since then, data is not available, except the country has some of the worst rankings for trade facilitation and logistics performance index and corruption index, etc. A countless number of policy statements have been presented on a single window system for well over a decade but the ground reality is that no one is in charge of such a project.

Time progress but issues remain unaddressed for decades

At a recently held forum by the International Trade Centre (ITC) in Colombo, it was highlighted that the operational issues in the 1990s still remain in the year 2024. I had to point out that the national single window website was last updated in 2017/2018 and the national trade information portal was not accessible, as I was informed the funds to maintain it has not been provided and the NTFC committee had no social media updated and its only Facebook page had nothing updated after January 2019, of a workshop.

For example, Article 7 of the Trade Facilitation Agreement (TFA) requires WTO members to begin the processing of goods prior to arrival at the importing country (Article 7.1), to allow for e-payments of duties, taxes, fees and charges (Article 7.2), to allow goods to be released from the Customs with minimum risk and speed (Article 7.3) but the fact remains that an import container can take up to five to 10 working days to clear  and this can be only accelerated through a bribe, to avoid hefty demurrages! Tracking traceability is not there for containers.
Sri Lanka passed Electronic Transactions Act (ETA) Number 19 in 2006. This gave legal validity to electronic signatures, including digital signatures. The ETA further enhanced this Amendment Act No 25 in 2017. The Lanka Pay system developed a number of platforms to facilitate payment but in their own view:

“The adoption has been rather lukewarm. The primary reason is that different parties are giving different interpretations and opinions to the ETA. This is the nature of our country. When there are legitimate solutions available in our country, there are people who drive their own agendas to derail them. The Customs adopted digital signatures during Covid-19 but since then, things have gone south. When the Central Bank has adopted digital signatures, some banks are going slow, due to their legal people giving different interpretations to the ETA. Digital signatures and digital payments will absolutely minimise corruption and make businesses more efficient. All of us who want this country to progress and be competitive in international markets, must embrace these technologies. The government must mandate such progressive technologies if they are going to help economic growth.” 

We are only fooling ourselves

To close a long story short, we have been fooling ourselves for good three decades on automation and efficient border controls to facilitate trade and it continues to date. There is a recent presidential committee report on this for the Customs reforms as well. The main reason for this is lack of leadership, as always, which has been pointed out by the UN agencies and lack of political will along with lack of implementation and follow-up through mandatory legal requirements. The fact remains that authorities are working in silos in their own kingdoms, keeping the doors open for corruption. Interestingly, some trade sectors are also keen to keep the water muddy, to make more money out of an inefficient system and pass the cost to the consumers and manufacturers. 
If someone is serious, it’s time for action, with less lip service, would be my advice!

(The writer, an economist by profession, with well over 32 years of experience in the shipping, international trade and logistics industry, is the founder of Shippers Academy International, a former Chairman of the Sri Lanka Shippers’ Council and First Secretary General of the Asian Shipper’s Council)