Understanding the complexity of trade facilitation reforms: the UNCTAD Trade Facilitation Agreement Implementation Score

15 March 2022

Written by: Arántzazu Sánchez Belastegui and Lazar Ristic, Article No. 87 [UNCTAD Transport and Trade Facilitation Newsletter N°93 - First Quarter 2022]

News

Ngwenya border crossing between Eswatini and South Africa.

The fifth anniversary of the entry into force of the WTO Trade Facilitation Agreement (TFA) was celebrated on 22 February 2022 midst of an increasing demand by some WTO Member States on methodologies and approaches on how to evaluate the implementation of the Agreement. This Article presents the UNCTAD Implementation Score of the TFA, a methodology used by UNCTAD in combination with its Reform Tracker, to empower National Trade Facilitation Committees (NTFCs) in their monitoring and coordinating roles and to assist countries in meeting their TFA implementation obligations.
 

Why it is useful to measure the complexity of implementation of trade facilitation measures

For the past decades, the United Nations Conference on Trade and Development (UNCTAD) has been actively assisting developing and least developed countries in the implementation of trade facilitation reforms, including those contained in the TFA.

In 2021, UNCTAD went a step further in its longstanding commitment to empower NTFCs launching UNCTAD’s Reform Tracker, an online tool for NTFCs to project manage, coordinate and monitor the implementation of the TFA at national level.

By the end of 2021, the deployment of Reform Trackers in 19 countries made it even more urgent for UNCTAD to develop an approach to assess the national level of implementation of the TFA in real-time, while taking advantage of the data provided in the Reform Trackers. The UNCTAD Implementation Score of the TFA was created to provide countries using the Reform Tracker with a methodology to determine the effort still needed for carrying out effectively the different Provisions of the TFA. In other words, the Score shows how far a country is from full compliance with the Agreement, taking into consideration that some TFA measures are more difficult to implement than others.

Each of the country Scores are intended to be used in conjunction with the Reform Trackers, which include a thorough implementation and gap analysis for each country; technical assistance to evaluate the level of implementation of the measures, and training on how to interpret TFA Provisions.
 

How is the implementation score constructed?

The UNCTAD Implementation Score of the TFA is a methodology that calculates a country’s implementation rate of the TFA. Compared to statistics provided by similar tools, this tool assigns weighted values to the Agreement’s Provisions based on how difficult each of the Provisions are to implement. Thus, the Score relies on the overall assumption that some Provisions are more difficult to implement than others. For instance, a country is not expected to need the same amount of effort and time to implement a single window as per Article 10.4 than to implement the Provision on Use of Customs Brokers according to Article 10.6 of the TFA.

The Score is built on three groups of attributes:

  1. Number of actors involved in implementation
  2. Complexity of activities involved in implementation; and
  3. Legal nature of the provisions

Let’s look at them more in detail.

The first group of attributes is based on the number of public agencies and private sector organizations (and the frequency of their involvement) needed to implement a measure. Assigning an involvement weight value is done by looking at the optimum required stakeholders directly concerned in implementing the measure and how much time they require to invest in the implementation.

The underlying assumption is that measures requiring frequent involvement of a high number of stakeholders are more difficult to implement and, accordingly, such measures are assigned a higher weight when calculating the overall Implementation Score.

The Self-Assessment Guide for TFA implementation developed by the WTO has been used as a reference for determining the weighted values. This Self-Assessment Guide provides us with a detailed recommendation of the optimum required authorities directly concerned in the implementation of the measure. The Guide was developed to assist developing and least-developed Members in the assessment of their technical assistance and capacity building support needs and priorities to implement the TFA.
 

  1. The number of stakeholders involved in the implementation

The second group of attributes is based on the complexity of activities involved in the implementation of a trade facilitation measure. The complexity weight value is based on the optimum implementation requirements (legal, procedural, institutional, and ICTs) for each Provision.

The underlying assumption is that measures requiring a higher and more varied number of tasks to be completed (legal, procedural, institutional, technology-driven) are more difficult to implement and, accordingly, they should have a higher weight in the overall Implementation Score.

To assess the number of requirements, a more systematic understanding of requirements and inputs needed for each TFA measure was introduced, breaking down the concept into its smaller components. We call it UNCTAD’s Implementation Checklist. The Implementation Checklist defines the deliverables each country needs to meet to comply with the TFA for each measure. It looks and interprets all aspects of the Provision as described in the legal text of the Agreement but considers an optimum execution approach for the actual implementation of each measure.

Each aspect gathered in the Implementation Check List will then also bear different weight values depending on the complexity of implementing that item of the list. Let’s look at the example of the Implementation Check List of Article 1.2:
 

Text of the TFA – Article 1.2

UNCTAD Implementation Check List for Article 1.2

2 Information Available Through Internet

2.1 Each Member shall make available, and update to the extent possible and as appropriate, the following through the internet:

(a) a description (1) of its procedures for importation, exportation, and transit, including procedures for appeal or review, that informs governments, traders, and other interested parties of the practical steps needed for importation, exportation, and transit;

(b) the forms and documents required for importation into, exportation from, or transit through the territory of that Member;

(c) contact information on its enquiry point(s).

2.2 Whenever practicable, the description referred to in subparagraph 2.1(a) shall also be made available in one of the official languages of the WTO.

2.3 Members are encouraged to make available further trade-related information through the internet, including relevant trade-related legislation and other items referred to in paragraph 1.1.

  • There is a national implementation framework to publish the information through the internet

  • The required information is published on the Internet as well as practical steps needed for importation, exportation and transit. Likewise, such information is updated, and if not, country has explained why it was not possible or appropriate

  • The URL of one or more websites where information is published are notified to the WTO Trade Facilitation Committee

  • All items of the required information are in one of the WTO official languages, if practicable

  • The issue of the legal validity of the information published on the internet is addressed/clarified

Figure 1: Implementation check list of Article 1.2 as programmed in UNCTAD Reform tracker
 

Compliance with the first item of the list “There is a national implementation framework in place to ensure the publication of information through the Internet” requires far more time and effort to implement than the second item of the list “The URL of one or more websites where information is published are notified to the WTO Trade Facilitation Committee”. As such, when complying with the first item of the Implementation Check List of Article 1.2, a country will get a higher number of points in the Score than when complying with the second item of the list.
 

  1. The number and nature of activities needed for implementation

The TFA uses different terms to explain the legal obligation for each provision. We have grouped them into four categories, illustrated below.

Category

Example from the TFA

Mandatory

Each Member shall promptly publish the following information in a non-discriminatory and easily accessible manner to enable governments, traders, and other interested parties to become acquainted with them

Mandatory/conditional

Each Member shall make available, and update to the extent possible and as appropriate, the following through the internet

Best endeavour

Members are encouraged not to require the payment of a fee for answering enquiries and providing required forms and documents

Voluntary

The Member may, as appropriate, issue the notification or guidance based on risk

Mandatory measures are assumed to be more critical to consider the Agreement as implemented than best endeavours and voluntary measures. Therefore, this should be reflected in the Implementation Score. For instance, although certain measures need a high number of agencies and activities for their implementation, they should not bear a high weight in the Implementation Score if their level of the legal requirement is not high.

10.3 Use of International Standards

  1. Members are encouraged to use relevant international standards or parts thereof as a basis for their import, export, or transit formalities and procedures, except as otherwise provided for in this Agreement.

  2. Members are encouraged to take part, within the limits of their resources, in the preparation and periodic review of relevant international standards by appropriate international organizations.

  3. The Committee shall develop procedures for the sharing by Members of relevant information, and best practices, on the implementation of international standards, as appropriate.

  4. The Committee may also invite relevant international organizations to discuss their work on international standards. As appropriate, the Committee may identify specific standards that are of value to Members

Let’s take, for instance, Article 10.3. Making sure a country uses relevant international standards as a basis for their import, export, or transit formalities and procedures would be a very complex endeavour, due to the high number of agencies that would need to be frequently involved as well as the technical complexity of the implementation of the measure. However, this specific Provision of the Agreement is a ‘best endeavour clause’ where WTO Members are ‘just’ encouraged to use those standards and not legally obliged to do so. The ‘best endeavour’ legal nature of the clause will decrease the measure’s weight in the overall Score.
 

  1. The legal nature of Provisions

Each measure is given an overall complexity score that includes the sum of assigned scores for all three dimensions (number of agencies, number and nature of activities, and legal nature). This allows for each measure to be assessed along any of these three axes.

Measures overall complexity scores ranges from 2.5 points assigned to the least complex measures to implement (Test Procedures, and Use of International Standards), and go up to 6 points assigned to the most complex measures to implement (Border Agency Cooperation, Formalities and Documentation Requirements, Single Window, and NTFC).

The underlying assumption is that measures with an overall score ranging from medium to high (4 – 6 points) are more complex to implement, as they require more resources, take longer time a stronger legal obligation. Measures with an overall score low to medium-low (2.5 – 3.5 points) involve a single border authority or prescribe a simple task or legal requirement for implementation.

Based on the Score’s methodology, Provisions such as ‘Information available on the Internet’ and ‘Single Window’ get high scores of 5.5 and 6 respectively, while ‘International Standards’ and ‘Use of Customs Brokers’ get low scores of 2.5 and 3 respectively.
 

  1. The sum of all complexities

UNCTAD’s Implementation Score tool is currently applied in the 19 countries using UNCTAD Reform Tracker, namely Bolivia, Botswana, Burundi, Cambodia, Ecuador, Eswatini, Honduras, Kenya, Lesotho, Madagascar, Malawi, Mongolia, Namibia, Peru, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe.

With UNCTAD’s technical support, these countries are currently analysing the current situation and gaps for each of the Provisions of the Agreement. Once this is done, the countries will be able to validate in the Reform Tracker those 140 measurable elements included in the Implementation Check Lists for the 37 TFA measures they are compliant with (the 36 Provisions of Section I of the Agreement as well as the obligations included under Article 23.2 on NTFCs). Once this is done there are immediate rewards: for each Item validated, the Reform Tracker displays the updated Score in real-time, making UNCTAD Implementation Score a great functionality for NTFCs to monitor the implementation of the Agreement and assess how far the country is from full implementation.

The Implementation Score is only accessible by national stakeholders using the Reform Tracker of a particular country.


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