customs

The Launch of RCEP

The Launch of RCEP

Apart from tariff benefits, RCEP members (and even non-members) can benefit from more streamlined customs procedures to facilitate trade. Building on existing ASEAN+1 agreements, RCEP introduces additional guidelines on the issue of advance rulings and on the release of goods at customs that improves certainty and reduces likelihood of shipment delays at the customs. The Chapter on Customs Procedures and Trade Facilitation also includes a scheme for authorised operators to benefit from reduced paperwork requirements, faster clearance of goods, and deferred payments or clearance at the premises of the authorized provider. While the assessment of benefits of FTAs are often fixated on tariff reductions for goods, it is equally important to recognize services and investment opportunities that RCEP offers to services providers and investors in Asia. RCEP provides further liberalization to services sectors such as legal services, accounting, architecture, computer services, wholesale trade and insurance, that can go well beyond existing ASEAN+1 agreements. This includes better market access, reduced limitations, and terms and conditions for the provision of services or the establishment of commercial presence in RCEP markets. For most service sectors, RCEP allows foreign service providers to deliver services across the border without requiring a local presence in the domestic market.

An Obsession with Building Trade Platforms

An Obsession with Building Trade Platforms

My bleak assessment of the odds of government-led platforms does not mean, however, that governments have no role to play in encouraging the growth of digital trade in their domestic economies. Rather than invest money in building flawed platforms, governments need to focus with laser-like intensity on building the right domestic infrastructure and policy settings to support digital trade. For many governments, this starts with clear knowledge and understanding of what the digital economy looks like today and what sort of support will be needed for the future. Officials need to remember that firms deliver both goods and services online and build systems to support both types of companies. Another default decision made by many governments seems to be to insist that individuals be given coding skills. If companies are going to be competing online, it makes sense to officials that firms need the ability to craft webpages, apps, and other complicated pieces of programming. While this is not entirely wrong, for most smaller firms today, there are already ample free or low-cost solutions that solve most basic needs for companies moving online. Many firms no longer need a website at all, but can set up virtual storefronts on a range of platforms.

Building Supply Chain Resilience Starts at the Border

Building Supply Chain Resilience Starts at the Border

The net result of this unprecedented supply and demand shock to the economic system has led to many calls to build or rebuild supply chains with more “resilience.” Resilience is a word, however, a bit like motherhood and apple pie. After all, who doesn’t want a mother or pie? Who wouldn’t want resilience in the face of disruption? Resilience, perhaps like motherhood and apple pie, means slightly different things to different people. For some, it implies a new-found enthusiasm for relocating chains closer to home. If foreign markets are part of the problem, with uncertain responses to unfamiliar challenges likely to arise in the future, getting critical parts or entire chains to move home seems like a logical solution. For others, resilience means building up multiple supply chains, including an extreme version that calls for double chains for every item. The slightly less pronounced version looks to have multiple suppliers available for every item or every critical item in the chain. To minimize disruptive impact, these two chains or multiple suppliers should be located in entirely different countries or regions. Resilience can also mean holding increased inventory, to reduce the shock of chain disruptions. Over the past decade and beyond, firms have been following the “just in time” mantra and eliminating or reducing inventory. Parts, components and raw materials arrive at precise timings and get slotted directly into assembly. The reduction in inventory provided important cost savings for companies, as holding stock is expensive. Governments tend to be less certain about what, exactly, they mean when they ask for resilience in supply chains and are unclear about what sort of actions, if any, they ought to take to ensure it happens.

RCEP: Facilitating Trade for E-Commerce?

One area of particular importance for smaller firms engaged in e-commerce is dealing with problems at customs.  Many e-commerce companies are not shipping 40 foot containers but a few boxes or even just one package straight to consumers or to other companies.  Yet the paperwork and processing requirements to send one small box can be exactly the same a huge container.  Firms often face complicated and cumbersome paperwork requirements at the border.  Some markets charge high fees or inspect every single parcel, which causes expensive delays.  Sometimes these issues are so significant that companies simply stop trying to send goods overseas at all.  These problems are not unique to e-commerce shippers, of course, but if one important goal of RCEP is to facilitate trade for e-commerce, then a final agreement that does not address the real impediments to trade in smaller size, smaller value shipments at the borders will be a missed opportunity.  The benefits of a robust e-commerce chapter that does not simultaneously tackle customs issues could be lost or watered down.