INSTRUMENT FOR TAJIKISTAN'S TRADE DEVELOPMENT

At the 9th Ministerial Conference in Bali, 3-6 December 2013, WTO Members concluded the negotiations on the Trade Facilitation Agreement (TFA) whose purpose is to facilitate trade by expediting the movement, release and clearance of goods in a view to reduce the time and cost of cross-border trade. Tajikistan – a WTO Member since 2 March 2013, has ratified the TFA on 6 May 2015, thus making a concrete commitment to enhance the transparency and efficiency of border procedures as well as establishing a fairer and more predictable trading environment. The implementation of the TFA in Tajikistan creates a significant opportunity for businesses to benefit from new trade facilitative mechanisms, thereby reducing trade costs, improving their competitiveness and enhancing their participation in the global value chains that characterise international trade today. In order to fully benefit from the TFA, businesses in Tajikistan must learn about the obligation taken upon by Tajikistan under the WTO and engage with policy makers to ensure that their needs are factored in the policy design, implementation and monitoring processes.

Trade facilitation as a way of establishing new opportunities in Tajikistan

As set out in the World Bank Reports “Doing Business”, Tajikistan moved from 189 (2015) to 144 (2017) in the ranking of 190 economies on the ease of trading across borders. Despite these results, Tajikistan is still lagging behind in Central Asia as we compare the costs and times spent at the border.

In order to insure Tajikistan attractiveness in the region and open new opportunities, trade facilitation is a key feature for both governments and business. By improving the transparency, predictability, fairness and efficiency of trade formalities, it shall cut the costs of doing trade, reduce delays at the border, and increase the competitiveness of businesses. By promoting enhanced coordination and cooperation of border regulatory agencies, trade facilitation also contributes to avoid redundant procedures (e.g. consecutive inspections by different agency vs. one synchronized inspection), redundant data requirements and unnecessary complex formalities.

But what really is Trade Facilitation?

A wide variety of activities undertaken by governments and/or the private sector can facilitate trade. According to the WTO, Trade Facilitation is “The simplification and harmonization of international trade procedures”, with trade procedures being “the activities, practices and formalities involved in collecting, presenting, communications and processing data required for the movement of goods in international trade”.

The objective of trade facilitation is to address the key challenges faces by traders at the border including:

• Delays in administrative procedures due to the number, complexity and time required for conformity assessment to obtain licences and permits or to comply with customs requirements
• Administrative burdens due to large number of sometimes overcomplicated documents, numerous different administrative windows, redundant procedures and formalities
• High fees and charges, often applied for fiscal or indirect protection of domestic market reasons or “unnecessary” pre-shipment inspections
• Inconsistent, unpredictable and insufficiently transparent procedures due to limited publication of applicable rules and formalities and lack of awareness of border

Trade facilitation is a win-win game, all countries and stakeholders benefit from an enhanced cross-border environment:

• Businesses: increased volume of exports and diversification of exported products and destination due to lower cross-border transaction costs
• Government: increase in government revenue through increased trade flow, enhanced business compliance, more efficient detection of customs fraud and corruption
• Consumers: increased purchasing power through job creations and reduced trade costs on imported products

Well aware of the needs for trade facilitation, the WTO members concluded the Trade Facilitation Agreement that came into force on 22nd of February 2017 for all the members that ratified it.

The Trade Facilitation Agreement (TFA) a huge step forward

The implementation of the TFA translates into a reduced number of documents required for imports and exports, minimized fees and charges imposed on import, export and transit, strengthened coordination between border regulatory agencies to improve traders’ experience.

Globally according to the most conservative studies, it should boost export growth up to 750 billion of dollars, and increase global GDP growth up to 0.35%. It means that the TFA should have a bigger impact on international trade than the elimination of all remaining tariffs.

In Tajikistan, the TFA can be of particular benefit to traders as they continually face lengthy and costly border delays. The First Deputy Minister of Economic Development and Trade estimates that trade costs for Tajikistan businesses will decrease by 13-15% following the full implementation of the TFA.

The TFA will increases transparency (e.g. publication of information, consultation) and efficiency (single window, border management etc.) of cross-border procedures in Tajikistan and the current situation suggests considerable room for improving trade processes and procedures. It is also important for Tajik business to monitor its implementation in the countries with which they trade.

In this context, among multiple obligations undertaken to facilitate trade, the TFA provides for the creation of a Coordinating committee on facilitation of trade procedures (CCFTP), a collaborative platform that will bring together all trade stakeholders to facilitate a coordinated approach in the implementation of the obligations.

As part of Tajikistan’s implementation of the TFA (ratified on 6 May 2015), the Tajikistan Trade Facilitation Committee was established through appropriate legislation, [Decree No. 529 on 24 December 2016] making it the first country [in the region] to have established a CCFTP.

Coordinating committee on facilitation of trade procedures (CCFTP) an important new tool

The CCFTP should lead to substantial improvements; it will address one of the key challenge of trade facilitation: stakeholder coordination.

Objectives.

The objectives of the CCFTP are to enhance the simplification and harmonization of international trade procedures (including, the implementation of the WTO TFA obligations) and to facilitate the coordination and collaboration between ministries, border regulatory agencies and the private sector.

These objectives will be carried out by the following activities:

• Gathering information on state-of-the-art and best practices in trade facilitation from around the world. Relevant knowledgeable database will be continuously developed for informing the particular trade facilitation context of Tajikistan.
• Identifying trade facilitation issues and stakeholders’ perspectives.
• Increasing the awareness among public and private stakeholders about trade facilitation issues impacting Tajikistan’s trade competitiveness Develop TF performance indicators related to issues
• Developing and adopting trade facilitation performance indicators for Tajikistan that are comparable over time, at both a national and international level.
• Developing time-bound action plans for resolution of identified trade facilitation issues in Tajikistan, Trade Facilitation Action Plans (TF Action Plans).
• Facilitating the negotiations of the trade facilitation issues between concerned stakeholders in order to arrive at a consensus resolution. In addition, facilitate the adoption of concrete actions/activities with clearly identified steps and responsibilities to implement the resolution, and then facilitate and monitor the implementation.
• Measuring performance improvement and report on Trade Facilitation performance indicators post implementation.

Structure

Coordinating committee on facilitation of trade procedures (CCFTP) comprises the following:

The Tajikistan Trade Facilitation Steering Committee (TTFSC) is the decision making body of the CCFTP. It will provide direction and guidance to the relevant entities on the implementation of decisions, and reports back to the Government on its performance. Chaired by the Minister of MEDT it meets 4 times a year minimum.

The initial nominees to the TTFSC comprises the principals (i.e. senior members/leaders) of the organizations selected from the members of the General Body, such that there is adequate representation of Tajik trade facilitation stakeholders, while also avoiding functional duplication.

The TTFSC involve numerous actors from both the public and private sector:

• Public Sector: Finance and Central Bank, Customs, Tax, Economy, Planning, Commerce, Standards, Agriculture, Health, Border Control and related Police/Security Agencies.
• Private Sector: Chambers of Commerce, Transport and Freight Forwarding Associations, Banking Associations, Insurance Associations, Customs Brokers Associations, Importers and Exporters Associations, and Trade and Industry Associations.

The Permanent Secretariat of the CCFTP (housed in the MEDT) advises on and coordinates the trade facilitation issues by providing the technical expertise and administrative facilitation required to:

1. identify, prepare and present the priority trade facilitation issues;
2. analyse and establish best options for resolution of the issues;
3. coordinate the discussion on the issues with the relevant stakeholders;
4. facilitate consensus among the stakeholders on the best available options for the resolution of the issue; and,
5. present the consensus option to the TTFSC for its decision, enabling the implementation of solutions to resolve issues raised by the respective stakeholder organization.

General Body of the CCFTP : consists of all public and private sector stakeholder organizations represented through their respective principals:

• Forms the membership of the CCFTP from which stakeholders will be selected to participate in Working Groups and other CCFTP meetings depending on their relevance to the issue;
• Highlights key trade facilitation issues to the Secretariat and lobby for the creation of Working Groups around these issues; and
• Validates the CCFTP's annual work program and its performance report.

The Working Groups of the CCFTP discuss, review solutions for resolution, and recommend the final solutions for their respective trade facilitation issues. The membership of the Working Groups is notified by the Secretariat. The Secretariat provides all required analytical support to the Working Groups.

Trade Facilitation Donor Coordination Committee (TFDCC) advocates for the resolution of trade facilitation issues, and supports the Working Groups and the Secretariat through knowledge and resources (including financial support).

The important role of the Private sector in the CCFTP

The participation of private sector in the work of the CCFTP is essential to ensure that their businesses’ needs and interests are taken into account in the implementation of the TFA in national law and administrative practice.

As such, the private sector’s involvement in the CCFTP should be a top priority:

• The CCFTP's planning and decisions will directly impact it.
• A unique opportunity is given to highlight the technical and/or financial assistance and capacity building needs of the business community.
• As key drives of trade facilitation and subsequent CCFTP activities, it will ensure that CCFTP objectives are met.
• Strong involvement will likely encourage the government to dedicate human and budget resources to develop and operate TF measures.
• May put scarce administrative resources to best use and could be relied upon for providing specialist services to the members of CCFTP.

In addition, many trade facilitation recommendations are the result of consultation with the private sector about possible solutions to the day to day operational obstacles that they face. The private sector may be relied upon to provide input into project specification, share views on implementation options and preferences, participate in pilot projects and help assess the trade facilitation-related performance at home and among trade partners.

The involvement in the CCFTP represents a unique chance to participate in the improvement of the business environment; it could very well mark a new era for businesses in Tajikistan: an era where doing business is fast simple and cheap.

The revised Kyoto Convention (RKC) is the main trade facilitation Customs convention. It was developed by the World Customs Organization and entered into force on 3 February 2006. It is an update and revision of the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention) adopted in 1973-1974. The RKC aims at facilitating trade by harmonizing and simplifying Customs procedures and practices. To this end the Convention provides standards and recommended practices for modern Customs procedures and techniques.