BOC launches UNESCAP report on PH cross-border trade readiness

According to the UNESCAP report, the Philippines has demonstrated “strong political will” and made “significant progress in implementing trade facilitation” and paperless trade but more remains to be done to further enhance trade efficiency in the country.
  • The Bureau of Customs launches UNESCAP report assessing the country’s cross-border paperless trade readiness
  • The report described progress of the Philippines’ cross-border paperless trade implementation as “trending in the right direction”
  • But execution of cross-border paperless trade measures remains uneven among agencies and stakeholders, it said
  • Customs Commissioner Rey Leonardo Guerrero said the report reinforces benefits of having an operational single window system as a prerequisite in accelerating digital connectivity within the region

The Bureau of Customs (BOC) has officially released the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) report assessing the country’s readiness for cross-border paperless trade, including the conduct of international trade based on electronic data and documents.

The report entitled “Readiness Assessment for Cross-Border Paperless Trade: The Philippines”, co-published by UNESCAP and BOC in March, seeks to contribute to the government’s push to towards cross-border paperless trade between the country and its Asia Pacific neighbors.

“With its exclusive focus on paperless trade, we believe that the readiness report will support the paradigm shift in the way cross-border paperless trade transactions are carried out, and how trade-related operations are modernized, standardized, and harmonized,” Customs commissioner Rey Leonardo Guerrero said in a speech during the virtual launch on June 2.

READ: UNESCAP cites PH ‘significant’ strides in adopting trade facilitation

The BOC chief said the report reinforces benefits of having an operational single window system as a prerequisite in accelerating digital connectivity within the region.

Guerrero added that the assessment provided BOC with full visibility of areas in the supply chain often overlooked such as role dynamics and process mandates of border regulatory agencies that affect their ability to cooperate properly in cross-border paperless trade.

According to the report, the Philippines has demonstrated “strong political will” and made “significant progress in implementing trade facilitation” and paperless trade but more remains to be done to further enhance trade efficiency in the country.

While the Philippines’ trade facilitation implementation level is now significantly above the Asia-Pacific regional average, still, implementation of paperless trade and cross-border paperless trade measures in the Philippines remains “uneven” among agencies and stakeholders, the report noted.

It said the benefits from successful implementation of cross-border paperless trade are significant, with the potential to reduce trade costs by 13% across Asia and the Pacific region as well as increase regulatory compliance, reduce illicit financial flows, and facilitate engagement in the increasingly digital global economy.

Moreover, the report said paperless trade was recognized as an effective way to mitigate trade disruptions during the COVID-19 crisis, providing more seamless and resilient trade opportunities. In view of this, the report said BOC and other relevant agencies accelerated their efforts to enable paperless trade systems, also improving information and communications technology (ICT) infrastructure to support it.

According to the UNESCAP report, the progress of the Philippines’ implementation of cross-border paperless trade “is trending in the right direction.”

It noted that the country also has a very high World Trade Organization Trade Facilitation Agreement implementation rate of 94.1%, and scored 86.02% in the 2021 UN Global Survey on Digital and Sustainable Trade Facilitation, which was higher than the South-East Asia average of 74.29%.

The report pointed out, however, that while the Philippines’ regional and subregional average rates are higher, cross-border paperless trade measures have low implementation rates. The country is also still working on achieving full implementation status for cross-border trade measures.

Technical readiness

The Philippines has implemented several paperless trade systems with BOC as the focal agency for cross-border trade.

In particular, the report cited BOC’s Electronic-to-Mobile (e2m) System, the Philippine National Single Window (NSW), TradeNet, and the World Bank-funded Philippine Customs Modernization Program as some of the agency’s projects for paperless trade systems.

READ: TradeNet is online platform for PH National Single Window

The implementation of the NSW and TradeNet, which was developed to become the new NSW, is expected to further advance paperless trade systems in the Philippines.

Several other government agencies have also established their own systems to facilitate information processing in completing trade transactions.

The Philippine Ports Authority has its own automation projects, such as Electronic Accreditation System, Electronic Permit Management System, and Internet-based Port Operations and Receipting for Terminals System.

The Maritime Industry Authority is also working on its Integrated Domestic Shipping Information System Shipping Information System, while the Civil Aviation Authority of the Philippines maintains electronic systems, but they are limited to air navigation and air traffic systems and equipment.

In order to improve its domestic paperless trade environment and its readiness to participate in cross-border paperless trade, the UNESCAP report said the Philippines should complete the integration of trade regulatory government agencies to TradeNet, the port community and other paperless trade systems that are interoperable within and across borders.

This would also involve the Philippines enhancing its national technical capacity in this area, designing a long-term plan and continuing the exchange of selected data and documents, all of which are greatly facilitated in the Framework Agreement on Facilitation of Cross-Border Paperless Trade in Asia and the Pacific (CPTA).

On December 2019, the Philippines became a party to the CPTA. The agreement aims to promote cross-border paperless trade by enabling the exchange and mutual recognition of trade-related data and documents in electronic form as well as facilitating interoperability among national and subregional single windows and/or other paperless trade systems.

From the technical readiness assessment, the report recommends continuing with trade-related electronic systems and other trade information technology projects, and updating the NSW to handle all types of documents in cross-border trade.

It also suggests implementation of, among others, the National Government Data Center Project, the National Government Portal, and the Integrated Business Permits and Licensing System.

Other recommendations include the following:

  • Adherence to the National ICT Ecosystem Framework (NICTEF)
  • Implementation of the e-Government Master Plan 2022
  • Conducting the annual Vulnerability Assessment and Penetration Test and ensuring stability of BOC’s Electronic-to-Mobile (e2m) System
  • Aligning the development and implementation of cross-border paperless trade with the NICTEF
  • Strict implementation of Republic Act 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018
  • Data harmonization according to available international standards such as the UN rules for Electronic Data Interchange for Administration, Commerce and Transport and World Customs Organization
  • Greater focus on capacity-building and budgetary support
  • Full implementation of BOC’s Authorized Economic Operator Program
  • Legislative recommendations

From a legal point of view, the report said the Philippines has the Electronic Commerce Act of 2000 (ECA), which is primarily modeled after the UN Commission on International Trade Law (UNCITRAL).

The ECA is fundamental to the recognition under Philippine law of paperless transactions, whether between domestic parties or involving cross-border transactions.

The report said, however, there is a glaring issue in defining the term “electronic data message.” ECA adopted UNCITRAL’s definition of “data message” but deleted the phrase “including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.”

The Philippine Supreme Court ultimately ruled that facsimile transmissions are not considered “electronic data messages.”

The ECA also states that electronic documents will have the legal effect, validity, or enforceability of any other document or legal writing; thus, there is a specific and unambiguous enabling of paperless trade involving the Philippines.

The report said among the remaining legal impediments to implementing full paperless trade is the lack of rules involving electronic notarization systems and the treatment of authenticated electronic signatures or digital signatures as “disputable presumptions” subject to rebuttal by a party disputing their authenticity.

Recommendations emerging from the legal readiness assessment include the following three key areas:

  • Legislative amendments to the ECA to ease the requirements for the recognition of electronic and digital signatures, facilitate electronic notarization and expressly recognize contracts formed by automated message systems as recognized under the UN Convention on the Use of Electronic communications in International Contracts (Electronic Communications Convention)
  • Accession to the Electronic Communications Convention to govern the legal recognition of cross-border electronic transactions, while domestic law will continue to govern domestic transactions
  • Enactment of a law related to the management of the NSW, and the rights and obligations attached to the use of the said system

As next steps forward, the Philippines must prepare an Individual Action Plan (IAP) pursuant to Article 12 of the CPTA. An initial action plan was formulated based on the experts’ recommendations and input gathered during validation and the national consultations for the report, providing and this will provide a valuable basis for the preparation by the IAP.

The country must also elaborate more detailed activities at the national and agency levels, and additional meetings and consultations with stakeholders may be useful in for further refining and specifying actions to achieve the long-term goal of cross-border paperless trade. – Roumina Pablo