Sustaining progress on trade facilitation : How Republic of

Korea did it

Sang-Hyeon Jo

Korea Paperless Trade Office , KITA

Table of Contents

Background of Paperless Trade Concept of Trade Facilitation APEC’s Trade Facilitation Agenda UNCITRAL model law for Paperless Trade

Paperless Trade in Korea Needs for Paperless Trade

Establishment & Dissemination of Paperless

Trading system

Legal framework & Expected benefits

Future tasks

Background of Paperless Trade

Concept of Trade Facilitation

Trade Facilitation

Impediments in general

Customs administration Standards and technical regulations Barriers to the mobility of business people

- Business facilitation

- Cutting red tape

- Simplification of procedural and administrative impediments to trade

Why is it difficult to implement?

Nevertheless, we have to go on. Why?

Concept of Trade Facilitation

1. Essential but not attention grabbing

2. Highly technical

3. Painstaking to reform

4. Expensive to implement

Trade Facilitation reflects the economy as a whole.

Based on APEC research it will add 0.25% of real GDP

to APEC member economies.

APEC’s Trade Facilitation Agenda

4 facilitation areas

Customs procedures Standards and Technical regulations Labor mobility e-Commerce

Importance of e-Commerce for Trade Facilitation

Having great potential by developed IT infrastructure Providing efficient electronic working environment Modernizing customs administration Reducing administration delays

UNCITRAL model law

UNCITRAL

United Nations Commission on International Trade Law Organization for enacting commercial law on

international

trade and transactions

ICTs - related Laws

Model Law on Electronic Commerce(1996) Model Law on Electronic Signatures(2001) Convention on the Use of Electronic Communications in

Electronic Contracts(2005)

* ICTs - Information and Communications Technologies

UNCITRAL model law

Merits of the e-Trade Platform Reducing trade-related costs Simplifying administrative processes

Establishment of the e-Trade Platform Principal agent

Formal agreement defining roles & responsibilities End user agreements

Governmental Organizations

Private Businesses

Joint project by Public-Private Partnership

UNCITRAL model law

Processing data

: mechanism must be commonly mutually recognized

Identification Authentication Authorization

Data protection

: compliance with all relevant privacy and personal data

protection laws

Access to data Integrity of data Accuracy of data

UNCITRAL model law

Liability issues

Proper logging mechanisms

- preventing reuse of wrong data

- clarifying mistakes and forgery

Electronic signature

- security mechanisms

Electronic documents

- functional equivalence of electronic documents to paper documents

- acceptance of their evidentiary value in court

Paperless Trade in Korea

export

import

Needs for Paperless Trade

Establishment & Dissemination of Paperless Trading System

Milestone of Paperless Trade in Korea

Trade Automation Act(1989) For national competitiveness by cutting costs through automated

transaction system

Establishment of KTNET(1991)

A 100% investment holding subsidiary of KITA Implementing IT based projects between public and private sector the sole designated system operator for uTradeHub a service provider of the national paperless trade system

Promotion by public opinion Consensus on online paperless trading system for easy access

for work efficiency

Project for building a paperless trading system Adoption as one of the e-Government projects Aim : transferring VAN EDI-based trade automation system to

Internet-based trading system

National e-Trade Committee (established in 2003)

Establishment & Dissemination of Paperless Trading System

Paperless Trade Governance in Korea

Establishment & Dissemination of Paperless Trading System

Establishment & Dissemination of Paperless Trading System

Korea Paperless Trade Office Established in 2005 The secretariat and PMO(Project Management Office)

of the National Electronic Trade Committee consolidation between public and private sectors

KITA (established in 1946) Korea International Trade Association Korea's foremost trade promotion organization with

65,000 member firms Supporting Korea's business community WTCS(World Trade Center Seoul), an access to one-stop business

Concept of uTradeHub

Establishment & Dissemination of Paperless Trading System

Course of ActionsCourse of Actions

Phase2Phase2

(’06(’06))

• Build a trade portal for traders License/Certification/Clearance support system

• Standardize documents ebXML based document standardization

Phase1Phase1(‘04-’05(‘04-’05)

• Build Core Infrastructure of e-Trade Platform

u-Trade document circulation system

e-L/C service system

• Establish e-Trade Platform, uTradeHub for all the trade related communities

Link systems of banks, logistics and many other

related organizations

Phase3Phase3

((’07~ )’07~ )

Establishment & Dissemination of Paperless Trading System

Government

Related Parties

Trading Partner

TrustedThird Party

• Policy & Law

• Funding & Execution Roadmap

• Project Leadership & Ownership • Integration

• Standardization Body

• Process Innovation

• Paperless Trading

• Enterprise IT Systems

• Service Development

• Platform Operation

• Global Network

Establishment & Dissemination of Paperless Trading System

Public – Private PartnershipPublic – Private Partnership

Digital Signature Act

Trade AutomationAct (1991)

e-Trade Facilitation Act

(2005)

CommercialLaw (2007)

Foreign Trade ActForeign Trade ActElectronic Electronic

Transactions Transactions Act Act

Legal framework

Legal framework

Foreign trade Act(1986)

- revised in 2009

e-Trade Facilitation Act(1991)

- revised in 2009

Digital Signature Act(1999)

- revised in 2008

Electronic Transactions Act(1999)

- revised in 2009

Commercial Law on electronic Bill of Lading(2008)

Productivity Increase

Reduction of extra fees

Reduction of redundant investment in the IT sector (318million USD)

Reduction of labor costs (263.3million USD)Reduction of labor costs (263.3million USD)

Reduction of printing costs (19.1million USD) Reduction of printing costs (19.1million USD) Reduction of circulation and storage costs(271.9million USD)Reduction of circulation and storage costs(271.9million USD)

Reduction of warehousing costs (1.36billion USD)Reduction of warehousing costs (1.36billion USD)

Reduction of inventory management costs (750million USD)Reduction of inventory management costs (750million USD)

Productivity increase [554.3million USD] + Reduction of extra fees [2.11billion USD]

+ Reduction of redundant investment in the IT sector [318million USD]

Expected Economic Benefits

LG ELECTRONICS

Reduced Labor costs, documents handling charges, etc. by 30mil USD for a year

SAMSUNG ELECTRONICS.

Reduced labor for the customs clearance department by 50% : 89 persons → 43 persons Shortening of working hours and process simplification : 25days → 5days, 53steps → 17steps

INTERFLEX

Reduction of extra fees for trading : 29,000 USD → 9,160 USD

Shortening of the time required : 12hours → 30mins

DAEWOO ELECTRONICS.

Shortening of handling hours for shipping requests : 22mins per → 6mins per

Cost saving cases in Paperless TradeCost saving cases in Paperless Trade

Expected Economic Benefits

Future tasks

1. By a commitment of government for effective e-Commerce infrastructure

2. By simultaneous reforms in a number of sectors

3. By systems integration based on Public-Private Partnership

4. By entire trade transaction cycle ; not standard harmonization or customs modernization alone

5. By helping developing countries for entire systems integration

How to find unexplored synergies in Paperless Trade

Future Tasks

Why is Joint Project essential for e-Trade?

- Consideration linking e-Trade Platform of each country

- International support is necessary based on public and private partnership of each country

- we need to define where we can initiate joint projects

Joint projects

Cooperation among countries

How do we build a partnership in borderless trade?

- Information sharing efforts about legal frame and IT infrastructure

- Constant progress reports of each project

Future Tasks

www.utradehub.or.kr