Digital economy has become central to the way we do business in 21st century. But the Covid19 pandemic has accelerated the importance of digital trade and e-commerce with implications for cross border trade. This new phenomenon has resulted in spikes in B2C sales and increase in B2B e-commerce in recent months. The global nature of Covid19 and its impact on e-commerce may encourage strengthened international cooperation and the further development of policies for online purchases and supply of goods. Moreover, e-commerce can also support small businesses and by making economies more competitive be an economic driver for both domestic growth and international trade.
However, there is an urgent need to bridge the digital divide in both within and cross countries. This pandemic has accentuated existing questions about the extent to which small producers, sellers and consumers in developing countries particularly in least developed countries like Bangladesh can benefit from the opportunities that e-commerce provides.
Many traditional obstacles have become even more difficult in the context of the covid19 pandemic. These can include access to online payment solutions, reliable internet and electricity connections, the prohibitive costs of trading across borders, visibility of online searches, advertising and sales platforms, and the difficulties in gaining consumer trust.
As you all know that the Word Trade Organization- WTO is the only organization that regulates international trade. And Bangladesh is a very strong believer of a multilateral trading system and a prominent voice for LDC’s in the WTO.
Unlike the areas of goods and services, at the WTO there are few international rules to facilitate cross border electronics commerce. But WTO members realize that there is an important role in promoting open, transparent, non-discriminatory and predictable regulatory environments in facilitating e-commerce. So only recently in 2017 a group of about 40 WTO members, 40 different countries, big and small, have been discussing potential rules in the area of e-commerce on their joint statement initiative. Such an approach to e-commerce has potential to greater coherence in policy making, provide greater certainty for market access, foster consumer confidence and enhance overall development of e-commerce.
So, in this context, one recommendation would be for Bangladesh to engage with these countries at the WTO and discuss further on ways to promote e-commerce and bring about international rules in this area.
This brings me to the second area which is trade facilitation. In the WTO, recently we have had the Trade Facilitation Agreement- TFA, which came into force in 2017. At the outset, I would like to highlight why the TFA is a special agreement. First and foremost, it is the only multilateral agreement since the establishment of the WTO in 1995. Secondly, TFA gives unique flexibility to the developing countries and LDC’s in implementing the obligations that have come out of the agreement. In this context, it gives more flexibilities to LDC’s in the sense that it allows each country to choose which measures it believes it can implement upon entry into force of the agreement and that falls into category A commitments, and then the measures that requires time for implementation those falls into category B commitments and then the measures that requires time but not only that they will also need a lot of technology to build for them to be implemented falls into category C commitments.
As a second largest exporter of garments in the world, trade facilitation reforms are crucial to Bangladesh’s effort to export diversification, integration to regional and global value chain and supply chain and also to digitalize trade.
Trade facilitation agreement comprises 36 measures. Which can broadly divide into three areas. First is transparency. This is very important especially for small traders. Second measures cover more custom procedures to expedite the release and clearance of goods. The third area of trade facilitation is to have the free flow of goods and transit. It focuses on freedom of transit; this is in particular importance to landlocked countries.
So now, let’s come to Bangladesh and Trade Facilitation Agreement. Where does the country stand? Bangladesh ratified the agreement in 2016 and already notified the categories of agreements I have mentioned earlier. Currently Bangladesh is implementing one third of the 36 measures. Rest are divided into either measure which need more time to implement (about one third) and rest, which is about one third, are the measure needs more time also need a lot of technical assistance and capacity building.
Now if we take a quick look at measures which need technical assistance and capacity building, we will see they are mainly custom related measures. More specifically, things like risk management, pre-arrival processing, post clearance audit and the authorized operated system. These require more time and technical assistance. And these are key to fast release and clearance of goods.
In addition, there are other measures. I will just highlight two main ones. One is border agency coordination; this is a measure in the agreement which requires that all agencies at the border can cooperate and coordinate together. Because we all know that the custom is not the only entity responsible for the release and clearance of goods. There are many agencies at the border, in general those related to standards, safety, veterinary matters, port services and more. So, this measure is very crucial to expedite the release and clearance of goods. In link to that is the single window. Single window is the measure that is the most ambitious and costly trade facilitation measure to implement. These two are not currently implemented in Bangladesh. If I just highlight the single window, what is interesting about it is that, it’s sort of single-entry point for traders to lodge all their documentation requirements, relevant data requirements one single entry point, whereby the agencies would then coordinate together and we would be able to clear the goods from the single-entry point. TFA encourages members to use information technology to support the single window. We know that there are electronics single windows, also ones that are linked on a regional level. Like in the case of ASIAN in Asia.
TFA has several provisions that promote digital trade. For example, it allows for advance lodging of documents in electronic format in order to allow for the pre arrival processing of such documents. It also allows the use of copies of documents and this is very important that, instead of always asking for originals. It also allows for the electronics payments, duties, taxes fees etc. and also the electronics single window that I have just mentioned.
Now, in this context and under the united nations Economic and Social Commission for Asia and the Pacific- ESCAP, I am very pleased that Bangladesh has recently ratified the framework agreement on facilitation of cross border paperless trade in Asia and the Pacific which aims at accelerating the implementation of digital trade facilitation measures for trade and development.
Now, to conclude, I think the Covid19 pandemic has made it clear that both e-commerce and trade facilitation can be important economic drivers including for small businesses. However, pandemic has also highlighted not only the importance of digital trade in general but also there are several vulnerabilities across the world. I would encourage Bangladesh to take part in the discussion on e-commerce at the WTO and implement the trade facilitation agreement sooner rather than later.