Achievements in Business Facilitation within the FTAA Process

 
From the start of the FTAA negotiations, the business community and trade negotiators expressed interest in making business facilitation a specific and early part of the FTAA process. This was achieved through the use of Americas Business Forums supported by the Business Network for Hemispheric Integration (BNHI), the US Chamber of Commerce and the American Chambers of Commerce in Latin America. The forums were incorporated into the Trade Ministerial meetings held in Denver (1995), Cartagena (1996) and Belo Horizonte (1997). At the latter meeting, the working groups were instructed to include in their work programs the identification of business facilitation measures.¹

The meetings adopted a general approach to the definition of business facilitation, with an open agenda that included transparency, customs, standards and other concerns put forward by country delegations. At the Costa Rica Ministerial (1998) the ministers decided to give meaning to the phrase to make "concrete progress�by the end of the century" by instructing the negotiators to agree on specific business facilitation measures. By December 1998, the Tripartite Committee (IDB, OAS, ECLAC) had compiled from all sources more than 200 measures for consideration. Trade Negotiating Committee (TNC) discussion of the measures led to a decision to concentrate on customs and transparency issues.

Agreement was reached on the selection of eight customs measures, which were referred to a special ad hoc group of customs specialists. At the Toronto Ministerial (1999) the 34 Summit of the Americas countries agreed to implement the eight customs measures by the time of the Buenos Aires Ministerial in April 2001, an example of early progress in trade liberalization in the FTAA process. The ad hoc group identified end products for business users for each measure and broke down each measure into elements that could be implemented by customs officials. In this manner, 26 "elements" were identified for the eight measures. The Tripartite Committee and other institutions offered technical assistance to those countries that requested it to implement the measures.

Ten transparency measures were also agreed to and implemented. These included the publication of inventories of national laws and regulations in the areas impacted by the FTAA negotiations. National web sites were also included in the FTAA Home Page, providing access to information on trade-related issues.

Thus by 1999, eight customs measures to improve and lower the cost of importing and exporting among member countries had been approved, as well as 10 measures for increasing transparency by giving the business community easier access to government information. Even though full implementation by all countries was not achieved by April 2001, the agreement was a major achievement nonetheless.
 

A summary description of the eight customs measures and their degree of implementation is presented below.

Temporary import of goods related to business travel
This measure allows for the duty-free entry of promotional materials and samples of wares. Such articles are not treated as imports; instead, they are granted a special designation, simplifying paper work and suspending all duties. Included in this category are materials and wares for trade missions and trade fairs. Thirty-five percent of the Summit countries have implemented this measure. Many of the smaller economies are developing customs procedures to offer this same service in the near future.

Express shipments
This customs measure allows the express shipment across borders of parts and documents. The goal is to set extended hours for customs officials to process the shipments and to expedite procedures. Twenty-six percent of the countries of the hemisphere have implemented express shipment procedures. Many smaller economies are still upgrading their customs systems, as express shipments require modern, high-speed computing systems.

Simplified procedures for low-value shipments
Low-value shipments are not subject to significant duties or import controls, therefore, they should pass through customs quickly. The key is to determine value quickly through the use of electronic filing and to develop an efficient customs review system to minimize risk so that goods can enter with ease. Forty-four percent of the countries have implemented this measure.

Compatible Electronic Data interchange Systems (EDIS) and common data elements
This measure is crucial for the electronic filing of customs information, making it easier for customs officials to assess duties, rules of origin, etc. and for shippers to provide the appropriate documentation for their shipments. The compatible EDIS allows different customs systems to share data among all parties interested in a shipment (the importer and exporter, country customs officials, insurance brokers, freighters and inspectors). Twenty-four percent of the countries in the hemisphere have fully implemented this measure.

Harmonized commodity description and coding system
The Harmonized System (HS) greatly facilitates international commerce by providing a single trade language for all public and private users of the international trading system. The members of the World Customs Organization (WCO) have committed to apply the HS at the six digit level (1,241 headings) for tariff classification purposes and it is also used for identifying goods subject to controls, origin, VAT calculations, trade statistics and freight tariffs. More than 85% of the countries are now using the HS.

Customs information dissemination/hemispheric guide on customs procedures
This measure has its origins in the Working Group on Customs Procedures of the FTAA. The WG, with the aid of the IDB, compiled a comprehensive and clear document on the customs procedures of each participating country. This Customs Guide (available on the FTAA Home Page) is an important step forward in transparency and access to customs data. Ninety-four percent of the countries have partially implemented this measure. What is lacking now is for countries to provide the hyperlink for electronic updating of the information provided (only 6% have done so).

Codes of conduct for customs officials
This measure is designed to reduce corruption in customs systems. It encourages strengthening laws and regulations on the ethical conduct of government officials, especially as they apply to customs employees. The Arusha Declaration of the WCO contains 12 elements recommended for inclusion in customs codes of conduct, including standards, conflict of interest and sanctions. The FTAA process has recognized the declaration as a guide for creating customs codes of conduct. This measure has been implemented by 47% of the countries.

Risk analysis/targeting methodology
This final measure refers to separating high- from low-risk goods and travelers. It uses such mechanisms as combining random and targeted searches to avoid delays and risky and illegal imports. The method for doing this rapidly and effectively comes with modernizing of customs operations; it requires good documentation, trained personnel and codes of conduct. Twenty-one percent of the countries have implemented this measure; some medium sized economies have implemented it only partially.

Observations
The implementation of these eight measures is making an important contribution to business facilitation by increasing the openness and efficiency of customs operations in the hemisphere. Unfortunately, little attention has been paid in the press to this early, tangible achievement of the FTAA process. The business community, through the BNHI, continues to monitor the implementation of these measures, provide feedback and promote further business facilitation. Most of the measures have a technical component and, therefore, technical assistance is an important part of successful implementation. Such assistance is being provided by various institutions, chief among them the IDB/IMF, OAS, the World Bank, UNCTAD, WTO and others.
 

[1] This article is summarized from "Business Facilitation: Concrete Progress in the FTAA Process" by Jane Thery, OAS Trade Unit.

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