Hawkerbd.com     SINCE
GSP certification: Benefits of automation [ VIEWS & REVIEWS ] 30/10/2014
GSP certification: Benefits of automation
Ferdaus Ara Begum

Export Promotion Bureau (EPB), the competent authority in Bangladesh to issue GSP (generalised system of preferences) certificates, has been providing automated services for the registered exporters since September 2014. This is a successful endeavour in complying with the EU GSP regulation process that went into force in January 2011.
The Trade Policy Support Programme (TPSP) Bangladesh, which is providing technical support to EPB for automation of Rules of Origin Certificate, operating from September 201, will end in August 2015. Software has been provided by the European Commission and European Anti-Fraud Office (OLAF) through the project. This has created a unique opportunity for Bangladesh to be the role-model in automation of GSP certification among all GSP beneficiary countries throughout the globe. So far, only Indonesia, Taiwan and some other Asian countries have started partial automation. Given the scenario, Bangladesh, should exploit the full benefits of the automation system to improve  its efficiency towards increasing export earnings.
In order to reach the target for full automation and ultimately for self certification by the exporters by January 2017, some extended time may be requested by the GSP-qualified countries up to January 2020. The Institutional and infrastructural development for full automation of GSP certification was discussed in a recent working committee meeting on trade & investment of Business Initiative Leading Development (BUILD), co-chaired by the Secretary, Ministry of Commerce and the President, Metropolitan Chamber of Commerce & Industry on September 30, 2014.
The European Union (EU) has been providing GSP facilities to the developing and Least Developed Countries (LDCs) since 1971. GSP policies have been changing according to the political will of the EU countries and the policies are fixed unilaterally depending on the strategies of the concerned countries. Criterion of Rules of origin (RO) also varies between products and between countries. Given this, it is also true that GSP providing countries seek opinion of the countries for which the benefits have been extended before enacting final policies.
Considering the importance of Bangladesh\'s trade relation with the EU, BUILD -- a Private Public Dialogue (PPD) platform along with a private sector think tank, conducted a brief study on the status of automation and how it can be moved forward towards a fully automated GSP certification system.
Bangladesh\'s total export to the EU is US$ 16.4 billion representing 54 per cent of total export of Bangladesh in FY 2013-14, of which apparel sector\'s share is 62.3 per cent. Major factors affecting EU export are the Duty-free Quota-free (DFQF) Market access (since 2001) and relaxed RO (since 2011). So, any change in the policies of RO of GSP will have serious impact on exports of Bangladesh. Infrastructural and institutional preparation is important for Bangladesh to get full benefits of GSP. Competitor countries such as some African and SAARC countries have already been able to reduce their lead time and thus lowered the prices of apparel products.
EVOLUTION OF GSP POLICIES: We now take a look at the evolution of GSP policies. The EU GSP introduced in 1971 completed its first phase and entered into the second phase in 1981 which lasted for 14 years (1981-1994). GSP cycle usually continues for 10 years but because of delay in completion of the Uruguay Round (UR), it continued for a longer period. This time GSP was heavily dependent on quantitative limits for duty free or reduced duty on industrial and agricultural products. The third phase of the GSP system was continued from 1995 to 2005 and there were some changes; firstly ,tariff preference were given based on the basis of sensitive, very sensitive, semi-sensitive and non-sensitive products, and the main feature of this phase was introduction of sector graduation.
The second phase of the third regime started from 1998 and continued up to 2001, where additional incentives relating to labour standards, environmental norms and extension of coverage of LDCs, among others, were allowed. The third phase started in 2001 and Everything But Arms (EBA) for LDCs was allowed in this phase. Instead of 5 categories of lists, two categories were introduced at this phase. Continuation of special incentives and DFQF access to countries combating drug production and trafficking were introduced.
It is observed that GSP cycles passed through different types of policy changes The fourth phase of GSP  commenced in 2006. A new structure was introduced as standard GSP, GSP+ and EBA for LDC, DFQF on sensitive products for GSP+ countries and this phase came to an end on 31 December 2013. The present cycle started in 2014 and will continue till 2023.  It provides for more relaxed and separate criterion for determining the country of origin for LDCs. In addition, provisions for cumulative RO and self-certification system were the main changes, which are to be implemented by January 1, 2017. It is true that over the period, EU has made the scheme more development-friendly. RO has been relaxed considering the origin related constraints of the LDCs.
With respect to utilisation of GSP Certificate of Origin (CO) for Apparel, it has been increasing gradually after the relaxation of RoO criteria (from 48.6 per cent in 2000 to 95.7 per cent in 2013, and from 3 stages to 2 stages and then to single stage). But utilisation of GSP for other sectors is much less than the required level, such as, in leather, fish, bicycle and other sectors. Many exporters are not even aware of the procedures and formalities for obtaining CO in order to qualify for attaining GSP facilities. Entrepreneurs, especially new and SME entrepreneurs, therefore, cannot avail these opportunities.
Since January 01, 2011, the EU GSP introduced four  major changes in determining RO. In the past, RO applicable to developing countries  and LDCs were the same. The new policy, considering the capacity constraints of LDCs, included separate provisions. Secondly, the list of products and working (or processing) operations which confer originating status have been simplified. Also, the policies of cumulation have been changed and simplified. The new procedures will be effective from Jan 2017 at which time the system of registered exporters and self-certification will be introduced.
FUTURE CHALLENGES: Given the GSP policy changes, it is important to look at the preparation and challenges of Bangladesh to meet the upcoming 2017 changes when a full automated GSP system will be in place. Self-certification would be the main policy for GSP certification. BUILD wanted to analyse how to exploit fully the benefits of GSP to increase export and diversify products covered under GSP, how to support exporters to be competitive and sustain competition with other exporters, how to ensure better services for the exporters and ways to reduce administrative hassles and cost of doing business.
Firstly, the new policy categorised the responsibilities of the Competent Authorities (CA) and exporters very clearly. The CA would be responsible for establishment and management of the database of registered exporters(Art 92).National numbering system will follow ISO Alpha 2 Country Code. Control of Origin (Article 97g) should be maintained very strictly. CA will conduct verification, subsequent verification and inform the EU as per the time frame accepted by the beneficiary country. Control of Origin with the framework of Cumulation (Art 86, para 2b) is allowed.
While responsibilities of the registered exporters (RE) would be to apply to the CA as per EU regulation (number 1063/2010), REs that no longer meet the conditions for exporting goods under the scheme, shall inform the CA in the beneficiary countries. REs withdrawn or removed from the list for any reason may only be re-introduced into the record of registered exporters once they have proved to the CA that they have remedied the situation that led to their withdrawal.
Government of the beneficiary country will be required to establish the administrative structure, including setting up and managing the database of the registered exporters (Article 92). Beneficiary country who cannot be ready may request for a transition period up to January 01, 2020 upon maintaining certain conditions. Under the new system, only the registered exporters will be eligible to get GSP CO, except when the total value of the originating products consigned does not exceed EUR 6,000 (Article 90). The current documentation requirements for attaining GSP CO has been reduced: earlier 13 Documents (about 45 pages) were required, presently only 4 (3-4 pages).
EPB\'s preparation towards automation is praiseworthy, extensive training for the concerned officials have been completed; a Help Desk has been established in the EPB to take queries from the intending Exporters. A database of exporters has also been established. The process includes, among others, electronic numbers in the EPB database.
It is true that the exporters are not yet fully ready to comply with the system even though they have received series of training. As per exporters, time requirement is much higher in the present system than the earlier one (two days and for any mistakes rectifications need some more time). In some cases, exporters have to re-submit because of information gap from the shipping sources or for other reasons. Digital Signature is not allowed by EU, so scanned hard copy with signature has to be sent along with the shipping consignments.
The initial stage of automation is facing problems because of several reasons. Coordinated inter-connectivity in the form of links among Customs, Bangladesh Bank, EPB and related organisations, is required for instant data check and clearance. Ultimate target of the system is to establish a transparent, reliable, and automatic and risk free export documentation.   
In order to get the full benefits of GSP, non-RMG sector and non-EU country GSP certification should also gradually come under the purview of automation. After the successful automation of textile GSP, it can also be continued for non-textile sector. Initially, the automation has been introduced in Dhaka; gradually it should spread beyond Dhaka. Once automation of GSP CO is fully in place, it can be extended for getting preferences for SAPTA and SAFTA and other regional agreements.
The benefits of automation is multifarious. It will help improve service delivery, increase traceability (as the exporters now have separate registration numbers, encourage entrepreneurs to become competitive, reduce their business process including reducing lead time and curb fraudulent practices.
The writer is CEO, Business Initiative Leading Development (BUILD).
News Source
Today's Other News
Related Stories
Forward to Friend Print Close Add to Archive Personal Archive  
Forward to Friend Print Close Add to Archive Personal Archive  
Home / About Us / Benifits / Invite a Friend / Policy
Copyright © Hawker 2013-2012, Allright Reserved
free counters