RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/152
4 May 1999
(99-1805)
Council for Trade in Goods Original:  English
TRADE FACILITATION
Role of Electronic Reporting in Trade Facilitation
Communication from Australia
The following provides views from Australia on the use of electronic reporting to facilitate
trade.  The purpose of our paper is to raise issues which Australia considers to be significant in this
area and to stimulate discussion of these at the third informal meeting of the Council for Trade inGoods to be held on 19 and 20 April.
Introduction
As already raised in WTO trade facilitation discussions, the increased use of electronic
systems can dramatically facilitate international tr ade.  Information technology (IT) provides a useful
tool which reduces border crossing times, while increasing control and improving revenue collection
functions.  IT is increasingly used for global trade and is vital in facilitating the increase in
international trade.
The growth of commerce over the Internet adds another dimension to global trade.  It allows
trade to be electronically conducted directly with the consumer and provides a simpler, cheaper and
more convenient option for business to business trade and for business to government communication.
IT may also offer significant opportunities for improving the access of small and
medium-sized enterprises (SMEs) to international markets, especially for developing country firms.
However, IT also poses important challenges for developing countries, including cost implicationsand the development of the necessary physical infrastructure and human skills.
Use of Electronic Reporting
Although much work has been done to encourage the use of IT for trade facilitation,
particularly in the area of EDI and UN/EDIFACT, industry indicated at the WTO Symposium in
March 1998 that more can be done.  Comments made by industry groups include:
(a) lack or insufficient use of automated processes and IT is a major source of delays, costs and
inefficiencies;
(b) the current use of IT is based on the superficial transfer of paper documents and manual
procedures into electronic equivalents; and
(c) too many forms, too many signatures, too ri gid application of existing rules and lack of
synergy between the public and private sectors.
A number of initiatives are underway which impact on the use of IT for facilitating
international trade and will go part of the way in addressing the issues raised above.  These include
the G7 Initiative, the US/UK Prototype, and other initiatives to simplify and harmonise customs dataG/C/W/152
Page 2
and documentation requirements.  It could be argued that it would be beneficial if these initiatives
were completed before computerising or making changes to existing computerisation.
Many customs administrations have developed electronic systems to communicate with
clients for import and export processing. The WCO encourages customs administrations to introducesuch systems and use risk analysis techniques to process information and ensure that any physical
intervention to inspect cross-border goods only affects a small minority of consignments.  Along with
the use of computerisation and risk analysis techniques, new methods to facilitate trade are being
implemented including the use of partnerships and alliances with industry.  These methods minimise
disruptions to an individual company identified as  low risk using risk analysis techniques.  This
process expects the company to put effort into their internal customs procedures and electronic
systems to meet customs requirements.  As a result the company receives facilitated processing whichincludes methods such as summary reporting, periodic reporting and duty deferral.
An increasingly attractive scenario for future global trade is one where information is
provided by the company responsible for the sale or supply of the goods concerned.  This information
will be available electronically to all those who need to, and have authority to access it.  This willinclude transport operators, port authorities, customs brokers, freight forwarders, finance houses,
insurance companies and government regulatory bodies in both the importing and exporting countries.
This option obviates the need for government regulatory bodies to introduce separate systems and
provides for single stream reporting.  It allows government regulatory bodies to `intervene by not
intervening'.  This option should make it easier to undertake international trade and provide astreamlined framework for trade in the next century.
Considerations
If it is potentially so beneficial to use IT to facilitate trade, why is it not happening to a larger
extent?  The following list identifies some reasons for the slow uptake and inefficient use of IT as
well as other issues which need to be considered in discussions.  This list is not exhaustive but shows
the complexity of the issues.
Use of Appropriate Systems
It is important that the most appropriate systems are implemented.  Systems should satisfy the
needs of traders which range from multinationals to small enterprises.  If complex and costly systems
are introduced, this adds to the invisible cost to trade and does not facilitate.  Concerns include:
(a) Different technology capabilities of clients and impact on regulatory bodies.  To cater for the
differing client needs, regulatory bodies may need to introduce a range of IT options fromsimple solutions such as an electronic form option, possibly using the Internet, to larger
systems such as EDI systems.  If only EDI systems are introduced they need to be tailored to
cater for SMEs by using software packages or simple transaction based solutions.  If this is
not done, systems which are too complex and costly will be introduced and this will not
promote trade facilitation.
(b) Different levels of computerisation of government regulatory bodies nationally and
internationally.  This has lead to the introduction of isolated and non harmonised systems.
(c) Incompatible trade systems.  As with regulatory bodies, industry is also developing a range of
trade initiatives and systems.  These may use variations in data elements and formatting
requirements, may not be harmonised nor based on international standards.  Systems may not
be integrated with other systems (and processes) in international trade such as transport,
banking or customs requirements.G/C/W/152
Page 3
Legislative requirement for paper documents
Although electronic systems have been introduced, some governments still require paper
documentation, thereby reducing the benefit of introducing electronic systems.  Consideration needs
to be given to the reduction or elimination of the requirement for paper documentation for customsand other cross-border trade administration as well as other documents for international trade.  This
issue is being addressed by APEC in its Blueprint for Action on Electronic Commerce with
implementation by 2005 for developed and 2010 for developing economies.
Low level of uptake of use of computerisation
The level of use by clients of introduced IT systems for communicating to regulatory bodies
has, in some instances, been low.  This reduces the benefits of introducing IT and increases the cost to
regulatory bodies as manual processes have to be kept in place.  One possible cause of low uptake is
the selection and implementation of inappropriate and unsuitable solutions.
New Technology Developments
New technology options and developments are constantly taking place.  These include
initiatives such as Bolero, Internet trading system s, XML (EDI messaging standard for the Internet),
virtual private networks which could link regulatory bodies/customs administrations or all the players
involved in the trading cycle, Bureau Services which can enable users with differing technology
capabilities to connect to electronic systems and open systems, such as the Internet, which obviate the
need for pre-existing agreement arrangements.
These new developments are sometimes cheaper, simpler and more convenient.  They provide
suitable alternatives to current technology use and provide opportunities for innovative ways ofelectronic communication.
New developments may raise further issues, such as with Internet commerce which raises
such issues as security, copyright, privacy, consumer protection, content regulation, taxation, cross
border trade issues.  These issues are being considered and addressed by a range of organisations and
initiatives.
In most cases, though, technology is not th e problem, and technology problems can be
resolved. What needs to be discovered is how best to use this technology for international trade.  This
has to be done at the highest management level rather than at the technical level.
Range of Options/Expectations
Customs administrations, and other regulatory bodies, are increasingly expected to introduce
a range of different options in electronic and paper form to cater for differing client requirements and
initiatives being introduced.  These include transaction reporting, summary entries with possibly duty
referral, single stream reporting (which requires electronic hook up with other government regulatorybodies) and seamless integrated transactions  (which includes risk management and audit capabilities).
In some instances differing types of electronic options are also required to cater for the differing
technology capabilities of clients.  The intention of these options is to provide benefits to trade but
there is a cost burden to governments with these expectations and it may be unrealistic to expect all of
these to be introduced, particularly for developing countries.
Given the future scenario raised at the beginning of this paper it may be wise to question the
introduction of customs specific systems.  Instead of putting the onus on customs, and other
regulatory bodies, there needs to be more invo lvement with areas of the trading community.G/C/W/152
Page 4
Bolero is a good example of trade facilitation through a purely private initiative.  This
initiative aims to provide a guaranteed and secure delivery, in electronic form, for trade
documentation.  It is a global project with the infrastructure for cross industry services in a binding,
trustworthy legal environment.
Presently firms operating in several markets are required to provide different information
using different processes via either paper or computerisation to different government regulatory
bodies.  Unless changes are introduced this will continue.
Single stream reporting to government is increasingly expected by business.  This option
requires governments to implement systems linking government regulatory bodies.  From the clients'
point of view they deal with one body.   This op tion would dramatically change existing systems and
such change may be complex and costly to introduce.  Any change may impose a cost on industry
(particularly SMEs) and therefore add to invisible costs to trade but may be beneficial in the longer
term.
Cost implications
The cost of enhancing existing systems, re-engineering systems, providing a range of options,
introducing new systems and supporting expensive inherited systems needs to be considered and
realistic measures put in place.  Regulatory bodies often have to face resource restrictions which make
identification of the most effective and suitable option/s even more important.
Development Aspects
The use of IT may offer significant opportunities for improving the access of SMEs to
international markets.  This may be particularly important for developing countries given the majorrole of such enterprises in their economies.  IT, including the use of electronic reporting, may help
address some of the cost, administrative, and information hurdles to increased participation of
developing countries in international trade, especi ally in relation to the growth of non-traditional
exports and the penetration of new markets.  These benefits may have particular relevance to small
and geographically isolated economies.  Use of electronic reporting can also contribute to public
sector reform and improved customs administration and revenue collection.
However, increased use of electronic reporting will also pose major challenges for developing
countries.  These include the initial start-up costs, and the need to develop the necessary physical
infrastructure and human resources.  These problems and cost implications should be fully taken into
account in any consideration of possible rules or other work on trade facilitation.  There should be an
assessment of technical assistance requirements in this area and the extent to which theserequirements are being addressed through either multilateral organizations or by bilateral donors.
Conclusion
There is no doubt that industry can benefit from the removal of unnecessary or inefficient
government data requirements and that industry require fast, reliable, flexible, harmonised,
cost-efficient and largely paperless systems.  But as we see from the issues raised above this is not as
easy as it seems and does not solve all the issues.  Simply improving one aspect of the trading cycle,
such as customs administration's use of electronic reporting, has only limited benefits.  The whole of
the trade transaction process must be considered from the point of quotation to the point of paymentwith both official procedures and commercial practices included.
For electronic trade to be most beneficial all players in the trade cycle must be involved:
(a) Industry to develop systems that facilitate international trade.G/C/W/152
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(b) Government regulatory bodies to allow for electronic reporting in a simple and flexible
manner to facilitate the introduction of these initiatives.
(c) Regulatory bodies, government and industry to remove all the impediments to these changes
and the requirement for paper documentation.
In examining the issues raised in this paper WTO Members should consider possible options
for:
(a) Supporting initiatives underway which simplify and harmonise data and documentation
requirements such as the G7 initiative, UK(EU)/US Prototype, WCO revision of the KyotoConvention and the Common Customs Data Model.
(b) Encouraging industry to contribute to the development of trading systems which link all the
players in the trading cycle.
(c) Encouraging regulatory bodies to investigate the use of new technology such as the Internet to
reduce costs, particularly for SMEs.
(d) Encouraging regulatory bodies not to be too prescriptive and allow for open, flexible options
for electronic communication that suit industry requirements.
(e) Ensuring the needs of developing countries and cost implications are identified and addressed,
including in considering the impacts of any rules in this area (e.g. in relation to increase use of
computerisation).  Expectations should be realistic and achievable.
(f) Ensuring that there are no impediments to the use of electronic reporting for international
trade (e.g. removing the legal requirements for paper documentation and ensuring electronic
options are available).
(g) Ensuring that there is no discrimination between trade undertaken electronically and trade
undertaken in the more classical, physical manner. "Discrimination is not trade facilitation".
This was stated by SITPRO at the March Symposium.
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