Bangladesh is at the crossroads of digital trade facilitation
Trade being an integral part of the national economy, Bangladesh is at a crossroad where trade has transcended beyond the limits of tangible goods and services. In 2021, the United Nations of Conference on Trade and Development (UNCTAD) reported that countries are harnessing their digital capabilities and expanding on data utilization, especially from the push of covid-19. Salehin Khan, Economic Affairs Officer at the United Nations Economic Commission for Europe (UNECE) puts together how Bangladesh can take the step toward increasing digital trade.
Trade facilitation is generally understood as simplifying, modernizing, and harmonizing export or import processes, popularly known as ‘cutting the red tape for international trade transactions. With the gradual reduction of tariffs, trade facilitation is deemed to be crucial for Bangladesh’s trade competitiveness. Over the last few years, Bangladesh is progressing in its pursuit of ‘cutting the red tape’ and gradually introducing digital solutions for traders. According to the United Nations Global Survey on Digital and Sustainable Trade Facilitation 2021, Bangladesh improved its trade facilitation implementation from 53 percent in 2019 to about 65 percent in 2021. The progress is significant from a mere 31 percent implementation in 2015. Bangladesh’s performance, compared to its South Asian neighbors, is relatively better, other than India’s. Nepal, Pakistan, and Sri Lanka achieved about 55, 58, and 60 percent in the 2021 survey while India stood at a massive 90 percent leading the South Asia sub-region. The rate of implementation is based on a set of trade facilitation measures or provisions ranging across access to trade-related information, border clearance formalities, digital services, and cross-border exchange of electronic trade data. For Bangladesh, most improvements have been observed in improving access to trade-related information such as export or import procedures and simplifications in border-clearance procedures. End-to-end digital services or digitalization of the entire trade procedures are relatively less implemented.
The gradual shift to digital channels is certainly a notable change in Bangladesh. A number of recent initiatives have been undertaken by the government including the establishment of an electronic single window (SW) in addition to the existing automated customs systems and the trade information portal. The single window project is reported to be undergoing. Bangladesh should aim for an ideal single window that connects trade-relevant authorities including the customs, the department of agriculture, the department of health, the department of environment, the certification and standards body, and so on. The user-friendliness of the system is also key. Normally, small and medium enterprises (SMEs) are most benefited from digital trade facilitation systems. Hence, the ICT readiness of these other agencies including the digital skills of the employees and traders, especially the SMEs are equally important to best utilize the benefits of the single window. Furthermore, a faster implementation of the single window is need of the hour. In addition, the Bangladesh trade portal provides various export-import-related trade rules, laws, and other relevant resources. The use of the trade portal must be monitored for continuous improvement and the latest updates.
Digitalization of trade facilitation services is a key enabler for trade facilitation reforms. The prerequisite of digitalization of trade facilitation is the appropriate legal framework i.e. laws and regulations making the digital submission, acceptance, and exchange of electronic documents legally acceptable.
Digitalization of trade facilitation services is a key enabler for trade facilitation reforms. The prerequisite of digitalization of trade facilitation is the appropriate legal framework i.e. laws and regulations making the digital submission, acceptance, and exchange of electronic documents legally acceptable. It will provide a mandate to establish connectivity between government agencies involved in trade facilitation. Currently, the absence of an appropriate legal framework in Bangladesh undermines the maximum benefits that digitalization may produce. In addition to faster clearance of goods, digitalization helps to create an efficient exchange of information among the government agencies as well as between the agencies and the traders. It creates transparency and traceability in the supply chains. But a major advantage is from the use of data generated through the digital systems that Bangladesh must strive to achieve. For example, if the single window is fully operationalized, the massive amount of data about the traded goods, traders, product specifications, pricing, etc. can be used to support compliance with the country’s trade rules to stop illicit trade, ensure sanitary and phytosanitary screenings, etc. The data can help better implement the fundamental trade facilitation measures like risk management, authorized economic operators’ scheme, pre-arrival processing, post-clearance audits, advance ruling decisions, etc.
It is important to do the right things, but to do things right, a deeper look into the efficiency of the current digital systems must be taken into consideration. For example, is the trade information portal helping the traders, especially the SMEs? Or even at the basic level, is there a duplication of providing paper documents when the customs clearance is automated? Needless to say, any trade facilitation reforms must be based on continuous checks and balances. Monitoring of existing trade facilitation provisions and coordination among the government agencies as well as the private sector bodies are therefore highly critical.
Bangladesh is actively involved in implementing the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA). Full implementation of the TFA including the category C measures – those needing capacity-building support is currently the focus of the country. There are advanced digital measures, which are not in the TFA. So, the country’s vision for increased competitiveness must not be limited to the implementation of the TFA. In this connection, Bangladesh has already ratified the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific – an international agreement to accelerate trade digitalization – the electronic exchange of trade-related data across borders. The agreement went into force in 2021 with five United Nations member states.
Finally, traders want reliability, certainty, and efficiency of the export and import procedures. Some of this can be achieved already with improved monitoring and execution of the current trade facilitation services. However, for greater participation in world trade, Bangladesh must have the vision to leapfrog the digital divide.
Trade facilitation is a journey. Like any policy reforms, trade facilitation reforms, particularly the shift to digitalization need a change of mindset of both the public and private sectors to embrace new ways of operating, underpinned by strong digital infrastructure and related skills. The change of mindset will help the country to step ahead to continue its journey towards digital trade facilitation.
Disclaimer: The opinions expressed are that of the writer themselves and not of the UN, in any form or manner.
