Sept 2016 EDITORIAL – DEVELOPMENT OF A TRADE SINGLE WINDOW: A BIG STEP FORWARD

Hong Kong is well known globally as an international trading hub of goods, but it is also a port where the process of compliance with business-to-government (B2G) documentation requirements is somewhat tedious. That’s because traders and carriers are required by nine government agencies to submit 51 trade documents, such as cargo manifests, import and export declarations, and present relevant licenses and permits – all for the movement of goods “subject to specific controls or schemes.”

They are in place to “meet regulatory requirements for a number of public policy reasons, such as statistics, levies and duties, anti-smuggling, public safety and health, and security purposes.” Despite a number of initiatives introduced over the years to ease the reporting requirements through electronic means – including the Government Electronic Trading Services (GETS) in 1997, Air Cargo Clearance System (ACCS) in 1998 and Road Cargo System (ROCARS) in 2010 – a majority of trade documents are still handled through “conventional paper means” over the counter or by mail.

And, whether electronic filing of trade documents is available, traders and shippers have to deal with each and every government agency separately as may be required at different points of time. The process is simply too fragmented and inefficient; it creates an enormous burden, financially or otherwise, on not only the trading community but also government agencies such as the Customs and Excise Department (C&ED). It lags behind the international standards set by other advanced economies and reduces Hong Kong’s competitiveness as a trading hub.

It has been a long-standing issue that the government, as Financial Secretary John Tsang mentioned in his 2016-17 Budget earlier in the year, is looking to address by establishing a full-fledged Trade Single Window (SW) – defined by the United Nations as a “facility that allows parties involved in trade and transport to lodge standardized information and documents with a single entry point to fulfill all import, export, and transit-related regulatory requirements. If the information is electronic, then individual data elements should only be submitted once.”

The plan calls for a single IT platform for the one-stop lodging of all 51 documents for all trade declaration and customs clearance purposes. It is also expected to include the technical capability to facilitate interfaces with business-to-business platforms operated by the private sector and connections with SWs of other economies. It is a monumental step in maintaining Hong Kong’s position as an international trade and logistics center.

Without a doubt, a “full-fledged” SW will involve a substantial capital cost comparable to the development of Hong Kong’s Next Generation Smart Identity Card System which is estimated to have a cost of HK$1,449 million (of which HK$967 million is for the development of a new IT system). This has caused some concern within the trading community about rising user fees for which the government “will review the existing [structure]…and identify possible cost savings with a view to achieving full-cost recovery as far as possible in the new SW environment.”

While industry stakeholders do not know the exact cost of a new SW scheme at this stage, they can be sure about the time and cost savings (HK$860 to HK$1,500 million per annum in administrative cost) in the long run as a result of far greater operational efficiency brought upon by an advanced, up-to-date online digital platform. As such, they will no longer need to approach different government agencies separately, can lodge B2G trade documents electronically and keep track of their applications and submissions through a single portal at any time.

The government can also benefit through the sharing of crucial information between participating government agencies through a single, globally interconnected information system. It will make trade control easier and more efficient; it will help enforce compliance with legal and procedural requirements; it will facilitate customs cooperation and connectivity; and it will facilitate the development and implementation of government policy objectives in the future.

In essence, a Trade Single Window system as specified in the current proposal will help the trade community achieve far greater efficiency and, hence, savings. It will be a great tool for the government for the purpose of exchange of trade information with a host of different countries and jurisdictions. Above all, it will help expedite the cargo clearance process and enhance international trade relations for the benefit of both the public and private sectors.

The unifying power of the anticipated SW system in Hong Kong will revolutionize the current business-to-government, business-to- business, and government-to-government interfaces. And it will form the foundation for a much wider range of e-commerce initiatives among traders and providers of logistics services. Without SW, Hong Kong will be hard-pressed to retain the status of globally important logistics and trading hub in the 21st century.

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