TheWorld Bank J u l y 2 0 0 4 PREMnotes n u m b e r 8 9 Economic Policy Good practice in trade facilitation: lessons from Tunisia Tunisia's experience shows how information and communications technology can be used to facilitate trade--cutting costs, saving time, and increasing international competitiveness. It also highlights the conditions that make these benefits possible. Although trade liberalization can create jobs nization rules. But despite initiatives in the and raise incomes, these benefits can easily be 1980s to streamline the flow of information undermined if trade transactions involve exces- on merchandise trade, trade transactions sive costs and delays--reducing a country's remained costly and inefficient through the export competitiveness. Trade facilitation 1990s. Customs clearance requirements, port Facilitating trade efforts aim to reduce such costs and delays logistics and procedures, and quality assur- by simplifying trade procedures and document ance checks strained resources and imposed creates jobs and flows, modernizing customs and port systems, significant costs on both the government and promoting quality and safety standards, and the private sector. raises incomes improving trade logistics. In the late 1990s cargo spent an average In recent years several countries have used of 8 days in Tunisian ports--and in many cases information and communications technology up to 18 days--due to customs, port, and tech- to achieve one or more of these goals. Tunisia nical control procedures, compared with a few provides a good example of stakeholders com- hours in Singapore and 4 days in Argentina ing together to simplify trade procedures and and Brazil. Similarly, customs clearance automate documentation and customs required an average of 4 days in Tunisia--and requirements. In fact, it is the first country in many cases up to 7 days--while it took just in the Middle East and North Africa that has 25 minutes in Singapore, 1 hour in Morocco, succeeded in applying information and com- and 3 hours in Argentina. Moreover, Tunisian munications technology to the entire range customs officials physically inspected 50­80 of trade documents. When other countries in percent of imported merchandise, while the the region (such as Morocco) have used such corresponding shares were less than 5 per- technology, they have focused on customs and cent in Singapore, 15 percent in Morocco, ports, overlooking other practices and pro- and 30 percent in Argentina. cedures that impose transactions costs on trade Further complicating matters, Tunisia's activities. This note summarizes the context procedures for external trade required that and challenges, key initiatives, impact, and documents be processed by multiple enti- success factors of Tunisia's efforts. ties: the Ministry of Commerce, banks, the port authority, and the customs agency, as Context and challenges well as the usual professional organizations Over the past two decades Tunisia's trade has such as customs brokers, shipping agents, been increasingly liberalized, with domestic and freight forwarders. The inefficiencies of firms gaining greater access to export markets these trade document processing and clear- through an agreement with the European ance practices are illustrated in figure 1, Union and adherence to World Trade Orga- where the lines indicate the main document from the development economics vice presidency and poverty reduction and economic management network exchanges that had to be carried out phys- measures to facilitate trade, starting with the ically--meaning that hard copies of docu- simplification and automated processing of ments had to be delivered and in some cases trade documents. The project focused on picked up again (after several days) for fur- streamlining customs and inspection pro- ther processing. cedures and using information and com- Underlying these inefficiencies were 19 dis- munications technology to improve the tinct steps required for import transactions information exchange associated with cargo and 15 steps for export transactions. (Some handling and clearance. of these steps did not apply to offshore com- panies, which by definition do not operate in Simplifying and standardizing documents the domestic market. Still, there was a need The reforms were based on the adoption Tunisia has vastly to standardize processes and streamline pro- of international standards for trade docu- cedures so that all traders could benefit. This mentation (a process initiated a few years simplified trade... was particularly important because the dis- earlier with support from the European Com- tinction between offshore and onshore enter- mission) and significant coordination among prises will disappear once the agreement with various stakeholders. Two documents pre- the European Union is fully implemented viously required by the authorities were elim- in 2008.) Beyond the costs involved, these inated, and three (the Certificate for External cumbersome processes severely impeded the Trade, submitted by importers and required ability of Tunisian companies to respond to by the Central Bank for foreign exchange or accept short-notice orders, further under- control, the customs declaration, and tech- mining their competitiveness. nical control documents) were redesigned to reduce duplication and standardize ter- Key initiatives minology, with the customs declaration In 1999 the Tunisian government--supported aligned with international standards. In addi- by the World Bank through the Export Devel- tion, two of the four documents required for opment Project--introduced comprehensive goods removal were eliminated. The devel- opment of electronic formats for trade doc- uments made it easier to share information Figure 1 Trade document processing in Tunisia, 1999 among stakeholders and process the infor- mation contained in the documents. CUSTOMS Introducing Tunisie Trade Net AGENCY In 2000 a semipublic agency, Tunisie Trade FREIGHT Net (TTN), was established to operate a value SHIPPING FORWARDERS AGENTS added network that provides electronic data interchange for stakeholders and to expedite flows and processing of trade documents. TTN shareholders include 10 government agencies, including the national port author- MINISTRY OF TRADERS COMMERCE ity and Tunis Air, and 18 private organiza- tions, including several banks and the Tunisian Internet Agency. The system works with all the actors involved in international trade, including the customs agency, Ministry PORT CUSTOMS AUTHORITY of Commerce, technical control agencies, BROKERS Central Bank, ports, and private traders, agents, freight forwarders, customs brokers, CARGO BANKS and banks (figure 2). HANDLER Three main documents are processed through the TTN system: the Certificate for PREMnote 89 July 2004 External Trade, the customs declaration, and container load takes an average of 2 min- technical control documents. In addition, the utes, whereas manual verification requires system processes online tariff payments. A up to 12 hours and three customs staff. At connection to the TTN server enables par- the port of Rades the use of scanners has ticipants to exchange documents and mes- reduced by about two-thirds the number sages with other participants. Shipping of trucks waiting for container verification.) manifests and customs declarations are sent over the network, reducing processing times. Impact In addition, manifest data are available to the Although it is too early to assess the full cargo handling operator in electronic format, impact of the above initiatives, there is evi- eliminating the need for the handler to cap- dence that Tunisia's investments in trade ture data and improving planning and oper- facilitation have dramatically reduced import ...dramatically ations. TTN provides a flexible user interface: and export processing times. Imported goods trade professionals (customs brokers, freight can now be cleared from ports in an average reducing import forwarders, ship agents, and so on) use client- of 3 days, compared with 8 days a few years based applications designed to process large ago. For example, manifest processing after and export numbers of transactions, while occasional the completion of vessel operations used to users can opt for a Web-based interface. take up to 4 days--but electronic processing processing times TTN employs 45 staff, 25 of whom are has cut that to 1­2 days. Payment of customs experts in information technology. Users pay and port duties and storage charges now TTN about $70 a month to access its network, takes only a few hours, rather than a full day. as well as a processing fee per document ($3 The time needed to prepare and process cus- for each of the three required documents). toms declarations has dropped to 15 min- utes, down from as long as 3 days. In 2003 Other efforts the physical inspection of goods reached the Several other measures were needed to com- target level of 15 percent, down from 50­80 plement the above actions, including: percent in late 1998. · Enhancing the customs computer system to support international message and doc- Figure 2 Trade document processing in Tunisia after ument standards for automation of man- implementation of Tunisie Trade Net (TTN) ifest acquittal and processing of customs declarations. (These changes have re- duced personal contacts between declar- CUSTOMS AGENCY ants and customs officials, facilitated more rapid, transparent, and consistent pro- FREIGHT SHIPPING cessing of customs declarations and elim- FORWARDERS AGENTS inated routine manual checks, and enabled risk management by allowing data sub- mitted through declarations to be com- pared with predefined parameters to MINISTRY OF TRADERS TTN SERVER COMMERCE identify nonconforming patterns.) · Developing Ministry of Commerce infor- mation systems to electronically process approvals for restricted goods through TTN, eliminating manual delivery and col- CUSTOMS PORT lection of the Certificate for External Trade BROKERS AUTHORITY to and from the Ministry of Commerce. · Installing three scanners at key border and CARGO port locations to speed verification of con- BANKS HANDLER signments. (Though not a perfect sub- stitute, scanning and analysis of a full PREMnote 89 July 2004 Electronic processing of ship manifests ported electronic processing and signa- has generated savings for the maritime cargo tures. Among the most important changes handling operator by eliminating the need were allowing value added network ser- to capture data already available through the vices to be supplied through telecommu- electronic manifest and improving vessel and nications and the Internet, introducing yard operations through the earlier avail- a new, streamlined customs declaration ability of accurate data. Moreover, the TTN procedure and procedures for submitting experience has shown how information and and processing external trade documents communications technology can increase the through the TTN system, and recognizing efficiency of government administrative the legal validity of electronic documents processes. As a result the TTN platform is and signatures. Tunisia's success being considered for electronic procure- Other success factors included: ment services and other e-government · Simplifying customs requirements. has involved much applications. · Extending electronic processing to all import and export administration and more than applying Success factors other agencies involved in trade trans- Tunisia's experience points to the dramatic actions, and developing their "back technology to trade improvements in trade clearing that can offices" to handle electronic processing result when administrative and political com- of trade documents. documents mitment combines with advances in infor- · Adopting internationally recognized mation and communications technology. standards and codes to ensure a com- But there is much more involved than sim- mon language among different users ply applying technology to trade documents. and in different countries. Perhaps the most important prerequisite is · Aligning the relative costs of processing commitment at the highest level of govern- documentation on paper and online. ment. This was made possible in Tunisia by the close involvement of the minister of com- Further reading merce, who was also the chairman of the Alavi, Hamid, and Donald Lim Fat. 2003. Superior Export and Investment Council, "An Initial Impact Evaluation of the a cross-ministerial committee reporting Bank's Trade Facilitation Support under directly to the president of Tunisia. Tunisia Export Development Project." The second main factor for success was World Bank, Washington, D.C. cooperation among private and government stakeholders at all stages of the reform This note was written by Hamid Alavi (Senior process. This was achieved by creating a steer- Private Sector Development Specialist, Finance, ing committee and a technical committee Private Sector, and Infrastructure Group, Mid- composed of key stakeholders at the early dle East and North Africa Region) and is based stages of the process. These committees were on Alavi and Lim Fat (2003). instrumental not only in the design of the If you are interested in similar topics, con- initiatives, but also in their implementation. sider joining the Trade and Competitiveness The- The third factor was the adoption of a matic Group. Contact Faezeh Foroutan (x37680) regulatory framework that allowed and sup- or click on Thematic Groups on PREMnet. This note series is intended to summarize good practices and key policy findings on PREM-related topics. The views expressed in the notes are those of the authors and do not necessarily reflect those of the World Bank. 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