Trade Facilitation and Its Impact on The Economy

28 Jun 2017






28TH JUNE, 2017 – 8:30 a.m.


I have been asked to address you on the topic of Trade Facilitation and its impact on the Bahamian economy and what the private sector, in particular The Bahamas Chamber of Commerce and Employers’ Confederation can do to assist in enhancing the economic outlook of the country.

Ladies and Gentlemen, the International Chamber of Commerce (ICC) defines trade facilitation as the general term for a package of measures which help to cut red tape at borders. The UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT), defines it as “the simplification, standardization and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payment”. It encompasses all governmental agencies that intervene in the transit of goods, and the various commercial entities that conduct business and move the goods. It is about making of trade across borders faster, cheaper and more predictable, while ensuring the safety and security of the process. It is about examining the procedures and controls governing the movement of goods across national borders and how they can be improved to reduce business cost and maximize efficiency while safeguarding legitimate regulatory objectives.

It implies a reduction or streamlining of the logistics of moving goods through ports or the documentation requirements at a customs post at the border. More recently, the definition has broadened to include the environment in which trade transactions take place.

The World Trade Organization (WTO), the international body made up of member states which make the rules which govern international trade, has defined trade facilitation as “the simplification and harmonization of international trade procedures”. Trade procedures include activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade. It can include the improvement of transport infrastructure, the removal of government corruption, the modernization of customs administration, the removal of other non-tariff trade barriers, as well as export marketing and promotion.

The adoption of the WTO’s Trade Facilitation Agreement (TFA) and its entry into force on 22nd February 2017, indicates the political willingness of governments across the world to invest in trade facilitation, expedite the movement, release and clearance of goods across borders, and make the public aware of the benefits of trade facilitation in easing connections to regional and global value chains.

Why does it matter?

A 2011 OECD study suggests that every extra day required to ready goods for import or export decreases trade by approximately, 4.5%. There are great potential gains to be achieved from trade facilitation for governments and the business community. Studies have also shown that public entities can profit from enhanced trade related tax collection, better use of resources and increased compliance by those conducting trade. A more efficient and transparent delivery of public services can assist governments in maintaining high security levels and effective government control, while diminishing opportunities for corruption. For countries as a whole, reducing unnecessary delays and costs attracts investments, and supports growth and job creation.

Ladies and Gentlemen, four pillars underpin trade facilitation namely: transparency, simplification, harmonization and standardization.

Transparency within government promotes openness and accountability of government and administration actions. It entails disclosure of information in a way that the public can readily access and use it. This information may include laws, regulations and administrative decisions of general application, budgets, procurement decisions and meetings which are published and disseminated, prior to enforcement to allow parties concerned to take note of it and make necessary changes. It allows relevant stakeholders and the general public to participate in the legislative process, by providing their views and perspectives on proposed laws prior to enactment.

Simplification entails eliminating all unnecessary elements and duplications in trade formalities, processes and procedures.

Harmonization of national procedures, operations and documents with international conventions, standards and practices can come from adopting and implementing the same standards as partner countries, either as part of a regional integration process or as a result of business decisions.

Standardization of the formats for practices and procedures, documents and information internationally agreed by various parties are then used to align and, eventually, harmonize practices and methods.

Although Customs is a key player in trade facilitation, trade facilitation has to encompass the entire trade environment of actors and processes involved in a transaction. It has to take place at the national, regional and international levels.

Ladies and Gentlemen, in 2012, the Inter-American Development Bank approved a $16.5M loan to boost international trade by improving the facilitation of trade and modernizing Bahamian customs operations.

In 2016 the Government, with the assistance of a consulting firm, Crimsonlogic Panama, Inc., commenced the establishment of an Electronic Single Window (ESW). It is anticipated that when the ESW is completed, customs brokers, importers, and overseas suppliers, will be able to submit all Customs documents such as Customs declarations, export/import permit applications, trading invoices and origin certificates to a single location or agency.

It is envisaged that the Electronic Single Window will provide further reduction in clearance time of imported goods and declarations; reduce the administrative cost of collecting revenue; improve electronic reception of advance and total cargo manifests; facilitate ‘One-time Submission’ of documents and online payments; facilitate information interchange with the Port Community Systems; Real Time Data harmonization, Information, Statistics and Reports; risk management approach to Border Management and Interventions; and International and Regional Systems Interoperability.

Ladies and Gentlemen, the move to establish an Electronic Single Window means that The Bahamas will be joining more than 70 countries around the world who have implemented single-window systems. Studies have shown that countries experience substantial cost and time savings and enhanced transparency and interagency collaboration in implementing such portals.

We would be aware that the international community expects a modern Customs Administration to reflect:

  • Transparency in its legislation, policies and procedures. Trading partners and the public require clear, published rules and procedures which are consistently applied to a common standard and an appeals system which can fairly resolve disputes and misunderstandings.
  • Simplicity in its regulations and procedures with minimal interference from Customs, the use of advance information, speed of clearance and ease of payment and recovery of movement.
  • In addition to the international requirements to protect society from terrorism and organized crime, it is the task of Customs to protect legitimate trade, the environment and the national heritage.
  • Customs must be encouraged and supported in the development of effective internal and external relationships which allow other government departments, trade and the public to influence their operations. The Department must be responsive to legitimate demands from economic operators and its activities coordinated with the activities of all border management agencies.

    Ladies and Gentlemen, thus far I have spoken about some of the things that the Customs Department is doing which will impact trade facilitation in The Bahamas and how the $16.5 Million dollar loan from the IDB will assist the Department in its efforts. I mentioned earlier in my remarks that the definition of trade facilitation has broadened to include the environment in which trade transactions take place. In that regard, my Ministry which has responsibility for international trade, also has a role to play in trade facilitation.

    My Ministry has oversight of Component III of the Government’s $16.5 million loan Agreement with the Inter-American Development Bank of which I spoke earlier. As I noted in my Budget contribution, Component III is aimed at strengthening trade-related institutions and ensuring that The Bahamas has in place relevant laws and institutions in keeping with the country’s international trade obligations and international best practices, while also supporting the Government’s efforts to use trade as a vehicle to support economic development and economic diversification.

    The institutional and structural reforms that will be undertaken to advance trade are necessary to boost productivity and enhance the competitiveness of the Bahamian economy, while creating an environment conducive to attracting foreign direct investment. The Government has undertaken a number of activities under Component III to support trade and in so doing support trade facilitation.

    So for example, in 2015, the Government enacted a suite of intellectual property rights legislation to bring the regime into compliance with obligations under the Economic Partnership Agreement, the trade agreement which The Bahamas signed in 2008. In addition the Registrar General’s Department which has responsibility for intellectual property rights is being strengthened. The newly established Bahamas Bureau of Standards is being strengthened. The Ministry of Agriculture has accessed funds for the Drafting of regulations for the Animal Health and Production Bill, training of Officers in Plant and Animal Health, and the Drafting of SPS Manual.

    In my Ministry’s case, funds were accessed for a number of consultancies including one for a Vulnerability Study to advise the Government on various policy options that the Government should deploy to deal with those sectors of the economy identified as most vulnerable to increased foreign competition arising from trade liberalization. This study will be reviewed by the Government shortly to determine the next steps.

    Of particular note is the establishment of a Trade Portal which is a collaborative initiative between the Ministry of Financial Services and the Bahamas Chamber of Commerce and Employer’s Confederation. In the speech from the throne the Governor General noted the Government’s commitment to establish a “one-stop-shop” to improve the ease of doing business. The Trade Portal’s establishment is an important business facilitation measure which will reduce the cost and time required to access trade information on The Bahamas, effectively improving the ease of doing business in The Bahamas. The Government’s support for the engagement of a Trade Information Specialist to administer the Trade Portal in collaboration with the Chamber of Commerce and Employer’s Confederation will ensure that information on the Portal is both relevant and current.

    You have asked me what can the private sector, in particular The Bahamas Chamber of Commerce and Employers’ Confederation, do to assist in enhancing the economic outlook of the country. I believe that the Chamber can play an important role in sensitizing the private sector about these issues. Sensitization of the private sector needs to extend beyond the Chamber’s traditional members. The government alone cannot undertake this task. Collaborative initiatives like the Trade Portal where the Government and the Chamber have come together to establish a tool called for by the business community is notable. The Portal was established to facilitate the ease of doing business with companies in The Bahamas and developed by its designers to bring visibility to companies registered on the Portal. I would like to use this opportunity to encourage members of the business community to register on the portal to bring visibility to their businesses. It must be noted that registration on the Portal is free.

    I am indeed optimistic about the future growth and development of our country as all sectors of society begin to take ownership and lend their collaborative efforts to the process.

    Good morning!