OECD Trade Facilitation Program. Improving the Belarus rankings Sergei Odintsov Head of Tax & Legal Department SCHNEIDER GROUP OOO (Minsk, Belarus) 08 November 2017
Agenda OECD Trade Facilitation Program Importance of TFIs rankings for Belarus World bank doing business rankings Comparison of rankings (Word Bank & OECD) Belarus country classification Country performance overview Belarus progress in 2015-2017 Areas for further improvements Proposed steps to enhance the Belarus rankings Appendixes 2
OECD Trade Facilitation Program OECD has developed a set of Trade Facilitation Indicators (TFIs) organized by 11 specific policy dimensions that identify areas for action and enable potential impact of reforms to be assessed. Firstly launched in 2013 and being updated every 2 years, current 2017 TFIs dataset covers the full spectrum of Customs and other Regulatory Trade Procedures at the border for 163 countries across income levels, geographical regions and development stages, included in the WTO Trade Facilitation Agreement (TFA) The data for TFIs are gathered through a questionnaire replied by the relevant administrations and by carriers with worldwide presence, and cross-checked against publicly available sources Precisely targeted for monitoring country performance on implementation of specific trade facilitation measures, TFIs would help governments improve their border procedures, reduce trade costs and increase trade flows to gain much more benefits from international trade 3
OECD TFIs positive rankings high importance for Belarus For Belarus, the implementation of trade facilitation measures does make sense, considering potential opportunity to benefit from substantial technical and financial assistance provided by various donors. Having positive TFI ranking would definitely enhance the country s overall potential and attractiveness for the foreign investors. 4
Trading across borders: World Bank Doing Business - Belarus Belarus stands at 30 in the ranking of 190 economies on the ease of trading across borders (2017 and 2016 DB Reports) Doing Business records & measures the time (excluding tariffs) and cost associated with the logistical process of exporting and importing goods in terms of (1) documentary compliance, (2) border compliance and (3) domestic transport. The ranking is determined by sorting distance to frontier scores for trading across borders, using certain assumptions as to the traded goods, transaction, time and costs. The indicator refers to a case study scenario of a warehouse in Minsk trading with the main import and export partner through the BY s main border crossing (e.g. Kamenny Log-Medniky and Russia-Belarus border crossing points) Ease of trading across borders Poland (1) 100 Lithuania (19) 97,7 Latvia (25) 95,26 Belarus (30) 93,71 Georgia (54) 85,15 Average (EUCA) 84,04 Ukraine (115) 64,26 Russia (140) 57,96 Source: Doing Business database 5
Trading across borders: World Bank Doing Business - Belarus Time & costs associated with import / export Measures Belarus EUCA Export Border compliance (hours) 5 28 Border compliance ($) 108 195 Documentary compliance (hours) 4 27 Documentary compliance ($) 140 111 Domestic transport (hours) 4 no data Domestic transport ($) 175 no data Quantity of documents 7 10 Import Border compliance (hours) 1 26 Border compliance ($) 0 202 Documentary compliance (hours) 4 26 Documentary compliance ($) 0 91 Domestic transport (hours) 4 no data Domestic transport ($) 229 no data Quantity of documents 5 9 Table to the left provides details on the predefined set of procedures, associated time and cost and required documents for exporting and importing a shipment of goods The indicators reported are based on a set of specific procedures for trading a shipment of goods by the most widely used mode of transport (whether sea or land or some combination of these). The information on the time and cost to complete export and import is collected from local freight forwarders, customs brokers and traders Source: Doing Business database 6
Good results Belarus rankings: OECD TFIs & Doing Business Projects According to methodologies applied by OECD and World Bank for the assessment of country s progress in implementing trade facilitation reforms, Belarus ranking is directly opposite Belarus progress in trading across the borders WB Doing Business 2017 Ranking: (93,71 out of 100) OECD TFIs 2017 Ranking: ( 0.77 out of 2) Notwithstanding the opposed rankings, the results of each project can be explained by different approaches and measurements on the side of World Bank and OECD. Underperformance For the past several years Belarus has achieved quite good progress in trading across the borders, currently ranked 30 from the other 190 sample countries (WB Doing Business 2017 report) Except for 2 areas (advance rulings & border agency cooperation), Belarus underperforms everywhere as compared to other countries belonging to the upper middle income group (OECD Trade Facilitation Program) 7
Belarus - country classification According to OECD classification, Belarus belongs to Upper Middle Income Countries Region Europe & Central Asia Income Category Upper middle income Population 9,513,000 GNI Per Capita (US$) 6,460 City covered Minsk Lower threshold for UMIC USD, 00 GNI per capita 2016 $3 956 GNI per capita 2015 $4,036 GNI per capita 2014 $4,126 GNI per capita 2013 $4,126 Along with Azerbaijan, Brazil, China, Kazakhstan, Serbia, Thailand, Turkey and some others Belarus refers to the group of upper middle income countries ( UMIC ). Classification of countries is made according to per capita gross national income (GNI) to determine maximum repayment term and tied aid eligibility for particular country The table to the left shows the lower thresholds for Upper Middle Income status for the last four years Source: http://www.oecd.org/tad/xcred/country-classification.htm 8
Country performance overview (1 of 2) Belarus exceeds or is closest to the average performance of upper middle income countries in the areas of information availability, advance rulings and external border agency co-operation EB agency cooperation IB agency cooperation Procedures Belarus v/s UMIC performance Governance & Impartiality Information availability 1,5 1 0,5 0 Trade Community Advance rulings Appeal procedures Fees & Duties The chart to the left shows Belarus ranking compared to the average results of Upper Middle Income countries Final results are assessed based on data provided for the latest available year (2014) and reconfirmed further with respondents and responsible governmental institutions Automation Documents Belarus UMIC Source: OECD, http://www.oecd.org/tad/facilitation/indicators.htm 9
Country performance overview (2 of 2) Except for the 3 areas mentioned above, Belarus performance in remaining TFI areas is below best performance as compared to other upper middle income countries from the below sample list Indicators Belarus Russia Turkey Kaz Serbia OECD Information availability Involvement of the trade community 0,90 1,43 1,47 0,75 1,66 1,67 0,57 1,37 1,62 1,43 1,0 1,57 Advance rulings 1,14 1,75 1,18 1,63 1,71 1,68 Appeal procedures 0 1,67 1,5 1,44 1,44 1,61 Fees & duties 0,20 1,308 1,69 1,71 1,46 1,82 Documents 0,33 0,67 1,12 0,86 1,73 1,74 Automation 0,50 1,31 1,75 0.92 1,0 1,74 Procedures 0,61 1,15 1,54 0,83 1,46 1,62 Int. border agency cooperation Ext. border agency cooperation Governance & Impartiality 0,50 1,0 1,7 0,36 0,45 1,44 0,60 1,09 0,81 0,55 0,9 1,54 0,33 1,37 1,88 0,25 1,66 1,9 Average TFP Index 0,57 1,28 1,48 0,98 1,24 1,66 The table to the left shows Belarus ranking compared to the results of other Upper Middle Income countries. 2 is the best performance indicator that can be achieved by a comparative jurisdiction All indicators are computed based on data provided for the latest available year (2014) Source: OECD (2015) reports, http://www.compareyourcountry.org/trade-facilitation; http://www.oecd.org/trade/aft/; http://www.oecd.org/tad 10
Belarus progress in 2015-2017 Overall assessment of trade facilitation measures introduced in 2015-2017 shows great results of the reforms in the areas of formalities & procedures, anticipated country ranking is 0,77 in total Progress in TFIs for 2015-2017, Belarus 2015 2017 1,50 1,00 0,50 0,00 Belarus improved its performance in the areas of information availability, involvement of the trade community, fees and duties, documents, and procedures Performance in the other areas is stable, with the exception of appeal procedures, where some ground was lost. However, country rankings as per other TFI areas is below best performance as compared to other upper middle income countries. Source: OECD reports http://www.compareyourcountry.org/trade-facilitation; 11
Areas for further development 1 Information availability 2 Consulting with Trade Community 3 Advance rulings 4 Duties & Fees 5 Formalities (automation, documents, procedures) accounting erp import legal tax 12
Area 1 Availability of Information It is highly recommended to follow improvements in Availability of information on the rate of duties Availability and user-friendliness of information on import and export procedures Making all forms and documents required for border procedures available online Providing an interval between the publication of trade related regulation and its entry into force Availability and user-friendliness of information on agreements with 3-rd party countries Providing access to rules and examples of Customs classification 13
Area 2. Interactions with Trade Community Required Enhancements provision of adequate and timely information on regulatory changes opportunity to comment before putting in place/ amending of trade rules inclusiveness of consultations with the private sector 14
Areas 3 & 4. Advance Rulings, Duties & Fees: Improvements needed in the area of Advance Rulings: Improve the availability of information on advance rulings Make advance rulings of general interest publicly available Provide the possibility to request a review of advance rulings Improvements needed in the area of Duties & Fees: Improve the availability of comprehensive information on applicable fees and charges on the Customs website Reduce the number and diversity of fees and charges collected Reduce the fees charged for services during normal working hours 15
Area 4 Formalities (1of 3) Further improvements needed Documents Expand the acceptance of copies of documents Reduce the number of export/import documents and time to prepare those Automation Introduce risk management procedures in the border process Improve the capacity of IT systems to exchange data electronically 16
Area 4 Formalities (3 of 3) Required improvements in procedures: Further development of a Single Window Reduction in average goods clearance time Introduce pre-arrival processing of import documentation Provide accelerated controls for perishable goods and preferential treatment concerning the separation of release from clearance Expand the possibility to have goods released prior to final determination and payment of customs duties Expand the use of Authorized Operator programs Further simplify procedures in terms of associated time and costs Customs working hours should be adjusted to business needs Remove the mandatory use of a third-party Customs Broker 17
Proposed steps to enhance Belarus rankings as per OECD TFIs Program SG to prepare and send a questionnaire to business (by 10.02.) Business to look through and respond / comment (by 28.02.) Review, analysis and discussion of the replies obtained (by 15.03.) Waiting for a feedback from the state, if any Drafting a proposal and sending its final version out to the Ministries (to be agreed) Final assessment, reporting and deliver the results (e.g. via AHK events as well) (to be agreed) 18
Appendixes 19
Appendix 1 Glossary of Terms and Abbreviations Advance Rulings Appeal Procedures External & Internal cooperation Duties & Fees Automation Documents Procedures Governance & Impartiality Information Availability Trade Community Prior statements by the authority to requesting parties on classification, origin, valuation method, etc., applied to specific goods at importation to Belarus, any associated rules & processes applied to such statements The possibility and associated conditions to appeal administrative decisions by customs & other authorities Cooperation with neighbor & 3-rd countries; cooperation between various border authorities within Belarus; control delegation to customs authorities Regulations on the charges & fees applicable to imports and exports Electronic data exchange; on-line (automated) border procedures; application of risk management processes Acceptance of document copies, simplification of trade related documents; bringing together internal regulations & documents in accordance with international standards Streamlining of border controls; single filing points for all docs (Single window); prearrival processing;; post-clearance audits; authorized operators Customs structures and functions; accountability; ethics policy Enquiry points; publication of trade information, including on Internet Interaction with exporters / importers; structures for consultations; established guidelines for consultations; publications of drafts; existence of notice-and-comment frameworks 20
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