RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/138
4 March 1999
(99-0851)
Council for Trade in Goods Original:  English
TRADE FACILITATION
Trade Facilitation and Electronic Commerce
Communication from the European Community
I. WHY WE NEED AUTOMATION IN TRADE ADMINISTRATION
The benefits of automation in import and export administration are widely known. Use of
electronic means of communication by customs enhances its control capability and capacity to collect
tax and statistics, and reduces operating costs. Electronic Data Interchange is also essential for
modern customs techniques such as pre-arrival processing of declarations and risk assessment.
Extension of electronic, EDI-based systems to  other government users such as port and
airport authorities, health and safety agencies, enables efficient tracking and overall administration of
imports, exports and transiting goods, in a more cost effective way. If, through automation, the
average turnaround time of a vessel or processing of a consignment at a port can be halved, thatmeans a doubling of port capacity without having to invest in expensive infrastructure. Innovative
smart card and similar technologies can also be used now to control and verify movement of both
goods and persons for customs, immigration and other purposes.
For business, the replacement of paper based procedures by standardised electronic
messaging enables goods to cross borders faster, since vital information for customs processing and
release can be provided in advance of the arrival of the goods. Compliance costs are also less: errorrates are reduced, and information generated at export can be used throughout the trade, banking and
transport chain for both commercial and regulatory purposes, and for different export markets.
Appearance of low cost internet based technologi es means that small and medium sized companies
can now take advantage of electronic commerce tool s both in their commercial dealings and at the
regulatory interface, in the same manner as large companies. Further liberalization oftelecommunications services under the GATS will make the infrastructure for EDI even more
accessible to governments and traders at every level of development. Developing countries should be
helped to build the capacity to exploit these new opportunities.
As the private sector embraces automation and EDI, in all facets of its operations, we need to
ensure that the growth of electronic commerce is  not slowed down by the weight of antiquated
government procedures. With rapidly increasing  trade volumes, new ways of doing business,
increasing pressure to get products over borders and into markets rapidly, and budgetary pressures on
government, use of electronic means of communication is an absolute must for all WTO Members.
The issue for WTO is how it can best support the ap plication of  EDI to trade administration, as an
essential tool of trade facilitation and simplification.
The European Community has argued for a framework of commitments on simplified trade
procedures in WTO. Electronic means of trade administration belong to that framework. Those
commitments should in the EC’s view  reflect the following principles:G/C/W/138
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(1) Governments should provide a framework that allows the private sector to use electronic
means of communication/EDI, as an alternative to paper based procedures for different
control functions.  The aim should be to ensure integrated management of documentation and
data, and the operation of seamless transactions.
(2) Automation and EDI alone cannot solve all pr oblems of trade procedures. A component of
trade facilitation, it can only be fully effective if implemented within a broader policy of
systematic improvement and simplification of trade practices and management.
(3) While automation will usually apply first to cu stoms, it should be extended to all import and
export administration and to the different stages of the transport chain, to make controls more
efficient and costs and delays to business as low as possible.
(4) Automation and EDI should incorporate open, interoperable and internationally recognised
standards and codes, to ensure there is a common language amongst different users and in
different countries, thereby facilitating trade.
(5) Rules should not be unduly limiting or prescriptive as to technologies, or impose undue
constraints on business: technology choices and interfaces are something for the public and
private sector operators to develop between themselves, as technology itself changes. WTO
should therefore not dictate choices of specific technologies, interfaces, standards or codes,
other than encouraging the use of international standards.
(6) A meaningful level of cooperation and assistance should be provided to developing countries
where necessary to build capacity for successful introduction of automation.
II. PROPOSALS FOR WTO
Having regard to the above, the EC suggests that any future WTO rule making could
encompass the following:
1. Automation and use of EDI
A WTO framework of rules should incorporate provisions of the WCO Kyoto Convention
establishing customs acceptance of electronic documents and data, and processing and release by
electronic means. Technical assistance should be provided where necessary for less developedcountries to do this. Excessive and unharmonized paper procedures should not however just be turned
into electronic equivalents. Computerisation needs to be preceded by reduction, simplification and
harmonization of data and documentation requirements. It should also be part of a package of modern
techniques such as pre-arrival processing, risk assessment, post-release payment of duties, and remote
filing of declarations. This is why in document G/C/W/122 the EC also proposed rules to simplify
data and documentation to the very minimum, in line with Article VIII of the GATT, and that WTO
Members adopt commitments on risk assessment, pre-arrival processing etc based on the revised
Kyoto Convention.
2. Automation as part of an overall strategy of trade facilitation
Automation is not a panacea for all problems with customs procedures. Experience suggests
that it can only be effective if accompanied by systemic improvements to customs practices and
management. There has to be a strong political commitment and a top-down driven approach to trade
facilitation in which customs automation plays a part. The EC has proposed in its submissions to the
WTO Council Trade in Goods that, as part of a WTO framework, WTO Members each develop astrategy for trade facilitation incorporating customs modernization and reform, supported where
necessary by development assistance from international organizations and private sector partners.G/C/W/138
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3. Use of EDI by other agencies
Benefits of automating customs will be reduced if other control agencies continue to rely on
unaligned, paper based procedures. While the initial focus will often be on customs and border
crossing administration, government efforts should progressively involve licensing and other controlauthorities such as veterinary and health controls, transport and transit arrangements, and banking and
payments systems, all of whom should migrate to ED I as part of an overall facilitation plan. Other
agencies need to introduce EDI and be linked to each other so that, ultimately, traders need only
provide one minimum set of electronic data once, a nd so that such data concerning goods flows can
be processed and action taken in a timely way before consignments arrive.  The EC has made
proposals in G/C/W/122 concerning concentration of official controls in the hands of one agency, and
the principle of a single window for information.
WTO rules may also be useful to ensure that particular rigidities at private sector level do not
create obstacles to trade. Insistence by banks on receipt of physical paper documentation in order to
release payment or foreign exchange, or delays in realizing banking transfers are cited as a major
delaying factor by many international traders. Consideration should be given to a regulatoryframework that ensures acceptance of electronic letters of credit and electronic equivalents of other
trade documents demanded by banks, and that speeds up the electronic transfer of funds.
4. Use of International Standards
The EC has in its earlier submissions suggest ed that WTO rules should include commitments
to use open, interoperable international standards, such as UN-EDIFACT, as a basis for harmonized
and simplified data and documentary requirements. The rule should be that electronic submissions
made in line with such standards set by government should be acceptable to customs. They should
also be designed to facilitate use by small and medium sized enterprises, who should be given time to
migrate away from paper based procedures. Retention of paper procedures alongside electronicprocessing, as a means to assist occasional traders for example,  should be for each country to choose.
5. Public and Private Sector Cooperation
Successful introduction of EDI depends on private sector support and take-up. Cooperation
between the private sector operators and the administration is therefore essential in order for
alternative electronic messaging technologies to be developed in a way that fits business conditions
and needs, and to ensure compatibility between commercial and governmental requirements.Cooperation in fact will be essential for the introduction of modern customs techniques such as
accessing of authorized traders’ data for control and taxation purposes, as well as for more basic
functions. The private sector in cooperation with some governments has developed specific EDI
programmes to reduce the time needed for government s to develop their own capability in this area.
Any WTO rules should imply cooperation with private sector interests when introducing EDI andother means of electronic communication.
6. Capacity Building
No one doubts the benefits of automation in trade administration. Chile and others at the
WTO March 1998 Symposium demonstrated conclusively its benefits. But some developing countries– including the LDC’s –lack resources to begin automation even if start up costs can be recouped
later. They therefore risk being left behind in the technology race as other countries move ahead with
modern systems. Any initiative on trade facilitation must therefore address capacity building. A
framework of WTO rules should provide a platform for systematic cooperation and coordination
between the different international organisations, such as UNCTAD and the WCO, with expertise in
developing automated systems as part of trade facilitation strategy. This would both increase theG/C/W/138
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profile of and ensure high level commitment to implement facilitation measures, and make
development assistance more effective through better co-ordination. A co-ordinated system working
to specific objectives laid down in WTO rules, with clear performance benchmarks and timeframes
for each participating country would also be effective in attracting additional public and  - in
particular - private sector investment.
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