By Francisco X. Santeiro
International trade and access to global markets are key factors contributing to economic growth and business opportunity throughout the world. They are especially beneficial in developing regions like Latin America and the Caribbean.
The World Trade Organization’s agreement that concluded in Bali, Indonesia, in December of 2013 was focused on trade facilitation. The WTO defines trade facilitation as “the simplification and harmonization of international trade procedures”, with “trade procedures” described as the activities and formalities related to the movement of goods in international trade. In simpler language, the trade deal is meant to reduce red tape at international borders and minimize bureaucracy related to customs clearance.
In any successful international trade transaction, transportation and related costs as well as speed to market are key considerations. Tariff reductions have long been the goal of multilateral and bilateral trade agreements. Some observers consider that the Bali trade agreement’s focus on trade facilitation made the agenda unambitious. True perhaps, but trade facilitation can however, if achieved on a global basis, result in significant increases in international trade.It is estimated that effective implementation could boost global trade by $1 trillion; even partial compliance could add nearly 5 percent to the world’s gross domestic product.
Francisco X. Santeiro is the managing director, customs and regulatory affairs, for the FedEx Express Latin America and Caribbean Division.
The efficiency of a county’s customs processes, as well as that of its airports and seaports, has considerable influence on its competitiveness in the global marketplace. According to the World Customs Organization, “Effective and efficient clearance of goods increases the participation of national industry in the global marketplace and contributes significantly to the economic competitiveness of nations, encourages investment and development of industry and increases the participation of small and medium enterprises in international trade.”
That is why continual efforts to lower the barriers tointernational trade resultingfrom inefficient customs clearance requirements and processes across the region must be a priority for stakeholders eager to achieve further and sustainable economic growth.
The blueprint for modern and efficient 21st century customs procedures is the Kyoto Convention3 (RKC), which was revised and adopted by the World Customs Organization in 1999. The Convention provides guidelines and best practices for facilitating trade by harmonizing and simplifying Customs procedures and practices. The Convention is now formally supported by more than 90 countries.
Kyoto’s governing principles are highlighted by the insistence on “transparency and predictability” in customs actions. This includes standardizing, simplifying and harmonizing customs procedures for all Convention adoptees.
Other key elements include maximizing the use of information technology (IT), including the increased use of automated customs procedures, and the implementation of effective risk analysis to reduce the unacceptably high inspection rates that can slow the customs clearance process.
In Latin America, only two countries have acceded to the RKC:Cuba and the Dominican Republic.
The solution is for governments to make it a priority to invest in and appropriately fund their customs services. Following the recommendations of the RKC, there must be an emphasis on modern information technology, overall infrastructure improvements, trainingand appropriate staffing levels.
Antiquated customs services and archaic procedures, which were inadequate even in the 20th century, will certainly serve as obstacles to economic success in the 21st.
This is where private enterprise must step up to help. We cannot expect to enjoy the full benefits of a more streamlined and efficient customs process without playing a role in its development and funding. Businesses and industry groups must play a role, offering knowledge, support and encouragement to governments as they modernize their customs services.
At FedEx, we are in the business of providing access – to people, products and services in 220 countries and territories across the globe. Each day, we see firsthand the benefits of access, and this guides our belief that when countries enable trade, they positively impact their economies, and their businesses and citizens prosper.
In an increasingly global marketplace, strong business connections are essential. Making customs more efficient is a key step in ensuring that economies in Latin America and the Caribbean have the tools and resources to compete and thrive. So we eagerly support efforts to achieve this goal and also to lower other barriers to trade.
About the Author:
Francisco X. Santeiro is the managing director, customs and regulatory affairs,for the FedEx Express Latin America and Caribbean Division. He provides strategic direction and support to the customs clearance operations in the more than 50 countries and territories the Division serves, and is also responsible for a number of other initiatives related to customs and international trade.