Shahid Sattar and Amna Urooj
In global supply chains, one of the most difficult stages is the clearance from customs and other relevant agencies. They are frequently held responsible for damaging developing countries’ ability to compete in global markets such as that of Pakistan in terms of delays. As a result, the World Bank and other development agencies have focused their efforts on assisting border clearance reforms and modernization. Despite much effort, inefficiencies in border administration continue to have a significant impact on emerging countries’ competitiveness.
While many countries continue to place a strong premium on improving customs performance, the truth is that it is merely one of the many border-processing offices, and is frequently the most updated. Furthermore, only around one-third of regulatory delays are caused by customs agencies. Customs authorities in most countries already use IT systems to process declarations and risk management to ensure that all cargo are not scrutinized. Additionally, they are usually guided by international standards set by the World Trade Organization (WTO) and the World Customs Organization (WCO) in order to balance their control responsibilities with trade facilitation goals. On the contrary, many other border management agencies just haven’t modernized as much.
This disparity has paved way for the focus of reform efforts to shift away from customs and toward the systems and procedures used by other border management agencies, such as health, agriculture, police, immigration, and many other organizations that regulate trade flows. It is not uncommon for more than 30 distinct government entities to be involved in the processing and clearance of products in many nations such as that in Pakistan. It doesn’t matter if customs declarations can be performed electronically if a slew of paper-based documentation must be delivered to different authorities, scrutinized, and authorized before the goods can be released. A comprehensive approach based on effective information exchange, streamlining of procedures, and true collaboration across all border control authorities is necessary to achieve meaningful trade facilitation improvements.
Keeping this in mind, the establishment of National Single Window systems, which has allowed manufactures/industrialists and traders to submit all import, export, and transit information required by regulatory agencies via a single electronic gateway, rather than submitting and processing the same information multiple times to different government entities, including some that are automated and others that still rely heavily on paper, is one new and innovative approach to border processing and clearance. The single window system has a clear time-saving advantage. The United Nations Economic Commission for Europe (UNECE) and its Centre for Trade Facilitation and Electronic Business (UN/CEFACT), the World Customs Organization (WCO), the United Nations Network of Experts for Paperless Trade and Transport in Asia and the Pacific (UNNExT), and the Association of Southeast Asian Nations (ASEAN) have all endorsed the concept (ASEAN).
A single window service is designed to provide unique benefits to the main communities and parties involved in cross-border trade including the government, the shipping and forwarding community, the shippers and traders, and finally the banking and insurance community.
The common steps faced on the path to a national single window can be illustrated through the figure below. It’s worth noting that this is only one of many conceivable interpretations. Each economy charts its own path based on local characteristics such as resources, skills, experiences, and political will, inter alia. Since the mid- to late 1980s, some of the world’s leaders in single-window trade facilitation have been actively altering and upgrading their systems. This wasn’t a simple task, and it wouldn’t have been accomplished without a long-term set of modifications and committed infrastructure. Owing to this, Pakistan has engaged in broader and more efficient global commercial operations through the establishment of Pakistan Single Window (PSW). The advantages are substantial and long-term.
Source: United Nations Economic and Social Commission for Western Asia (ESCWA)
By digitizing Pakistan’s cross-border trade and eliminating paper-based manual processes, the PSW effort, led by Pakistan Customs (PC), intends to reduce the time and cost of conducting business. Under the provisions of the PSW Act, 2021, the Federal Government has notified the PSWC, a public sector business constituted under Section 42 of the Companies Act, 2017 by PC, as the ‘Operating Entity’ of the PSW system. PSW intends to create an integrated electronic platform that allows parties participating in international trade and transportation to submit standardized information and documents through a single point of entry to meet all regulatory criteria for export, import, and transit. Section 3(3) of the PSW Act 2021 makes it mandatory for Customs and Other Government Agencies (OGAs) listed in the Act’s schedule to align their respective laws, regulations, procedures, processes, and other information requirements related to regulation of imports, exports, transit trade, and associated transport with PSW in order to ensure the PSW system’s maximum benefits to traders and public sector regulators.
Another flagship project of the PSW is the Trade Information Portal of Pakistan (TIPP). TIPP is a website that provides the most up-to-date and comprehensive regulatory information on imports, exports, and transit trade for any item/HS code, as well as statistical data for international trade.
TIPP provides a number of advantages. It improves transparency and access to a wide range of data that might be critical in making trade and investment choices. Pakistan was required to construct a TIPP under Article X of the General Agreement on Tariff and Trade (GATT) Commitment to Transparency. Following that, Pakistan agreed to implement the TIPP by 31 March 2022 under Article 1.2 of the WTO Trade Facilitation Agreement (TFA). Each piece of data in TIPP has been gathered and verified from the 77 Other Government Agencies (OGAs) listed in Schedule I of the PSW Act 2021. Thousands of linkages to Legal Documents (including necessary laws, rules, regulations, and orders), Procedures, Measures, Commodities, Forms, Fee Schedules, and other regulatory content have been created using Pakistan Customs Tariff (HS Codes).
The PSW and TIPP is a move toward a more digital Pakistan, which is boosting the country’s speedier, more inclusive, and long-term economic growth. PSW is using technology and new solutions to make it easier to comply with national legislation. It is efficiently promoting simplification, harmonization, and digitalization of trade related processes to improve ease of doing business and compliance in Pakistan.
The quality and precise nature of the PSW is commendable however, it is recommended that a module be formulated for extension of a digitalized platform to indirect importers/exporters so that they may seamlessly avail the Duty Free Import for Export Schemes. Such a module is necessary to enhance trade prospects of the country.
To maximize the economic benefits of export incentives, it is critical that exporting enterprises eligible for incentives are well-integrated into the local economy, with strong backward links — that is, exporting companies are progressively sourcing their inputs from the local economy. Local input suppliers to exporting companies are considered indirect exporters in some countries like Pakistan, and they receive incentives from the exporting corporations. This measure aids in the integration of exporting enterprises into the local economy by establishing strong backward links. However, the PC Law does not contain this provision. Therefore, it is recommended that through PSW indirect exporters especially those related to the textile sector should be incorporated within the Customs Law and provided with duty and tax drawbacks, as well as other export incentives. After the drawback system is fully and effectively in place, it would be beneficial to include “deemed” export benefits in the Pakistani trade regime.
In the end, the PSW is a highly practical way of increasing border clearance performance. In certain ways, it might act as a ‘Trojan Horse,’ overcoming institutional barriers to collaboration and change. It was, however, not straightforward to create and implement. The majority of the difficulties were not related to technology, but rather to getting individual entities to work together to achieve a common goal. However, equally important is the need to integrate the indirect textile exporters on this newly established digital platform as they can considerably boost the chances of economic success of the country.