KINH TÊ RESULTS OF TRADE FACILITATION IN VIETNAM • NGUYEN HOAI THU ABSTRACT: In recent years, the idea of trade facilitation has expanded to the modernization and automation of import procedures in order to make the adoption of international standards easier It is generally understood that trade facilitation involves the reduction of transaction costs for all parties in the compliance with trade regulations and policies Trade facilitation is now recognized as a key driving factor in determining export competitiveness of a country For countries like Vietnam which is increasingly integrating into the global economy through exports and imports of goods and services, it is crucial that trade should be “facilitated” through appropriate measures This paper points out that Vietnam’s ability to strengthen the country’s international economic integration depends on the country’s trade facilitation measures Keywords: trade facilitation, international cooperation, international trade l.Introduction In recent years, the idea of trade facilitation has expanded to the modernization and automation of import procedures in order to make the adoption of international standards easier It is generally understood that trade facilitation involves the reduction of transaction costs for all parties in the enforcement, regulation and administration of trade policies Trade facilitation has been described as the “plumbing” of international trade (Hoekman et al., 2002) that focuses on the efficient implementation of trade rules and regulations By nature, trade facilitation is very technical and detailed, with the underlying objective of reducing various forms of non-tariff barriers that impose significant loss of time and costs in conducting trade, including an excessive number of documents, involvement of dozens of agencies, and complexity in data reporting and processing It is in this context that the simplification of customs procedures is of great importance for countries around the world and Vietnam is no exception Data and Methodology The literature review is a continuous process that consists of literature collection, analysis, comparison and criticism In addition, books, reports from internet sources are used to find additional information Besides, several databases, such as Google Scholar, EBSCO Business Source Premier, Elsevier Science Direct, Emerald, Springer, SAGE and JSTOR are used in the course of the literature research Furthermore, to collect data for analysis, the author also looks for reports and database from international organizations such as the World Bank (WB), International Monetary Fund (IMF), United Nations (UN) and so on Regarding the information about trade development in Vietnam, reports from So - Tháng 4/2022 19 TẠP CHÍ CƠNG THƯƠNG several organizations, including Vietnam Trade Promotion Agency under the Ministry of Industry and Trade and other independent agencies Literature review 3.1 Definition of Trade Facilitation Various definitions of “trade facilitation” have been used by international organizations and in trade agreements According to the Organization for Economic Co-operation and Development (OECD), trade facilitation means the simplification and harmonization of international trade procedures including the activities, practices and formalities involved in collecting, presenting, communicating and processing data and other information required for the movement of goods in international trade (OECD, 2005) In addition, many bilateral and regional trade agreements have a broader understanding of trade facilitation, extending more generally to “any procedures, processes or policies capable of reducing transaction costs and facilitating the flow of goods in international trade” United Nations defined trade facilitation s a policy that reduces costs, uncertainty and time expanded over international trade of goods, excluding out traditional instruments like tariffs levied over the international transactions (ESCAP, 2009) Similarly, the World Customs Organization (WCO) pointed out that the core definition of trade facilitation is “lowering trade transaction costs and creating standard efficiencies” (WCO, 2011) With a view to maintaining a sound balance between the operational procedures and stakeholders’ requirements, the global trading community has long been striving to move towards the concept of paperless trade This implies a shift towards automation and the virtual abandonment of all paperwork The potential benefits of paperless trade include easier processing of more reliable information, a reduction of costs and delays all along the supply chain, and increased security in conducting international trade 3.2 Changes in the trade facilitation regulatory and policyframework International cooperation on trade facilitation pre-dates the World Trade Organization (WTO) but has been given more attention since the 120 So - Tháng 4/2022 inclusion of trade facilitation as a topic under the WTO in 1992 Two multilateral agreements, the wco Revised Kyoto Convention (RKC) and the WTO Trade Facilitation Agreement (TFA), have been negotiated in the past years and now constitute a multilateral framework for a core set of trade facilitation measures and disciplines to be implemented and respected globally They complement older legal instruments such as the UNECE Convention of Harmonization of Frontier Controls (1982), and the International Customs convention TIR (1975), the FAL Convention (1962) as well as other regional or transport mode specific agreements By creating these instruments, namely the wco RKC and the WTO TFA, governments have deepened and strengthened their commitment to implement trade facilitation The wco RKC provides standards and recommendations to harmonize and simplify Customs procedures and practices The WTO TF is a more horizontal Agreement that covers a wide range of government activities Implementation of the Agreement will require WTO Members to take legislative and non legislative, i.e organizational or practical measures Over the past 30 years, the number of existing trade agreements has increased rapidly on a global scale In 2010, more than 300 preferential trade agreements were notified to the WTO and were in effect The proliferation of these agreements and customs unions increases the complexity of overlapping trade rules and raise specific trade facilitation concerns with regards to the rules of origin Irregularities, including deliberate fraud, with Certificates of Origin (CoO) are common CoO are still commonly paper-based, physically accompany the goods, need to be presented as original copy for customs processing The direct exchange of CoO amongst issuing administration is an emerging trend adopted for pilot projects, such as the Senegal-CI exchange project Another approach to secure authenticity and integrity of CoO is the self-certification Exporter based risk management and information exchange with the issuing authorities in the foreign country are other means to limit CoO fraud KINH TÊ After the September 11 attacks in the U.S, many governments adopted security measures that significantly affect port, transport and border procedures worldwide Global transport of goods is now subject to additional requirements as regulators worldwide push for the advance submission of cargo information to identify security risks easier and earlier Numerous countries have introduced Advance Cargo Declaration requirements for maritime container goods and / or airfreight including the EU, the U.S, Japan, Australia and New Zealand, Mexico, Turkey, China and the Philippines Under these requirements transport operators are obliged to provide a defined set of data prior to arrival (exact time requirements differ across regulations) to Customs authorities and/or port and aviation authorities 3.3 Key trends in implementing trade facilitation measures 3.3.1 Agency cooperation Many trade facilitation instruments and concepts, including the WTO TFA, RKC and TIR, focus on the Customs administrations and the simplification of their procedures and processing This perspective, however, is increasingly replaced by a more integrated vision of trade facilitation that brings in other government agencies, such as food control agencies, veterinary services, and transport bodies Mandates, responsibilities and interventions on goods and means of transport overlap, in particular with regards to control measures applied to goods crossing the borders Simplification for trade facilitation therefore requires integration both from the organizational and the IT perspective and stretches to risk management, border management, as well as pre clearance formalities Information integration has been the driving force behind so-called Single Windows for trade In conceptual, Single Window scenarios, external users-traders and other intermediaries-submit structured information to a single platform where internal users-government entities or other service providers-access the information, process it, communicate between each other, and communicate the decision back to the external user 3.3.2 Cross-border cooperation The simplification of procedures rests to a large extent on the cooperation of neighbouring countries and trading partners Process, procedures and document alignment and harmonization across borders, cuts costs to traders who are shipping goods across several borders Sharing data and information through point-to-point communication amongst administtations across borders provides additional security relevant information, allows for a better control of transit movement, and secures licenses and certificates that are common sources of fraud, such as the CoO or the Sanitary and Phytosanitary certificates Cross-border exchange of data is currently pursued in many regions on different levels; for transit movements, for sharing of licenses and certificates from government to government (G2G), and for sharing of customs data (WCGO GCN etc.) 3.3.3 Paperless trade Information exchange in global supply chains A seamless flow of information is at the center of modern supply chain management Supply chains that are geographically fragmented and extended rest upon information processing and exchange amongst supply chain partners Information visibility, Information timeliness, and Traceability are the three information requirements that matter most Supply chain partners already have a lot of data available in electronic format: Notifications, requests and services orders are produced and exchanged amongst transport operators, e-invoices sent between partners and to clients, and certificates and documents exchanged with authorities Logistics partners also use specific software and platforms for processes from warehouse management, to route planning and order management, and to increase productivity and performance Progress with paperless trade with the introduction of modem equipment and technology for control and facilitation at border points, and clearance facilities Customs administrations tap m-services, use barcode and QR codes to retrieve information, and technologies such as license plate number reading for vehicle control at border stations So 6-Tháng 4/2022 121 TẠP CHÍ CƠNG THƯƠNG Data and messaging harmonization Many current trade facilitation initiatives call for more cooperation and integration across agencies, across borders, and between ICT systems The UNTDED and UNCEFACT code lists are widely used for unambiguous identification of data elements that can be integrated into data models Two hierarchical data models, the wco data model and the UN CCL, constitute de facto standards for data harmonization for trade and transport facilitation National and regional data harmonization efforts align their data models to both data models The wco data model incorporates non-Customs requirements of other agencies and can accommodate a large type of data and messages from supply chain partners In addition to the global initiatives and instruments, initiatives also emerge at industry level and for specific transport sectors, such as for the advance cargo information (IATA cargo xml message), and standards for electronic documents (e-Cargo Security Document (e-CSD)) In Europe, projects, such as e-freight and the National Single Window (NSW) for transport, build a framework for information exchange based on common data and message standards 3.3.4 Client orientation in public administration Public administration leverages the benefits of automation and faster and processing through ICT Improved process speed and efficiency provide an answer to resource scarcity and growing trade volumes But there are two additional elements for which ICT can and increasingly is leveraged: the reduction of physical and time barriers for service delivery, and improved information provision In the real world, administrations physically located in different places have different operating times, and responsibilities and mandates are fragmented over various bodies By using ICT, this geographic, procedure and time fragmentation can be overcome Physical presence is not necessary for obtaining information and submitting documents, and services provided by different entities can be accessed in a single location at any time There is the trend across in government affairs to set up online portals that regroup different services from different entities and that allow 122 SỐ - Tháng 4/2022 citizens to interact with one access point without physical contact Results of trade facilitation in Vietnam According to the World Bank, Vietnam exports for 2019 was $279.72 billion, a 7.79% increase from 2018, while import value was $271.36 billion, a 7.99% increase from 2018 This increase is due to the trade facilitation measures that have been applied Indicators of the trading across borders environment are published by the Worlds Bank and measure the trade environment in terms of time, number of procedures and cost required for import and export of a standardized cargo To make a comparison, a number regions have been included in the Table 4.1 The regions are East Asia/Pacific and the OECD When comparing Vietnam to the East Asia/Pacific region’s average, a positive picture emerges Vietnam has more favourable trading environment than the East Asia/Pacific average according to all the indicators, except the number of documents necessary to import This again indicates that importing to Vietnam is more difficult than exporting Lastly, when comparing Vietnam with the OECD average, it can be seen that it takes more than twice as long to import and export from Vietnam compared to the OECD average, even though the number of documents required for trading and the associated costs is rather competitive By looking deeper into the data in the table below for Vietnam, one can conclude that preparing documents is the main bottleneck as half of the total time required in the export and import process involves document preparation Table 4.2 shows that the time to handle port of border procedure for exporting is longer than importing but the cost for exporting is less than that for importing 4.1 Trade flows Trade facilitation is likely to affect imports and export volumes By removing redundant and time consuming procedures trade costs will fall and the export and import volumes will rise In Vietnam’s case, the trade flows are in line with the effects we expect from trade facilitation KINH TẼ Table 4.1: Comparison of Doing Business Indicators between Vietnam and selected regions in 2020 Vietnam East Asia & Pacific OECD Time to export: Border compliance (hours) 55 57.5 12.7 Cost to export: Border compliance (USD) 290 381.1 136.8 Time to export: Documentary compliance (hours) 50 55.6 2.3 Cost to export: Documentary compliance (USD) 139 109.4 33.4 Time to import: Border compliance (hours) 56 68.4 8.5 Cost to import: Border compliance (USD) 373 422.8 98.1 Time to import: Documentary compliance (hours) 76 53.7 3.4 Cost to import: Documentary compliance (USD) 183 108.4 23.5 Region or Economy (Source: World Bank, 2020) Table 4.2: Indicators of Trading across borders in Vietnam in 2020 Import Export Time to complete (hours) Cost (USD) Time to complete (hours) Cost (USD) Clearance and inspections required by customs authorities 60 16 85 Clearance and inspections required by agencies other than customs 25 Port of border handling 55 205 32 288 (Source: World Bank, 2020) Trade has become more important Figure 4.3: Vietnam’s trade balance during 2010 - 2019 for the economy In 2017, Vietnam had a total export of 215,118,607 in thousands of USS and total import of 213,215,299.14 in thousands of us$ leading to a positive trade balance of 1,903,307.86 in thousands of us$ The Effectively Applied Tariff Weighted Average (customs duty) for Vietnam is 2.69% and the Most Favoured Nation (MFN) Weighted Average tariff is 5.88% The trade growth is 9.79% compared to a world growth of 5.68% GDP of Vietnam is 245,213,686,370 in current us$ and services as percentage of GDP is 105.83% and Vietnam service export is 14,790,500,000 in BoP, imports of goods and services as percentage of current us$ and services import is 18,470,000,000 GDP is 102.47% in Bop, current us$ Vietnam’s exports of goods SỐ - Tháng 4/2022 123 TẠP CHÍ CƠNG THƯƠNG Figure 4.4: Vietnam’s trade growth rate compared to GDP growth rate Figure 4.5: Vietnam’s trade flow as share of total As shown in the Figure 4.5, Vietnam’s trade to GDP ratio has been increasing since 2010 The ratio in 2019 was 210.40%, a 2.09% increase from 2018 This result is contributed to the implementation of various TF measures during recent years 4.2 Export diversification Trade facilitation is also likely to promote product diversification As trade costs decrease, companies are able to diversify their production and to produce time sensitive goods that previously 124 SỐ - Tháng 4/2022 were not exported due to time consuming procedures Time sensitive goods tend to have high value, which implies that faster customs clearance could result in more production of higher value products Such goods are likely to include textiles and clothing, perishable products and semi finished products, that all rely on timely deliveries Conclusions about the effects of trade facilitation on trade flows from Vietnam can be drawn when studying the manufactures as share of total exports over time The share of manufactures shows an upward trend, with an increase from 64% in 2010 to 80.5% in 2019 Consequently, the country has diversified its production by producing more manufactures than previously, partly as a result of trade facilitation 4.3 Customs revenues Trade facilitation reduces trade costs and increases trade flows, which in turn increases the customs revenues Customs revenue is an important source of government revenue, especially in developing countries that may lack other tax systems Earlier experiences suggest that customs modernisation programmes have a large positive effect on customs revenues Several countries have more than doubled their customs revenues after successful implementation customs modernisation programmes Even relatively modest reform programmes result in increased customs revenues The Vietnamese government's revenue from customs duties in the first five months of 2020 was estimated at US$5.3 billion, down 17.18% from the same period of 2019 This is partly a result of trade facilitation efforts and increased economic integration as well as economic development KINH TÊ Figure 4.6: Manufactures as share of total exports during 2010 - 2019 The amount of FDI in Vietnam shows an upward trend from 2010 and onwards, see figure below According to the World Bank, Vietnam has been one of the largest recipients of FDI in the world, in relative terms FDI is the result of other reforms as well, but it is likely that trade facilitation has had a positive influence on the large inflows of FDI in Vietnam 4.5 Cross-border trade value Thanks to the application of trade facilitations measures, cross-border trade of Vietnam (Source: World Bank, 2019) with other countries has made significant progress In terms of Figure 4.7: Vietnam’s FDI inwards during 2010 - 2019 trading markets, the top 20 (in billion USD) trading partners of Vietnam account for about 80% of her total trade China, the United States and Japan have been the three largest trade partners of Vietnam for many years Since signing a bilateral trade agreement with the US in 2000 and joining the WTO in 2007, Vietnam’s trade relations have been more diversified Trade with Europe accounted for 8.32% of Vietnam’s total trade in 2011 Trade with Australia and South Africa also accounts a (Source: World Bank, 2019) considerable share At the same time, trade with ASEAN member 4.4 Foreign direct investment and emerging economies such as Singapore, Trade facilitation also tends to promote FDI and Indonesia, the Philippines and India has increased have positive effects on the investment climate in a noticeably over the past decade country High predictability and low trade costs are Vietnam and South Asian countries have good important aspects when companies decide where to political relationship A typical example of that invest Trade facilitation that results in lower trade relationship is the Vietnam-India strategic cost and a more predicable customs administration partnership established in 2007 Currently, attracts FDI inflows The efficiency of customs Vietnam and many South Asian countries have procedures is especially important to attract built up a fairly complete legal framework as a investments in industries that produce time basis for the development and strengthening of sensitive goods cooperation relations So - Tháng 4/2022 125 TẠP CHÍ CƠNG THƯƠNG Vietnam's largest export markets in South Asia include India, Bangladesh, Pakistan, and Sri Lanka The total number of products exported to South Asia in 2010, 2011 and 2012 has reached more than 77 commodity groups However, it can be seen that Vietnam's exports to South Asia are still concentrated in a number of key commodity groups: mobile phones; clinker; rubber; computers, electronic products and components and agricultural products The structure of imported goods focused mainly on four groups of goods: corn, animal feed and raw materials; medicine; cotton of all kinds; machinery, equipment and spare parts The largest import markets of Vietnam in South Asia include: India, Pakistan, Sri Lanka Thus, it can be seen that the trade relations between Vietnam and South Asian countries over the past time have developed relatively positively However, compared with the great potential of the two sides and the trend of expanding economic and trade relations under the influence of globalization trend, the relationship between Vietnam and South Asian countries needs to be further strengthened This is completely consistent with the interests of all parties and the goal of promoting economic and trade growth that Vietnam and South Asian countries have set Conclusion Trade facilitation is now recognized as a key driving factor in determining export competitiveness of a country In a case such as Vietnam, which is being increasingly integrated into the global economy through exports and imports of goods and services, it is crucial that trade is “facilitated” through appropriate measures Vietnam’s ability to ensure strengthened global integration of its economy depends on the efficacy of such measures Particularly with Vietnam, we will need to continue to improve policies to promote trade relations with South Asian countries to match Vietnam's integration commitments and increase the competitiveness of Vietnamese enterprises market in South Asian countries, especially with key markets such as India, Pakistan, Bangladesh and Sri Lanka These are countries with relatively high levels of 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đại hóa tự động hóa thủ tục nhập nhằm giúp việc áp dụng tiêu chuẩn quốc tế dễ dàng Tạo thuận lợi thương mại việc giảm chi phí giao dịch cho tất bên việc thực thi quy định sách quản lý thương mại Tạo thuận lợi thương mại coi nhân tố quan trọng hàng đầu định đến khả cạnh tranh xuất quốc gia Trong trường hợp Việt Nam vốn hội nhập ngày sâu rộng vào kinh tế tồn cầu thơng qua xuất nhập hàng hóa dịch vụ, điều cốt yêu thương mại phải “tạo thuận lợi” thơng qua biện pháp thích hợp Bài viết nêu rõ khả đảm bảo tăng cường hội nhập toàn cầu kinh tế Việt Nam phụ thuộc vào hiệu biện pháp tạo thuận lợi thương mại Từ khóa: tạo thuận lợi thương mại, hợp tác quốc tế, thương mại quốc tế SỐ 6-Tháng 4/2022 127 ... Trade Union University KẾT QUẢ VỀ TẠO THUẬN LƠI thương mại TẠI VIỆT NAM • ThS NGUYỄN HỒI THU Đại học Cơng đồn TĨM TẤT: Trong năm gần đây, ý tưởng tạo thuận lợi thương mại mở rộng, bao gồm việc... tăng cường hội nhập toàn cầu kinh tế Việt Nam phụ thuộc vào hiệu biện pháp tạo thuận lợi thương mại Từ khóa: tạo thuận lợi thương mại, hợp tác quốc tế, thương mại quốc tế SỐ 6-Tháng 4/2022 127 ... dụng tiêu chuẩn quốc tế dễ dàng Tạo thuận lợi thương mại việc giảm chi phí giao dịch cho tất bên việc thực thi quy định sách quản lý thương mại Tạo thuận lợi thương mại coi nhân tố quan trọng hàng