2014 Trends: ICT’s Role in Trade Facilitation towards Building a Paperless Supply Chain
Despite the breakneck developments in information and communications technologies (ICT) and trade data-exchange standards, trade documentation exchanges remain mostly paper-based. However, in the modern trade environment, such paper-based exchanges cannot satisfy the need for efficiency and security.
Global trade expanded rapidly during the 1980s and 1990s. The resulting complexity, speed of the modern supply chain, and the number of parties involved greatly increased the requirements for information controlling the flow of goods. Despite the breakneck developments in information and communications technologies (ICT) and trade data-exchange standards during the same time, trade documentation exchanges remained mostly paper-based. However in the modern trade environment, such paper-based exchanges cannot satisfy the need for efficiency and security.
Paperless trade facilitation is called upon as the next step to be taken by nations to enhance efficiency, security and transparency of international trade. One “omnibus” means to address this that has gained considerable momentum in the last decade is the so-called “Single Window”. In Recommendation No. 33, UNECE defines the Single Window as a “facility that allows parties involved in trade and transport to lodge standardised trade-related information and/or documents to be submitted once at a single entry point to fulfil all import, export, and transit-related regulatory requirements.
Hence, countries and regions will have to work together to ensure that domestic and cross-border paperless trade systems are interconnected via a Single Window environment, which would ultimately enable the development of paperless supply chains. Undoubtedly, Information and Communications Technologies (“ICT”) play the central role during this transition.
The Benefits of Paperless Trade
ICT is transforming the world on a daily basis. Switching from paper documents to electronic ones would substantially save cost, increase security and transparency in supply chains, and improve financial performance of Governments and the private sectors.
All parties involved in the supply chains stand to gain considerably from converting to paperless trade:
• Governments – Paperless trade increases the security of trade operations by utilising electronic data, which are more structured, reliable and easier to use. Administrative costs are lower and less revenue is lost due to corruption and non-compliance.
• Private Sector / Supply Chain Operators - Paperless trade eliminates the operational costs related to processing, increases the transparency of the supply chains, encourages the information exchange between the trading partners, improves trade and finance processes and lastly, helps build new collaborative modes among companies.
• Developing and Emerging Economies – Paperless trade will result in simplified and cheaper trade procedures, greater transparency, higher compliance and higher governmental revenues. For instance, automation will significantly reduce the scope for discretionary subjective decisions, and hence, for corruption. Some landlocked countries and other developing countries will profit from the development of electronic corridors, where traders can send information required in a chain of border crossings well in advance for better and timely analysis by the authorities.
For the transition to be successful and sustainable, governments, international and regional organisations must provide a supportive political, regulatory and business-accommodating environment. In fact, Single Window development on a national scale and paperless trade projects are already under way in the Asia-Pacific region. They are led by the Governments, and regional and cross-regional initiatives, such as the Association of Southeast Asian Nations (ASEAN), United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), Pan Asia e-Commerce Alliance (PAA) and Asia Pacific Council for Trade Facilitation and Electronic Business (AFACT).
ICT’s Role to Play in the Future of Trade
The new WTO Trade Facilitation Agreement, which was struck at the 9th WTO Ministerial Conference in Dec 2013, creates binding commitments across 159 plus WTO Members to expedite movement, release and clearance of goods, improve cooperation among Members on customs matters, and help developing countries fully implement the obligations. The agreement will increase customs efficiency and effective collection of revenue, help small businesses access new export opportunities through measures like transparency in customs practices, reduction of documentary requirements, and processing of documents before goods arrive.
This means that the trade community will be expected to face an exponential growth in the facilitation of trade, and yet faced a huge demand for data, increasing the need to ensure effective and efficient use of ICT. ICT providers have to address these challenges and provide sufficient support to the trade community, by offering cutting-edge product features to enhance security safeguard, increase operational efficiency and optimize cost management in order to enable users to realise their maximum potential.
A recent ICT innovation that significantly impacts the Single Window is the Services-Oriented Architecture (SOA). An SOA utilises methodologies for designing and developing software to enable interoperability. Designing the Single Window using SOA principles will enable a web-based Single Window environment to integrate widely disparate systems and applications to use multiple implementation platforms. Hence, a Single Window using the SOA integration approach provides a flexible integration model for online and transactional processing through a messaging architecture.
Two significant advances in ICT development are expected to dominate the Single Window development landscape in the coming years: cloud computing and mobile computing. The advent of cloud computing where applications are served with data that is stored on the internet and can be accessed and shared by the parties involved in the supply chain operation has evoked various degree of interest.