Alliance initiative to develop trust through public private partnership demonstrates the importance of trade facilitation
After more than a decade of stop-start construction, in December 2017 Senegal’s US $575 million flagship airport opened with elaborate fanfare. Blaise Diagne International handled over 2.6 million passengers last year and around 40 million tons of freight, making it already pivotal to national and regional trade and development.
But even in such a modern environment, an Alliance initiative to develop mutual trust through public private partnership demonstrates the importance of trade facilitation in optimising the new facilities.
Private Sector Partnership
An Alliance private sector partner had experienced a divergence from World Trade Organization valuation guidelines in the way Senegalese Customs assessed the valuation of imported IT products. Subsequent Alliance-conducted interviews with global and local IT companies operating in Senegal, as well as freight forwarders, confirmed the practice was widespread.
Customs would often base their assessment of tax payable on retail pricing gleaned from the Internet, rather than on wholesale or discounted valuations. When issues arose – mainly relating to additional tax and duty payments as well as fines for non-compliance – there was no effective formal dispute resolution process in place, with importers contesting valuations facing extended delays and additional storage costs.
The Alliance identified several reasons for this, including pressure to maximise import revenues, significant non-compliance by traders, technical difficulties in following World Trade Organization valuation guidelines and a knowledge gap when it came to understanding standard discounting in the pricing of technology products.
Underlying this was a lack of engagement between Customs and traders.
To fully understand the issues at stake the Alliance, with the support of partners, including DHL and FedEx, launched an in-country study headed up by an experienced local customs consultant. The Alliance catalysed a private sector task force comprising key stakeholders, including the IT body, L’Organisation des Professionnels des Technologies de l’Information et de la Communication au Sénégal (OPTIC) and the National Employers Council, Conseil National du Patronat du Sénégal (CNP), to ensure local ownership and cohesion.
The initial intention was to re-engineer valuation procedures to incorporate World Customs Organization best practices but local Customs did not actively pursue this option. Despite this, with Alliance support, both parties agreed to persevere at a local level, producing a protocol agreement on how Customs would manage the valuation of IT products.
The agreement, signed on May 23, 2003, contains a range of Customs’ measures designed to support Senegal’s broader digital strategic goals, including:
- Training IT operators on Customs valuations
- Reviewing regulations on discounts for IT products
- Organising regular public private dialogues (PPDs) to discuss outstanding issues
- Setting up a dispute resolution framework at clearance points
- Supporting the introduction of an advance rulings mechanism to enable greater transparency and predictability
- Streamlining approval of in-bond manufacturing operations to support local assembly of IT products
- Facilitating the issuance of temporary clearance authorisations in urgent cases.
Chris Holden, Alliance Development Manager – Business Action Projects, said the new agreement showed the value of flexibility, patience, and persistence.
“The outcome demonstrates that while it isn’t always possible to achieve an original project objective, agility and perseverance can often generate very worthwhile benefits,” he said. “While PPDs can be extremely valuable in breaking down barriers and improving trust, they also require a catalyst to get them up and running and continuous support to move them forward when progress stalls.”
OPTIC and Customs have committed to continuing engagement to ensure ongoing momentum and effective implementation of the new valuation procedures.