Case Study: China's Trade Facilitation responses to the COVID-19 Pandemic

22 May 2020

Written by: Pamela Ugaz and Sijia SunArticle No. 52 [Transport and Trade Facilitation Newsletter, Special COVID-19 Edition]

With the unprecedented global spread of COVID-19 in only one month, the World Health Organization has declared the virus a pandemic. The COVID-19 poses a severe global threat, not only substantially impacting people and public health, but also disrupting global trade. Border agencies face the challenge of expediting imports, including donations and emergency relief while ensuring epidemic prevention and providing adequate Customs clearance and compliance controls.

China has been at the epicentre of disease Covid-19, and it has launched a series of trade facilitation and compliance measures since January 2020. Maintaining incoming trade flows of medical supplies and food products has been seen as crucial. China also sought to minimize the disruption of COVID-19 on its export trade flows, which supplies nearly 20% of the global intermediate-goods trade.

Given its role in global value chains and being the first county to have taken wide-ranging measures in relation to trade flows as a reaction to Covid-19, China is a compelling case to study. Indeed, the Chinese experience in facilitating trade during tumultuous times may provide useful insights for response planning in other countries.

This article will first look at the process of adoption of a cross-border emergency plan in China. Then, it will provide information on concrete measures adopted by China from two perspectives: measures taken to relieve logistic bottlenecks that have affected trade in medicines, equipment and essential supplies to fight against the pandemic; and, measures to prevent supply chain disruption and to facilitate the resuming of business operations.

 

Operationalization of trade facilitation measures

China launched an emergency plan in which the central government and local agencies joined efforts to promote cross-border trade facilitation. With this goal in mind, the plan emphasized simplified customs procedures and reduced port charges, inspections and quarantine.

The General Administration of Customs of China (GACC) issued a series of measures such as the following ones, to ensure both effective control against the outbreak of COVID-19 and to facilitate resuming business operations:

Local customs offices have refined the general measures of the GACC considering local conditions, in accordance with the process to elaborate plans in China, illustrated in Figure 1.

Figure 1: Process to elaborate response plans in China
Trade Facilitation

Since January 2020, China began implementing response measures to the Covid-19 pandemic, and relied extensively on its e-platforms for International Trade, namely the Single Window and the “Internet + Customs” platform. Electronic tools ensure epidemic prevention while providing effective customs clearance services. Affected by the epidemic, some manufacturing goods and electronic goods that used to be transported by road transportation and air transportation are gradually being transferred to the railway transportation, which also shows China's flexibility in response. From January to February 2020, the CR Express (Chengdu) put into service 269 trains, increasing transport capacity by more than 80% compared with the same period last year.

 

Measures to contain COVID-19

Getting medical supplies without delays required Chinese Customs and other compliance authorities to adopt several exceptional initiatives such as the following:

a) Speeding up the release of goods

During this health crisis, China deployed continuous efforts to facilitate epidemic relief. Chinese Customs managed to reduce the release time of relief cargo to 45 minutes by adopting:

  • Special counters and green lanes to provide 24/7 clearance at critical ports across the country
  • Pick-up service upon arrival for imported medicines and medical devices
  • On-board inspections or door-to-door inspection, while preventing illegal activities taking advantage of the situation
  • Expeditious clearance procedures at various Customs offices, such as:
  • Optimization of control procedures over medical items imported through postal and express services
  • Expedited administrative penalty procedures without retention of the anti-epidemic supplies, transportation conveyances or account document. If the involved party has given prior consent, customs can send the legal record of administrative penalty through electronic ways such as by fax, e-mail, mobile phone or other means where reception can be confirmed

b) Enhancing access to information about new procedures

Customs set up online services to guide importers throughout the fast clearance of anti-epidemic supplies. Xiamen Customs is holding online meetings with importers, answers questions, and guides traders in filling in declaration forms.

c) Reducing tariffs

Import materials donated for epidemic prevention and control are exempted from import duties, import value-added tax and consumption tax.

d) Adopting more flexible sanitary requirements

Sanitary registration for donated medical items has been suspended. Customs can release directly selected medical items, such as vaccines, blood products, and reagents, essential to prevent, diagnose or cure COVID-19, according to the certificate issued by competent authorities, provided that the health risks can be controlled.

e) Keeping records

Customs must now keep a record of the importation of anti-epidemic supplies and compile relevant statistics, to support decision-making related to securing these supplies.

f) Coping with trade restrictions

A few countries have imposed restrictions on imports of live animals or animal products from China, or on exports of supplies such as masks, protective suits and disinfectant to China. To deal with this, the Chinese government is sending early warning information to the affected enterprises as well as providing targeted consulting services. It has also strengthened communication and coordination with trading partners to create an enabling environment for bilateral trade and economic cooperation.

 

Measures to prevent supply chain disruption

COVID-19 has slowed down global trade flows and, as a result, importers are struggling to get inputs and inventories are running low. China has adopted the following measures to prevent supply chain disruption and to facilitate resuming business operations:

a) Relaxing procedures and requirements

In the framework of the “Belt and Road Initiative”, China allows enterprises to choose clearance mode for goods transported by the CR Express either at ports of entry/exit or at local Customs. Besides, when a paper document is required for verification, its electronic copy can be accepted by Customs upon approval before the submission of the paper document.

As an alternative to on-site audits, Customs are conducting off-site audits via video or electronic data transmission or are basing the audit on the inventory data provided by enterprises. Finally, enterprises do not need to apply for changes in business registration until the outbreak ends (except for the business name, which requires an online application).

b) Expediting clearance

To facilitate the import of agri-food products, equipment and raw material, China has adopted the following measures:

  • A shorter quarantine approval process
  • Green lanes on a reservation basis
  • Non-intrusive inspection equipment at railway ports of entry/exit to increase efficiency, together with the application of artificial intelligence image recognition technology
  • Absence of consignees during an inspection provided that they entrust operators of the inspection yard or the person in charge of the transport conveyance to be on site. Consignees can notify Customs of their absence through e-mail or online platforms.
  • Prioritization of test for products suspected to contain pests or disease
  • Acceptance of third-party certificates, test reports or self-declaration on quality and safety instead of laboratory testing
  • Optimization of pre-export control and certification services, ensuring the issuance of quarantine certificates, disposal certificates, origin certificates and sanitary certificates for export goods. The purpose is to support businesses in the export process
  • Expedite administrative approval for registered exporters and training on dealing with technical trade barriers
  • Enhanced mutual recognition of Authorized Economic Operators (AEO) throughout the “Belt and Road” This measure has entailed implementing facilitative clearance measures and promoting credits to enterprises to qualify as AEOs
  • Acceptance of electronic documents when the paper documents must be examined in person, provided that the latter are resubmitted latter upon approval
  • Enhancing the application of the Single Window for international trade by expanding essential service functions
  • Guidance with clearance formalities, especially for micro, small and medium-sized enterprises. To minimize declaration errors and avoid procedural non-compliance, these companies can seek help from Customs authorities through a new media platform and a hotline.

c) Reducing costs

China Customs reduced costs by decreasing the number of declarations through manifest consolidation. Moreover, traders can apply for an exemption or reduction of the fee for delayed declaration in case the outbreak disrupted their operations or if funds are low upon the resumption of business. Importing enterprises, unable to pay taxes on schedule, may submit a payment schedule spread across a maximum duration of three months. Fees for late payment shall be exempted or reduced, provided that the enterprise complied to the payment schedule.

d) Enhancing logistic/transport capabilities

To boost the transport capacity, China is supporting the construction of transport hubs. Likewise, multimodal transport operations based on railway transport (i.e. CR Express) is expected to facilitate domestic customs transit among multiple customs districts.

e) International coordination

Mitigating the health risks and economic consequences from COVID-19 require coordinated preparedness and response.

International collaboration is essential, as well. China has proposed data exchange and information sharing among customs authorities in countries and regions along with the CR Express. Moreover, China has intended to strengthen international cooperation on epidemic prevention and control, as well as to work closely with the World Health Organization (WHO).

 

Final remarks

Covid-19 is spreading across the globe and governments are struggling to mitigate its negative impact on international trade. It will be important to learn from experiences in different countries, carefully evaluating each country’s unique situation. As China was among the first countries confronted with this virus, we hope that readers may find the compilation of measures taken in China useful to prepare their own responses.


Contact the authors:

Pamela Ugaz | Economic Affairs Officer | UNCTAD Trade Facilitation Section | [email protected]

Sijia Sun | Junior Professional Officer | UNCTAD Trade Facilitation Section | [email protected]

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