Long delays at the border, ambiguous regulations, excessive custom checks and a plethora of documentation requirements leads to significant challenges for exporters and importers. According to a recently published study by the World Bank titled “Modernizing Trade in Pakistan: A Policy Roadmap”, it took 75 hours to comply with border regulations for export and 120 hours to comply with border regulations for imports in Pakistan in 2018. It also shows the deterioration in the Logistics Performance Index as the country’s ranking fell from 110 in 2010 to 122. These figures are disconcerting, particularly at a time when the Ministry of Commerce is actively promoting exports. The study emphasizes on the benefits of a more efficient trade facilitation policy and logistics infrastructure. For instance, the implementation of the National Single Window will not only reduce transaction costs associated with trade but also help boost connectivity between domestic and foreign stakeholders.
United Nations Regional Commissions conduct a periodic Global Survey on Digital and Sustainable Trade Facilitation since 2015. The purpose is to determine the progress on trade facilitation processes adopted by different countries. The survey covers several trade facilitation measures, some of which are featured in WTO Trade Facilitation Agreement.
Pakistan has increased its total score on digital and trade facilitation from 40.86 in 2015 to 59.14 in 2019 as observed in Figure 1. Although, Pakistan struggled to improve its overall exports between 2015 and 2019, this change is commendable given that it will ease the costs of doing business and provide opportunities to exporters that otherwise struggle due to burdensome and time-consuming processes at the border.
Pakistan scores low on cross-border paperless trade. Pakistan Customs identified several challenges at the border including excessive documentation requirements, inadequate automated processes, high administrative costs and lack of cooperation and coordination between agencies. These can be alleviated with the implementation of a cross-border paperless trade facility. Pakistan has yet to implement paperless collection of payments from a documentary letter of credit, electronic exchange of SPS certificates, electronic exchange of certificate of origin and have a recognized certification authority as according to the UN Global Survey on Digital and Sustainable Trade Facilitation. On the other hand, Pakistan does partially implement laws and regulations for electronic transactions and electronic exchange of customs declaration.
It is obvious that Pakistan has to make significant strides in order to boost connectivity with its major trading partners that can translate into higher exports. Although, there are many aspects to trade facilitation that require attention from the authorities in Pakistan and cross-border paperless trade is just one of them, even partial implementation of the aforementioned measures related to cross-border paperless trade will provide the necessary impetus to export growth. According to a report on trade facilitation and paperless trade implementation in CAREC countries by United Nations ESCAP, electronic exchange of trade data and documents can reduce trade costs by approximately 30 percent. Lastly, glitches under Electronic Data Exchange Mechanism with China must be resolved to ensure accurate trade data is shared between the two countries and reduce instances of incorrect invoicing.
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