Lao PDR Trade Development Facility Risk Management Workshopsiteresources.worldbank.org/INTLAOPRD/Resources/293582... · Lao PDR Trade Development Facility Risk Management Workshop

Lao PDR Trade Development FacilityLao PDR Trade Development Facility

Risk Management WorkshopRisk Management WorkshopRisk Management WorkshopRisk Management Workshop28 January 201128 January 2011yy

Gerard McLinden – Kees Van Der MeerWorld Bank

World BankWorld Bank

OverviewOverviewCCContextContext

Aims of border managementAims of border management

D i f hD i f hDrivers for changeDrivers for change

A changing paradigmA changing paradigm

I t ti l d ti i i k tI t ti l d ti i i k tInternational good practice in risk managementInternational good practice in risk management

TowardsTowards SPS risk management SPS risk management in Lao PDR in Lao PDR

Capacity building needs Capacity building needs


ContextContext –– Border Management ObjectivesBorder Management ObjectivesTo ensure effective and cost efficient compliance with national laws and international commitments relating to the movement of goods and people across national borders. Focus on:p p

Protecting the community from harmful imports;Revenue collection;Revenue collection;National security; andTrade facilitation (low transaction costs, transparency & ( , p ypredictability)


ContextContext –– Drivers for ChangeDrivers for ChangeHeightenedHeightened awareness of the costs of inefficient and outdated border awareness of the costs of inefficient and outdated border formalitiesformalitiesGlobalization and continued growth in international tradeGlobalization and continued growth in international tradeGlobalization and continued growth in international tradeGlobalization and continued growth in international tradeIncreased investment by the private sector in advanced logistics, Increased investment by the private sector in advanced logistics, inventory control & just in time manufacturing regimes leading to inventory control & just in time manufacturing regimes leading to increased expectations for prompt and predictable processing of increased expectations for prompt and predictable processing of imports and imports and exportsexportsGreater policy and procedural requirements associated with regionalGreater policy and procedural requirements associated with regionalGreater policy and procedural requirements associated with regionalGreater policy and procedural requirements associated with regionaland international commitmentsand international commitmentsTougher competition for FDI (comparative data now available)Tougher competition for FDI (comparative data now available)


g p ( p )g p ( p )

ContextContext –– Drivers for ChangeDrivers for ChangeIncreasing workload and public expectations with static or reduced Increasing workload and public expectations with static or reduced human and financial resourceshuman and financial resourcesIncreased competence qualifications and expectations of staffIncreased competence qualifications and expectations of staffIncreased competence, qualifications and expectations of staffIncreased competence, qualifications and expectations of staffIncreased awareness of good governance and sound integrity in Increased awareness of good governance and sound integrity in governmentgovernment


ContextContext –– A changing paradigmA changing paradigm

Current PracticeCurrent Practice Future PracticeFuture Practice

Focus on Agency requirements Focus on Agency requirements Focus on trade supply chain Focus on trade supply chain C t l fC t l f F ilit ti / t l b lF ilit ti / t l b lControl focusControl focus Facilitation/control balanceFacilitation/control balanceHigh levels of Physical inspectionHigh levels of Physical inspection Intervention by exceptionIntervention by exceptionFocus on the goodsFocus on the goods Focus on informationFocus on informationFocus on identifying nonFocus on identifying non--compliancecompliance Compliance/nonCompliance/non--compliance balancecompliance balancey gy g pp pp ppOne size fits allOne size fits all Flexible solutions for different clientsFlexible solutions for different clientsLimited use of ICTLimited use of ICT Extensive use of ICTExtensive use of ICTAdversarial relationship with tradeAdversarial relationship with trade Constructive partnership with tradeConstructive partnership with tradeCompetition between agenciesCompetition between agencies Collaborate border managementCollaborate border managementCompetition between agenciesCompetition between agencies Collaborate border managementCollaborate border managementLimited incentives for complianceLimited incentives for compliance Strong incentives for complianceStrong incentives for complianceLimited cooperation with neighborsLimited cooperation with neighbors Extensive cross border cooperationExtensive cross border cooperationLimited operational statisticsLimited operational statistics Clear measures of performanceClear measures of performance


Finance

Duties; Taxes; Fees

Dumping; Industry protection

Revenue Generation

Entry ControlsFinance,Commerce

p g y p

Patent; Trademark; Copyright

Drugs, narcotics; Pornography;

Entry Controls

Intellectual Property

Transport Health and Safety

Money laundering; FraudProhibited Transactions

Vehicle safety; road taxes

Health,Agriculture,

pInsect/pest control;

Toxic wastes;Production processes;

Manufacturing emissions;

y

Environmental Protectiong ,Industry

Endangered species

Food; Consumer goods;Animal disease;Plant disease;

Health and Safety

Interior Immigration

Anti-terrorism; Gun controls;

Generic safety

Entry Controls


Arm trafficking;Weapons of mass destruction

Military International Security

What traders thinkWhat traders thinkPercentage of LPI respondents claiming improvement in Customs and other borderPercentage of LPI respondents claiming improvement in Customs and other borderPercentage of LPI respondents claiming improvement in Customs and other borderPercentage of LPI respondents claiming improvement in Customs and other borderagencies since 2005agencies since 2005

70%

50%

60%Customs agencies Other border agencies

20%

30%

40%

0%

10%

OECD EastAsia & Europe& Latin MiddleEast South Asia Sub


Pacific Central Asia America &Caribbean

& NorthAfrica

SaharanAfrica

Good Practice in Risk ManagementGood Practice in Risk Management

Manifest (carrier) and Declaration (owner or Agent) Manifest (carrier) and Declaration (owner or Agent) information is provided by the trading community either information is provided by the trading community either p y g yp y g ymanually or electronically via either a ‘single window’ or manually or electronically via either a ‘single window’ or directly to Customsdirectly to CustomsThe Customs system performs the initial screening of The Customs system performs the initial screening of manifest and declaration information and determines the manifest and declaration information and determines the

f i b d bli h d i k filf i b d bli h d i k filstatus of consignments based on established risk profilesstatus of consignments based on established risk profiles(developed by or in full cooperation with all relevant (developed by or in full cooperation with all relevant agencies)agencies)


agencies)agencies)

Good Practice in Risk ManagementGood Practice in Risk ManagementC t ill th ithC t ill th ithCustoms will then either:Customs will then either:

clear the consignment (once duties, taxes and other clear the consignment (once duties, taxes and other g (g (regulatory requirements have been met)regulatory requirements have been met)undertake specific action including documentary check, undertake specific action including documentary check, scanning, partial or full physical examination, and scanning, partial or full physical examination, and delegated tasks on behalf of other agenciesdelegated tasks on behalf of other agenciesrefer the consignment to other specialized agencies for refer the consignment to other specialized agencies for specific actionspecific action


Good Practice in Risk ManagementGood Practice in Risk ManagementWhere there is a need for more than one agency to inspect goodsWhere there is a need for more than one agency to inspect goodsWhere there is a need for more than one agency to inspect goods,Where there is a need for more than one agency to inspect goods,this is coordinated and undertaken only oncethis is coordinated and undertaken only onceIn all cases, the decision to inspect any consignment must be based In all cases, the decision to inspect any consignment must be based p y gp y gon identified riskon identified riskDefault channel should be Default channel should be greengreen notnot redred

l f ll i i d d l d d f d b k il f ll i i d d l d d f d b k iResults of all inspections are recorded, analysed and fed back intoResults of all inspections are recorded, analysed and fed back intothe risk management systemthe risk management system


Some arguments for not using risk Some arguments for not using risk managementmanagementmanagementmanagement

We need IT and more equipment to do risk We need IT and more equipment to do risk management properlymanagement properlymanagement properlymanagement properlyIf we don’t check everything we will get in trouble if If we don’t check everything we will get in trouble if anything slips throughanything slips throughD i ill dD i ill dDetection rates will go downDetection rates will go downExamining everything is a deterrentExamining everything is a deterrentOur trading partners demand that we inspect everythingOur trading partners demand that we inspect everythingOur trading partners demand that we inspect everythingOur trading partners demand that we inspect everythingEven good traders can go bad if not checkedEven good traders can go bad if not checked



Post release controls can’t work herePost release controls can’t work hereWe understand the key principles but the other agencies We understand the key principles but the other agencies don’tdon’tW ’ h h i i dW ’ h h i i dWe can’t trust the other agencies to inspect goods on We can’t trust the other agencies to inspect goods on our behalf our behalf R i i t t f th tR i i t t f th t l ti f dl ti f dRevenue is important for the countryRevenue is important for the country –– valuation fraudvaluation fraudis rifeis rifeOur fees are based on performing inspectionsOur fees are based on performing inspections


Our fees are based on performing inspectionsOur fees are based on performing inspections


We could use risk management if our traders were notWe could use risk management if our traders were notWe could use risk management if our traders were notWe could use risk management if our traders were notsuch crookssuch crooksWe don’t have the information to assess risk andWe don’t have the information to assess risk andWe don t have the information to assess risk andWe don t have the information to assess risk anddevelop profilesdevelop profilesWe need much more training and time to develop ourWe need much more training and time to develop ourWe need much more training and time to develop ourWe need much more training and time to develop ourexpertiseexpertise


SPSSPS


Towards SPS risk management in Towards SPS risk management in Lao PDRLao PDRLao PDRLao PDR

Adoption of riskAdoption of risk--based managementbased managementAdoption of riskAdoption of risk based management based management in SPS is behind Customs in SPS is behind Customs What are the issues?What are the issues?What are the issues? What are the issues? What can be done? What can be done? How can efforts in SPS and other How can efforts in SPS and other agencies be better aligned to achieve agencies be better aligned to achieve


higher efficiency in clearance?higher efficiency in clearance?

Rationale for riskRationale for risk--based SPS based SPS managementmanagementmanagementmanagement

Wise use of public resourcesWise use of public resources•• Why spend same effort on high and low risk Why spend same effort on high and low risk

shipments?shipments?

SPS/TBT i i l H l h iSPS/TBT i i l H l h iSPS/TBT principle: Health protectionSPS/TBT principle: Health protectionmeasures should be proportionate to risk measures should be proportionate to risk T d f ilit ti l t ti tT d f ilit ti l t ti tTrade facilitation: lower transaction costTrade facilitation: lower transaction costfor compliant tradersfor compliant traders


WTO’WTO’ di i i ti ddi i i ti dWTO’s nonWTO’s non--discrimination anddiscrimination andtransparency principlestransparency principlesp y p pp y p p

Countries can put restrictions on products with health Countries can put restrictions on products with health risks, but….. risks, but….. ,,NonNon--discrimination between discrimination between

foreign and domestic producersforeign and domestic producersd i diff id i diff iproducers in different countriesproducers in different countries

Import of pests and diseases that are already Import of pests and diseases that are already endemic is not a risk endemic is not a risk Same food standards for import and domestic marketSame food standards for import and domestic marketTransparency required about a country’s food safety, Transparency required about a country’s food safety, plant and animal disease situationplant and animal disease situation


plant and animal disease situationplant and animal disease situation

Capacities needed for risk Capacities needed for risk managementmanagementmanagementmanagement

Staff with knowledge about Staff with knowledge about •• pests diseases food safety hazards epidemiologypests diseases food safety hazards epidemiology•• pests, diseases, food safety hazards, epidemiology,pests, diseases, food safety hazards, epidemiology,

pathways of health hazards, pathways of health hazards, etcetc•• containment, treatment, eradicationcontainment, treatment, eradication

Information to determine health risks of imported Information to determine health risks of imported goods throughgoods through•• monitoring, surveillance, inspection, diagnostics andmonitoring, surveillance, inspection, diagnostics ando o g, su e a ce, spec o , d ag os cs a do o g, su e a ce, spec o , d ag os cs a d

testing, internet etc.testing, internet etc.•• gather information about health in country of origingather information about health in country of origin

InformationInformation storage in (ICT) data basesstorage in (ICT) data bases


InformationInformation storage in (ICT) data basesstorage in (ICT) data bases

Steps in risk managementSteps in risk managementEstablish risk profiles for imported productsEstablish risk profiles for imported products –– e.g.e.g.Establish risk profiles for imported products Establish risk profiles for imported products e.g.e.g.low, medium, high; (or more stratified) low, medium, high; (or more stratified) •• many factors involved: including kind of product, intended many factors involved: including kind of product, intended

use origin certification reputation of producer/traderuse origin certification reputation of producer/traderuse, origin, certification, reputation of producer/trader use, origin, certification, reputation of producer/trader

Risk assessment Risk assessment •• for market access decisions, e.g. for firstfor market access decisions, e.g. for first--time imports, in time imports, in

case of outbreakscase of outbreaks•• ccoping with new or unaddressed risks oping with new or unaddressed risks

Risk management decisions: allow, reject, allowRisk management decisions: allow, reject, allowRisk management decisions: allow, reject, allow Risk management decisions: allow, reject, allow with conditionswith conditions•• Conditions can include, postConditions can include, post--harvest treatment, harvest treatment,

quarantine guarantees from competent authoritiesquarantine guarantees from competent authorities


quarantine, guarantees from competent authorities,quarantine, guarantees from competent authorities,traceability, etc. traceability, etc.

Risk management on current Risk management on current importsimportsimportsimports

Based on risk profile and market access conditions Based on risk profile and market access conditions •• incidence of control measures differs incidence of control measures differs •• controls in many cases better through surveillance in domestic controls in many cases better through surveillance in domestic

markets, warehouses etc. than on border markets, warehouses etc. than on border Good training of staff, inspection manuals, instructions about Good training of staff, inspection manuals, instructions about g , p ,g , p ,prioritiesprioritiesRule of law: legal and regulatory framework needed to Rule of law: legal and regulatory framework needed to define powers of agencies and inspectors, and rights and define powers of agencies and inspectors, and rights and p g p , gp g p , gobligations of traders obligations of traders Operational budget for inspection, sampling, testing, Operational budget for inspection, sampling, testing, diagnosticsdiagnostics


gg

Facilitation of exportsFacilitation of exports

Requires same capacities, though applied Requires same capacities, though applied i f i t f i ti f i t f i tin response of requirements of importersin response of requirements of importersAdditional capacities include certification Additional capacities include certification and accreditationand accreditationand accreditationand accreditationRespond to requests for information Respond to requests for information


S d hi ti ti f i kS d hi ti ti f i kScope and sophistication of riskScope and sophistication of riskmanagementmanagementmanagementmanagement

CanCan be expanded be expanded ((at costat cost))•• Ranges of pests, diseases, food safety parameters to be Ranges of pests, diseases, food safety parameters to be

controlledcontrolled•• Developing pestDeveloping pest-- and and diseasedisease--free zones;free zones;

compartmentalizationcompartmentalization•• Detail in risk assessment Detail in risk assessment •• Efforts to achieve market access for certain products in Efforts to achieve market access for certain products in

demanding markets demanding markets •• Promoting Good Agricultural Practice (GAP), Good Promoting Good Agricultural Practice (GAP), Good

Manufacturing Practice (GMP), Manufacturing Practice (GMP), HHazard Analysis and Critical azard Analysis and Critical Points (HACCP), ISO 17025 for laboratories etc. Points (HACCP), ISO 17025 for laboratories etc. A ti ti i ti i l t t INFOSAN ARASFFA ti ti i ti i l t t INFOSAN ARASFF


•• Active participation in alert systems e.g. INFOSAN, ARASFF,Active participation in alert systems e.g. INFOSAN, ARASFF,OIE, IPPCOIE, IPPC

Alignment and CooperationAlignment and CooperationHow can efforts in SPS and other agencies be How can efforts in SPS and other agencies be better aligned to achieve higher efficiency in the better aligned to achieve higher efficiency in the l ?l ?clearance process?clearance process?

Work towards EWork towards E--commerce and Single Windowcommerce and Single WindowAdoption of suitable ICT and Adoption of suitable ICT and sstandardized data tandardized data ppdefinitions for information exchanges; definitions for information exchanges; Agreements between the lead and other agencies about Agreements between the lead and other agencies about delegation of tasks: needs legal basis;delegation of tasks: needs legal basis;g g ;g g ;Although each agency keeps basic responsibility for risk Although each agency keeps basic responsibility for risk management in its own domain, agreement is necessary management in its own domain, agreement is necessary about coordination of inspections and other measures.about coordination of inspections and other measures.


pp

O t t ib tiO t t ib tiOur next contribution …. Our next contribution ….


For further information:For further information:GerardGerard McLindenMcLinden [email protected]@worldbank.or

ToniToni MatsudairaMatsudaira tmatsudaira@worldbank orgtmatsudaira@worldbank orgToniToni MatsudairaMatsudaira [email protected]@worldbank.org

KeesKees Van der Meer Van der Meer [email protected]@gmail.com


Documents

Lao PDR Trade Development Facility Risk Management Workshopsiteresources.worldbank.org/INTLAOPRD/Resources/293582... · Lao PDR Trade Development Facility Risk Management Workshop