INTERNATIONAL TRADE IS SRI LANKA’S DNA
Eric Miller discusses Sri Lanka’s strengths and weaknesses as it looks to position itself as a hub for international trade facilitation
In an exclusive interview with LMD following the launch of the ‘Positioning Sri Lanka as a Hub for Multi-country Consolidation Services’ project, Global Alliance for Trade Facilitation (GATF) Senior Advisor and Sri Lanka Project Manager Eric Miller calls for the island nation to embark on a journey of continuous improvement as it looks to transform itself into a global hub for trade.
Q: Could you elaborate on GATF’s goals?
A: GATF was established following the signing of the WTO Trade Facilitation Agreement (TFA) in 2013, which essentially outlined what was needed to reduce the time that goods were at the border as well as costs.
As the velocity of trade is a key factor of competitiveness, the potential was that it would make a significant difference to developing countries. According to a World Bank study, 75 percent of delays in trade are due to hurdles such as customs procedures, certifications, clearances and cargo inspections.
Set up as a public-private partnership, GATF looked to try a different model of assistance for developing countries based on the premise that the private sector possesses extensive knowledge about how trade works in practice. It’s supported by six governments – the US, Canada, the UK, Germany, Australia and Denmark – and some of the world’s largest multinationals such as A. P. Moller-Maersk Group, Walmart and United Parcel Service (UPS).
A strong local component is needed to be successful so we work with those involved in trade locally. Therefore, local companies derive direct benefits – in addition to the indirect benefits of improved border procedures.
It isn’t a model that was set up for everybody; and it isn’t designed to provide technical assistance at the scale of organisations such as the World Bank. Instead, we pursue projects that can make a large impact and have an aggregate effect.
What we’re doing in Sri Lanka is ‘applied trade facilitation.’ This begins with identifying the interests and priorities of the country, government and private sector.
Q: What motivated the organisation’s involvement in Sri Lanka?
A: International trade is in the DNA of Sri Lanka. The country also ratified the TFA and there was interest in our involvement.
In my view, a project is developed by embedding it in the realities of the country, and also political priorities of the government and private sector. During our consultations, we saw an interest in turning Sri Lanka into a hub and frustration about the locational advantage not being utilised to the degree that it should.
We looked at how GATF could help realise this and decided to focus on multi-country consolidation (MCC). This project is designed to build a modern transit regime; it is also a stepping stone that helps realise the hub vision.
It’s also an economic opportunity for the people of Sri Lanka because of the shifts in global supply chains such as e-commerce providing opportunities for those undertaking smaller consignments. MCC can help create middle-class jobs in logistics as people are needed for labelling, processing, quality control, value addition, insurance, legal advice and other services.
Q: So how can Sri Lanka differentiate itself from competitors?
A: Sri Lanka has the raw advantage of location – there’s also a hunger to transform that advantage into something that’s more durable and broadly felt in the country, and to seek assistance that can be felt by small companies. Our project is about helping catalyse both the discussion and an action plan.
My focus is on how we work with everybody in the industry. What unites people is that everyone benefits from more volume and value addition.
Q: Has there been sufficient progress in introducing reforms?
A: A lot of work can be done. Part of the challenge is that people tend to consider simple solutions such as a single window or other reforms but the reality is that trade facilitation is an end-to-end process that spans from the factory floor to the end consumer.
Thinking about it holistically and where improvements can be made is extremely important. Countries that have succeeded in facilitation constantly examine how to improve the process and make it faster. In a small economy such as Sri Lanka’s that is dependent on international trade, there is a benefit in more volume and value addition coming through.
Q: In your view, what should the next steps be to achieve the vision of a hub for trade?
A: Sri Lanka has the necessary facilities so there will be a need to constantly look at infrastructure and signal the future plan.
Working with customs authorities to ensure they’re best in class as a trade facilitator is important. In addition, the National Trade Facilitation Committee must be transformed into an entity that drives this process. The bottom line is also ensuring that opportunities to benefit are disseminated to local companies.
Singapore and Dubai built a culture of continuous improvement but this took time. Singapore has a great location – perhaps not as great as Sri Lanka – but was committed to transforming itself into a hub and continuous improvement.