FX International Payments
By Karen Lynch
The most efficient international trading environments share common features, the report says. "They allow traders to exchange information with customs and other control agencies electronically. They also use risk-based assessments to limit physical inspections to only a small percentage of shipments, reducing customs clearance times." In addition, they participate in bilateral, regional, and multilateral trade agreements, "making the time and cost for complying with border formalities negligible."2
By that measure, 16 European nations, including France, Italy, and the Netherlands, share the report's top ranking specifically for the ease of trading across borders, although major regional economies such as the United Kingdom (28th) and Germany (39th) are not among them. Turning to other key international trading centers, the standings are as follows: Hong Kong (31st), the United States (36th), Singapore (42nd), Japan (51st), Australia (95th), China (97th), Brazil (139th), and India (146th).3
The report breaks out separate rankings for the time and money it takes to comply with customs requirements on imports and exports, using a set of assumptions to create comparable data (e.g., a standardized shipment of 15 metric tons of containerized auto parts).4 At the regional level, for instance, European and Central Asian countries together register the lowest costs for completing import documents ($95) and border procedures ($185). South Asia has the highest costs for documentary compliance on imports ($341), and Sub-Saharan Africa has the highest costs for border compliance on imports ($687).5
Of all improvements to customs, the implementation of electronic systems produces the most time savings across regions, the report says. For companies, "achieving rapid and predictable turnaround time is an important aspect of their competitiveness strategies," its authors note.6
The authors also document the rollout of systems for electronic data interchange (EDI) and single-window platforms that enable international traders to submit all import, export, and transit documents in one place. For imports, 160 countries' customs agencies use EDI for customs declarations. However, only 40 have a single-window platform.7 (The data set says the U.S. platform was "in progress" when information was collected in June 2017, and news reports project completion by February 2018.8)
The report called the single window the best-case scenario. "The system allows traders to file standard information and documents through a single-entry point to fulfill all import, export, and transit-related regulatory requirements, then shares relevant information with all parties involved in trade, including private participants such as banks and insurance companies, as well as public agencies such as immigration and vehicle registration authorities."
More single windows are being implemented over time. For example, China's official news agency reported a new one in the port of Chongqing in October 2017, saying that it would reduce costs by 10 percent and save 10 percent of clearance time by eliminating a third of all procedures.9
In the transition to digital administration, the World Bank cautions that, "The full potential of digitization and electronic data interchange systems is not realized immediately. Implementing the systems takes time and involves change in operational practices, in training and in some cases, in the work habits of staff."10
Local headlines sometimes echo this observation. The Daily Observer, in Antigua, reported in May 2017 that international traders were frustrated because the country's new automated customs system was actually more time consuming.11
The world's first national single window, implemented in Singapore in 1989, connected 35 border agencies, was processing 99 percent of permits in 10 minutes by 2006,12 and issued 9 million permits in 2016.13 It is expected to be replaced in December 2017 by an even more extensive one-stop trade portal for business-to-government and business-to-business services.14
In the Doing Business report, 22 countries were recognized for introducing or improving electronic submission and processing of documents for imports or exports in 2016-17, including large and small nations ranging from Bolivia to Taiwan to Zambia, but not the United States.15
International trade is just one aspect of the Doing Business report's ranking of business conditions worldwide. Others include taxation, credit conditions, and the challenges faced in starting a business. Overall, for 2018, the Top 10 countries where doing business was ranked easiest are, in order, New Zealand, Singapore, Denmark, Korea, Hong Kong, United States, United Kingdom, Norway, Georgia, and Sweden. The report was published on the heels of another index that is watched by international traders – the World Economic Forum's Global Competitiveness Index, which also includes statistics for quality of port infrastructure, tariffs, and other trade-related conditions.
In international trade, customs is increasingly digitized, according to the World Bank's Doing Business 2018 report. There is a general trend toward single-window digital platforms that can electronically handle a range of requirements more quickly and inexpensively, though different countries' progress toward that goal varies widely.
Karen Lynch is a journalist who has covered global business, technology and policy in New York, Paris and Washington, DC, for more than 30 years. Karen also is a principal at Content Marketing Partners.
1. Doing Business 2018, World Bank; http://www.doingbusiness.org/
2. “Good Practices,” World Bank; http://www.doingbusiness.org/data/exploretopics/trading-across-borders/good-practices
3. “Trading Across Borders,” World Bank; http://www.doingbusiness.org/data/exploretopics/trading-across-borders
4. “Trading Across Borders Methodology,” World Bank; http://www.doingbusiness.org/Methodology/Trading-Across-Borders
5. “Trading Across Borders,” World Bank; http://www.doingbusiness.org/data/exploretopics/trading-across-borders
6. “Good Practices,” World Bank; http://www.doingbusiness.org/data/exploretopics/trading-across-borders/good-practices
7. “Electronic Platforms Dataset,” World Bank; http://www.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Methodology/Other/DB2018_TAB_Electronic-Platforms_Dataset_10-Oct.xlsx?la=en
8. “Hiccups for CBP’s New Port System as it Nears Completion,” Federal Computer Week; https://fcw.com/articles/2017/11/16/ace-cbp-outage-rockwell.aspx
9. “More Chinese Cities Adopt “Single Window” Approach for Foreign Trade,” Xinhua; http://news.xinhuanet.com/english/2017-10/31/c_136718127.htm
10. “Good Practices,” World Bank; http://www.doingbusiness.org/data/exploretopics/trading-across-borders/good-practices
11. “Business Owners Express Frustration with ASYCUDA,” The Daily Observer;https://antiguaobserver.com/business-owners-express-frustration-with-asycuda/
12. “Good Practices,” World Bank; http://www.doingbusiness.org/data/exploretopics/trading-across-borders/good-practices
13. Statistics, Singapore Customs; https://www.customs.gov.sg/news-and-media/publications/statistics
14. “What is Singapore’s New National Trade Platform?” OpenGov; http://opengovasia.com/articles/7802-what-is-singapores-new-national-trade-platform
15. Doing Business 2018, World Bank; http://www.doingbusiness.org/
16. “Doing Business Records Nearly 3,200 Reforms in 15 Years to Improve Business Climate Worldwide,” World Bank; http://www.worldbank.org/en/news/press-release/2017/10/31/doing-business-records-nearly-3200-reforms-in-15-years-to-improve-business-climate-worldwide