Trade Facilitation Measures Recommended for DR-CAFTA Region

A report prepared with the help of two Sandler, Travis & Rosenberg professionals has identified a number of steps that should be taken to further facilitate trade in the DR-CAFTA region. The report states that lowering barriers such as inefficient customs procedures, redundant paperwork, and a lack of adequate infrastructure and technological capabilities can be a significant tool for boosting trade flows and economic growth and development.

Published by IDB, download the report here

In this context, the Inter-American Development Bank, the U.S. Chamber of Commerce and the Association of American Chambers of Commerce in Latin America (which sponsored this report) “place the highest priority on trade facilitation measures for realizing the vision of a more competitive, economically integrated and prosperous Latin America and the Caribbean region.”

ST&R’s Nicole Bivens Collinson, president of the firm’s trade negotiations and legislative affairs practice, and Ned Steiner, senior director for trade negotiations and legislative affairs, provided technical support and input for the report. Collinson explained that while the benefits of facilitating trade throughout the global supply chain far outweigh those associated with the removal of tariffs, countries are finding it difficult to change the way they have traditionally conducted customs business. “This report is a stellar example of a group of countries willing to look in the mirror to reflect on what they need to do to be more globally competitive,” Collinson said, “and that work involves addressing domestic and regional hurdles to facilitating trade.” Steiner added that with trade facilitation also the subject of substantive work at the World Trade Organization and among Asian nations, the DR-CAFTA nations must now develop a road map on how to implement the report’s recommendations to remain competitive in today’s global economy.

The report points out that while DR-CAFTA has had a positive effect on trade in the region since implementation began in 2006, it has also highlighted deficiencies in commercial logistics and infrastructure issues that prevent the region from attracting more investment and business. Problems are identified in areas such as customs administration (e.g., lack of information and training, inadequate staffing and technological infrastructure, and corruption), complexity of import requirements, communication between customs administrations and consumer protection organizations, coordination between national customs administrations, dispute settlement, timely release of goods (particularly express shipments), and implementation of trusted trader programs.

The report therefore recommends adoption of the following measures.

– greater follow-up on trade facilitation commitments, including permanent channels for private sector input into the drafting of legislation and regulation and independent evaluation of progress in trade facilitation issues

– implementation of a fully electronic entry documentation system, beginning with those countries ready to do so and extending to the entire region when appropriate

– harmonization of border controls, with the International Convention on the Simplification and Harmonization of Customs Procedures as a foundation and the goal of ensuring uniform interpretation and application of customs rules and regulations within countries and across the region (e.g., by developing a regional model similar to the Centers of Excellence and Expertise being rolled out in the U.S.)

– implementation of a harmonized tariff system in the region, including promoting the use of advance rulings and determining whether the time for issuing such rulings can be lowered to 30 days

– mutual recognition of sanitary and phytosanitary and SPS-related registrations, beginning with one or two priority products in areas such as cosmetics, food or medicines that could serve as a pilot project

– adoption of authorized economic operator programs and risk systems, including consideration of different programs for different modes of transportation, an AEO program for low-risk goods, and negotiations to achieve mutual recognition agreements

– transparency and capacity building, including permanent capacity building mechanisms taking into consideration all the different public sector agencies involved in international trade issues