On February 20, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (CPTA) comes into force.
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 and facilitating interoperability among national and subregional single windows or other paperless trade systems. Over 30 countries were involved in finalising the treaty text, which has since been ratified by Azerbaijan, Bangladesh, China, Iran and the Philippines, and signed by Armenia and Cambodia.
Yann Duval, chief of the trade policy and facilitation section at UNESCAP, explains to GTR what the CPTA will mean for trade digitisation, and outlines the next steps.
GTR: What is the background of the UNESCAP Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (CPTA)?
Duval: UNESCAP has been working on trade facilitation for the past 20 years. More than a decade ago, we were approached by the Pan-Asian E-Commerce Alliance, which was working on strategies to implement paperless trade in the region. They were facing certain key challenges, including the legal recognition of electronic documents, and the fact that some of the regulatory documents issued by governments could not be easily integrated into cross-border paperless systems without closer intergovernmental cooperation. We had just established the United Nations Network of Experts for Paperless Trade in Asia and the Pacific then, and this became a key focus area of work.
In 2012, we started to bring our member countries together in informal consultations, which then developed into formal negotiations of a treaty text by 2014. In 2016, the countries adopted the CPTA as a fully-fledged United Nations treaty.
Because it is a treaty, the ratification process must follow strict domestic proceedings in each of the countries, including in some cases going through parliament, which can take a long time. We now have entry into force of the framework agreement, because, as specified in the treaty, five countries have completed ratification.
GTR: With five countries having ratified the agreement, what is the roadmap to achieve full ratification by all 53 UNESCAP member countries?
Duval: Besides the five that have ratified the agreement, several other UNESCAP member states are in the process of completing their domestic processes for accession. There are currently 24 delegations participating in the steering group that is drafting the implementation roadmap, so the expectation is that those countries will all be part of it in the future. As more countries join, the more attractive it will be for the other countries to join as well.
GTR: What do banks, exporters, and other stakeholders in global trade need to know about this agreement?
Duval: From the private sector perspective, there really is a very strong incentive to support the CPTA because it provides an opportunity to secure long-term political will for the development and implementation of cross-border paperless trade in their countries.
The technology for cross-border paperless trade has been around for a while, but the big bottleneck to implementation of the electronic exchange of trade documents across countries is a lack of political will. Once a country becomes party to an intergovernmental agreement such as this, it is a very high-level statement that the country commits and prioritises implementing paperless solutions that will really cut the cost of trade.
It’s noteworthy that one of the seven key principles specified in the agreement is cooperation between the public and private sectors, so the expectation is that what is done under the framework at the national and regional level will be done in collaboration with the private sector.
GTR: The CPTA covers solely Asia and the Pacific. What is the thinking behind creating a regional agreement rather than a global one?
Duval: The agreement is open to all 53 ESCAP member states, including non-regional members like the UK. But the agreement started in the Asia Pacific region because it is home to leaders in trade digitisation. Many countries and regional groups have already developed national systems for paperless trade, including the Asean single window system. One of the regional leaders, the Republic of Korea, has led the development of the CPTA, together with other countries. It has also provided funds for capacity building of ESCAP developing countries on paperless trade, as China and the Russian Federation have also done.
During the negotiation of the WTO agreement on trade facilitation (TFA) at the global level, some of the countries in the region had tried to push for ambitious provisions in the area of paperless trade, but it proved difficult to achieve consensus among such a large group of countries. As a result, the TFA only has a provision on a single window at national level, either paper-based or electronic, with no emphasis on interoperability or cross-border paperless trade. The CPTA as a regional agreement, on the other hand, is wholly dedicated to facilitation of cross-border paperless trade, with systems interoperability and mutual recognition of documents across borders at its core.
Of course, the CPTA can be expanded globally if the countries that ratify it decide to open it up further. But we are still at quite an early stage for that. However, it is worth bearing in mind that ESCAP members already cover nearly two-thirds of the world’s population and around 50% of global trade, so once all members ratify the agreement we should be most of the way there. Perhaps, most importantly, the paperless trade tools and solutions developed under the framework are expected to be available to all for implementation in any case.
GTR: Does the CPTA duplicate the work already done by the Asean single window initiative?
Duval: The CPTA builds upon many existing bilateral and subregional cross-border paperless trade initiatives but does not prescribe a specific model. The Asean single window is very specific in the sense that the 10 Asean member countries have agreed to develop national single windows and then interconnect them to develop a regional single window system. The CPTA is much more open in terms of how countries can exchange electronic data and documents with each other. Obviously, doing it through a single window is something that is recommended, but one of the important points made by countries during the treaty negotiation was that this is not the only way of doing it.
The CPTA aims to facilitate cross-border paperless trade. It doesn’t specify exactly how that should be achieved. Instead, it provides a space for countries to plan and develop solutions, which may be suitable for different countries with different levels of development. The CPTA is a platform to foster harmonisation and interoperability among different systems, including among existing bilateral or regional initiatives, using international standards when available.
GTR: Does the CPTA framework envisage adoption of the UNCITRAL Model Law on Electronic Transferable Records (MLETR)?
Duval: One of the challenges in developing the framework agreement was to accommodate a wide range of countries with different development levels. The UN seeks to foster inclusive and sustainable development, and therefore the idea is not to exclude least developed countries from the CPTA, but instead enable them to build capacity. Obliging signatories to the CPTA to adopt a particular instrument, even the MLETR, would scare away many countries so negotiators decided not to do this. However, the text of the CPTA does contain provisions on the consideration and adoption of all relevant international standards and instruments, and that certainly includes the MLETR.
UNCITRAL has been actively engaged in the development of the framework agreement from the very beginning and the design of the treaty incorporates several of the general principles of UNCITRAL legal instruments on e-commerce. Since adoption of the treaty, we have been collaborating closely on the development of implementation support tools for the framework agreement, such as the cross-border paperless trade readiness assessment check lists and online interactive guide. Achieving cross-border paperless trade in practice requires countries to agree on a number of challenging legal but also technical issues, such as the acceptable level of reliability of a particular document being exchanged. This is what the CPTA is for.
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