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HomeNews and EventsCalendar of EventsIntegrated Trade Facilitation 'at the border' and 'behind the border': Reforms and Implementation

Integrated Trade Facilitation 'at the border' and 'behind the border': Reforms and Implementation


Post-event Statement

A four-day learning activity was held in Georgia from 10 to 13 April 2013 to understand the key features of integrated trade facilitation. It was organized in collaboration with the Central Asia Regional Economic Cooperation (CAREC) and the Government of Georgia. The objectives of the event were to: (i) highlight the impetus for, scope of, and benefits derived from Georgia's reforms to facilitate trade; (ii) showcase the procedures, which Georgia is developing with Turkey to expedite shipments along the CAREC corridor; and (iii) demonstrate the extent to which the Georgia Customs Administration (and other border management agencies) shares data and exchanges information with its neighbors and principal trading partners to minimize time spent in crossing borders.

Twenty-seven representatives from governments, mostly senior customs officials, and trade ministries from 10 Central Asia economies, as well as 13 representatives from knowledge institutes and the private sector attended the seminar and field trip. Participants shared practical experiences and explored ways to more effectively integrate trade facilitation approaches. Site visits to the Batumi Seaport and Customs Clearance Zone, Sarpi Border Crossing Point, and Tbilisi Public Service Hall afforded participants opportunities to observe firsthand the changes in procedures that have come about as part of the reform process.

Highlights of Georgia's Reforms

The key components of Georgia's trade facilitation reform include customs improvement and automation, border management strategy, and joint customs control. Trade liberalization, which has been implemented in a phased manner since 2002, has led to economic diversification for trade partners and trade in commodities. As part of the reform process, Georgia enacted a new customs code in 2006 that simplified the customs clearance process and better aligned it with international good practices. In 2009, it simplified documentation requirements for imports and exports. Finally, in 2012, Georgia created customs clearance zones—a one-stop shop for different clearance processes. This progressive, step by step reform resulted in a significant reduction in time and costs behind the border and at the border trade procedures. The key themes highlighted the extensiveness of the government's anti-corruption/integrity policies and the thoroughness of their implementation. The Georgian approach to designing and implementing reforms was of a practical, incremental nature: as problems were identified, solutions were devised. As these incremental reforms accumulated, the cumulative impact was comprehensive.

The impact of Georgia's reforms is evident in the transparent and efficient customs procedures at the Sarpi crossing point on the Georgian-Turkish border and at the Batumi Customs Clearance Zone. The facilities are equipped with impressive ICT tools to ensure transparency. A Turkish customs official met with the CAREC delegation at Sarpi to explain the scope and extent of its plans with the Georgia Customs Administration and other border management agencies to implement Joint Customs Control, with the aim of minimizing the time required for goods and people to cross the borders. Several briefings also covered Georgia's customs institutional reforms, border management strategy, and other integrated trade facilitation measures.

The presentations and explanations showed that strong political will is a prerequisite for successful reforms and demonstrates deep interest in the step by step approach taken by Georgia in implementing reforms. At the same time, the immediate transferability of the Georgian scenario to other Central Asian countries depends on several factors including volume and nature of trade.

Trade Facilitation at the border

Site visits to Batumi Sea Port (operated by Kazakstan's KazTransOil), Batumi International Container Terminal LLC (an affiliate of the Manila-based International Container Terminal Services, Inc.), and Georgia Revenue Service (Tax and Customs Administration of Georgia) allowed the participants to understand collaborative border management, multimodal logistics capabilities for transshipment of transit traffic, and efforts underway to expedite shipments between Georgia and Central Asian countries on CAREC Corridor 2. Georgia has introduced several tools, such as risk management strategy that involves physical inspection of random vehicles at border crossing points. Another tool is the Golden List program, an Authorized Economic Operator program that involves 175 companies. Batumi (largely an oil port, but has managed to increase container traffic in recent years) is performing better than Poti (70 km to the north and Georgia's principal container-handling port). But staff retention for Georgian customs is an issue (since 2007, Georgian customs have had a 95% turnover of staff).

Challenge with Private Sector Operators

The head of Georgia's Chamber of Commerce and Industry related that corruption was a major economic drain on Georgia, especially for small businesses, so its eradication was the top priority for the government, followed by providing trade regulators with appropriate infrastructure. He called for a more regional approach to facilitate trade: governments and business must agree on integrated tariffs, joint border management, and coordinated infrastructure development for improving supply chain efficiency.

Representatives of Gosselin Moving and the Poti Free Industrial Zone observed on the lack of influence of the trading community (business is not always consulted when bilateral trade agreements are drafted), and urged governments to empower and listen to business, and responding to Uzbekistan representatives' observation that business is not always familiar with prevailing laws and legislation in countries where they work, called for regular meetings between business and customs. Infrastructure development is also important: communication capabilities are not robust enough to track shipments across much of Central Asia, and electronic data exchange between customs services is not supported.

Neighboring Country Perspectives

Further development of rail transport is essential in light of the distances involved. Uzbekistan suggested that the Organization for Railway Cooperation can offer a forum to address rail issues. The Kyrgyz Republic representatives noted that it initiated reform of its trade regulations in 2008, which led to the establishment of a single window facility. Azerbaijan representatives reported that Azerbaijan, the People's Republic of China Turkey, and Georgia have recently concluded an agreement on container shipping. Kazakhstan shared its intention to develop a series of transport-logistics centers adjacent to border crossing points to increase throughput capacity. Uzbekistan representatives highlighted that country's single window development, which was funded ($5.5 million) by the Korea International Cooperation Agency, elimination of 8–10 procedures and documents, improved interagency communication, and increased frequency of meetings with the trading community.

Epilogue

The lessons learned from the four-day event include (1) the importance of employing modern ICT equipment in improving customs; (2) the utility of advanced risk management techniques (e.g. "the Golden List"); and (3) the success of transparency and anti-corruption measures as a driver of reforms.

Participants noted that trade facilitation and reform is challenging, and that interagency and cross-border cooperation requires a lot of work. Customs and other border management agencies need to step away from their traditional transaction-per-transaction document checks and physical inspection techniques and instead adopt a risk-based management approach. Political will is the essential ingredient, but peace and security are prerequisites. The sharing of experience is important as a multiplier effect, introducing reforms is not simply a matter of copying and pasting, countries need to study the experience of others and see what might apply in their specific context.

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Purpose

This training program aims to contribute to trade facilitation and to support regional integration in the Central Asia Regional Economic Cooperation (CAREC) region.

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Background

The CAREC program is a partnership of 10 countries (Afghanistan, Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, People's Republic of China, Tajikistan, Turkmenistan and Uzbekistan), supported by six multilateral institutions, including ADB. CAREC seeks to promote development through cooperation, leading to accelerated growth and poverty reduction. As a partner organization of CAREC, ADB is involved in all of its priority sectors, including trade facilitation.

This program is one of three events ADBI will be jointly organizing this year with the Central and Western Asia Regional Department of ADB on economic corridor development and integrated trade facilitation in the CAREC region. Through trade facilitation ADBI seeks to promote regional integration in the region.

The training program will consists of two parts. The first part will be discussions with customs and border control officers of Georgia and other experts regarding Georgia's border management strategy and the status of trade facilitation in CAREC. The second part consists of field visits to several Georgian border crossing points to observe management of goods and people crossing sea and land borders.

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Objectives

To gain an understanding of necessary technology and institutional reforms required for efficient cross-border mobility of goods and peoples in the CAREC region.

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Outputs

  • Improved understanding of necessary technology and institutional reforms required for trade facilitations;
  • Exposure to Georgia's strategy and experience with efficient border management of flows of goods into the country;
  • Discussion on feasible approaches to improving cross-border mobility of goods and people in the CAREC region.

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Participants

50 senior border-control and customs officials from CAREC countries.

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Language

English (interpretation services in Russian and Chinese will be provided)

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Responsibilities

Actively join discussions and share views and experiences.

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Partners

CAREC Program, Central and West Asia Regional Department, ADB.





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© 2014 Asian Development Bank Institute.