Assessing Trade Facilitation Implementation in the Era of E-Commerce: a Comparative Analysis of Jordan, Oman and Hong Kong, China
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Chapter 9 Assessing trade facilitation implementation in the era of e-commerce: a comparative analysis of Jordan, Oman and Hong Kong, China Taleb Awad-Warrad, Houcine Boughanmi and Youwon Hwang* Abstract The emergence of e-commerce is driving important changes in the ways of conducting international trade. It has become clear that improvements in trade facilitation implementation should be supported by electronic systems. Through a comparative study of a number of reports issued by international organizations – the International Telecommunication Union (ITU), the Organisation for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD) and the World Bank – on topics of e-commerce, logistics and trade facilitation, we examined the status and performance of Jordan, Oman and Hong Kong, China. Based on this analysis, Hong Kong, China, shows one of the best practices of modern trade facilitation and customs, and we found that governmental willingness is influential in expediting trade facilitation provisions. Jordan and Oman recently made trade reforms to improve trade facilitation, but they still need to bridge the gap between policy and actual practice in all governmental organizations in terms of trade facilitation and e-commerce, as well as build citizens’ capacity. By improving the implementation of trade facilitation measures and increasing e-commerce capacity as Hong Kong, China, has done, Jordan and Oman will succeed through trade prosperity driven by the global digital economy. * The contents of this chapter are the sole responsibility of the authors and are not meant to represent the position or opinions of the WTO or its members. 196 CHAPTER 9 Introduction place digitally, while the delivery process can be either online or When e-commerce crosses countries’ offline. E-commerce can facilitate the borders, trade facilitation becomes one sales of goods and services whether of the most critical issues to global domestically or across borders consumers, because the status of through reducing the final costs of trade facilitation implementation in transactions and enabling closer each country significantly affects the customer relations among different cost of trade. Improving the efficiency actors from businesses, households of trade logistics is a key element to and governments. However, to reducing trade costs and promoting succeed on the e-commerce front, global and regional trade. Trade costs it is crucial to have a well-developed are still high despite the reduction in logistics system, that is, smoothly trade barriers and improvement of working road transport, ports, postal communication brought by the digital delivery services and customs, to help technology. Trade costs are estimated ensure effective order fulfilment. Trade to be equivalent to a 170 per cent logistics, including trade facilitation, tariff on international trade globally and is one of the seven policy areas that, 231 per cent for developing countries according to the United Nations (WTO, 2016c). Trade facilitation has Conference on Trade and Development been referred to as the “the grease (UNCTAD), are essential to help create in the wheel” of international trade, an environment that is more conducive as it focuses on reducing all the to reaping the benefits of e-commerce transactions costs associated with (UNCTAD, 2017). the enforcement, regulation and administration of trade policies A large number of studies found a (Staples, 2002). Available figures positive relationship between improving indicate that implementing the the trade facilitation environment and multilateral Trade Facilitation international trade flows. According to Agreement (TFA) would reduce trade Anderson and Marcouiller (2002), a cost by an average of 14.5 per cent 10 per cent increase in a country’s (Hillberry and Zhang, 2015) and index of transparency and impartiality increase global export between leads to a 5 per cent increase in its US$ 750 billion and US$ 1 trillion imports. Hoekman and Nicita (2008) per annum (WTO, 2016c). Developing found that improvements in logistics countries gain proportionally more from performance and trade facilitation have trade facilitation as they have more a greater effect on increasing trade for room for improvement. a country than lowering tariffs. According to gravity trade model, E-commerce and reducing transaction costs related to trade facilitation trade, by changing public policies and improving regulations and procedures Any sales activity, whether conducted for import and export supply chains, is domestically or internationally, is critical for enabling a country to expand composed of a set of processes: its trade opportunities. ordering, paying, shipping and delivering. A transaction is considered The emergence of e-commerce is to be e-commerce if the ordering takes driving the huge movement in the CHAPTER 9 197 international trade arena. Estimated the provision of efficient infrastructure global sales through e-commerce of transportation and logistics (Jordan are expected to surpass US$ 2.3 Investment Commission, 2018). Jordan trillion (Gain, 2017). In order to identified digital development as a high provide e-commerce-based services, priority for the country’s social and other technologies, such as economic development (Harake, telecommunications, internet, logistics, 2019). The launch of 4G LTE services transportation and electronic systems, in Jordan has led to a growth in data should be available in advance. revenues for mobile operators (De Therefore, it is important to identify Rosbo, 2020). whether current infrastructures are available to support e-commerce and Revenue in the e-commerce market trade facilitation implementation in the in Jordan is expected to reach selected economies – Jordan, Oman US$ 525 million in 2020, and the and Hong Kong, China – for the number of e-commerce users will comparative study. be around 3.3 million (Statista, 2020b). Jordan became one of the first Logistics, trade facilitation countries in the MENA region to and e-commerce enact laws regarding information and communications technology Jordan (ICT) related transactions following Transportation infrastructure in Jordan the spread of internet use. The has been evaluated as comparatively Electronic Transaction Law (ETL), well-developed among the Middle East drafted first in 2001, covers a wide and North Africa area of internet (MENA) region transactions including (Jordan Investment “Improving computer information Commission, 2018). the efficiency transactions, general Thanks to Jordan’s sale of goods and strategic location, the of trade logistics services via the internet transport sector is a key element and other inter-party contributed around to reducing transactions conducted 10 per cent of the GDP trade costs online (Yaseen, 2016). in Jordan, and employed and promoting Jordan and the United about 7.2 per cent of States signed the Joint the work force (Harake, global and Statement on Electronic 2019). The annual regional trade.” Commerce in 2000. growth of the However, a clear set of transportation and regulations and tax laws logistics sector is estimated to covering e-commerce transactions has increase from 5 to 6 per cent by 2030 not been prepared yet. (Jordan Investment Commission, 2018). In Jordan, the air transport In 2019, the Cabinet decided to infrastructure and connectivity is impose customs fees on online among the highest in the MENA region purchases of foreign clothes, shoes, (World Economic Forum, 2017). foodstuffs and children’s toys over Jordan’s abundance of electricity and JOD 200 per month, with an annual telecommunications services support cap of JOD 500 (Jordan Post, 2019). 198 CHAPTER 9 The Jordanian people were concerned that, in its five-year development plan, that imposing higher customs fees Oman is expecting to invest OMR 6 on e-commerce commodities might billion in building and expanding have a negative effect on online trade. airports and seaports in three main Still, Jordan Post referred the hubs: Salalah, Sohar and Duqm). The establishment of a special centre full operation of these three main ports to deal with e-commerce items and is expected to reduce trade cost by 10 took the first step to develop an per cent (Al Shammakhi, Akintola and electronic tracking system for serving Boughanmi, 2018). The results show the global market and its customers that trade facilitation improvement will (Jordan Post, 2019). have a positive gain in terms of GDP (an increase of 4.3 per cent) and Oman welfare (an increase of almost The logistics sector plays a vital role in 1.3 per cent) (Al Shammakhi, Oman’s modern economy and is Akintola and Boughanmi, 2018). viewed not only as a core sector but also as the backbone of the economy, The Omani government issued the facilitating the growth of many other Electronic Transactions Law in 2008, sectors. With revenues amounting to which covered the fast development of US$ 7.87 billion in 2013 (Ithraa, 2016), technology and the internet in the sector contributed 4.9 per cent to processing operations and concluding Oman’s GDP in 2015 (Ithraa, 2016). transactions locally and internationally The logistics industry is expected to (Al Barwani, 2018). Furthermore, the grow at an annual growth rate of 7 per government established the Information cent between 2015 and 2020, Technology Authority (ITA) to ensure enhanced by government investments proper implementation of the in ports (Duqm and Sohar), free zones provisions of the Law. ITA