Tax & Accounting Blog

The Challenges for Growth and Development in Thailand

Blog, Global Trade, ONESOURCE December 9, 2016

Trade Automation and electronic customs initiatives, including the concept of “Single Window” was introduced and has been widely discussed on a global scale for a few decades.  Specifically as to serve the needs of businesses and customs authorities; complementing one another in order to increase efficiencies, save money, reduce costs and enhance competitiveness among related parties from the automated and convergence of IT systems.  However, during the very first proposal (led by the WTO during 1996 Ministerial Conference in Singapore known as the “Singapore Issue”) this initiative was unsuccessful as it was opposed by many countries due to economics and political reasons.

In 2013 at the WTO Bali Ministerial Conference this initiative was successfully realized with 90 out of 164 WTO members ratifying the Trade Facilitation Agreement and 63 members accepting the protocol. By having two-thirds of the members having completed the ratification process, this made the Trade Facilitation Agreement effective.  The ongoing and further implementation steps, such as technical issues and implementation standards, are under the assistance of the intra-government bodies such as the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT), World Customs Organization as well as United Nations Conference on Trade and Development. These sets of recommendations will ensure that all parties in international trade, as well as the related government bodies, are acting towards the same goal in driving the implementation of the WTO Trade Facilitation Agreement.

Recent Movements and International Trends

In the U.S., President Obama signed the new version of the Trade Facilitation and Trade Enforcement Act 2015 (TFTEA) on February 24, 2016; later endorsed by the senate.  This legislation has already taken effect with a lot of amendments in a few key areas of trade[1].  The U.S. changes to the ‘single window’ reporting in the new ACE (Automated Commercial Environment) trade data system is expected to eliminate the burden of a few hundred trade forms and increase efficiency of trade process in the U.S as a whole.

Meanwhile, since October 2010 under the European Union there was also an initiative of a National Single Window. The European Parliament and the Council adopted the EU Directive 2010/65 on reporting formalities for ships arriving in and/or departing from ports of the Member States. The main objective is to simplify, automate and harmonize the customs and logistics administrative procedures that are specifically tied to maritime transport.  The information and documents are pooled into one data mapping portal and only submitted once among all different jurisdictions and government authorities under the same format (i.e. the Single Electronic Access Point as well as the Automated Import and Export System) at all ports within an EU country.  However this soft structure reprocessing and the establishment of the interconnections between each jurisdiction IT systems takes a number of years until the final version of a National Single Window guideline for maritime transport was successfully published last year in April 2015.

As one of the key ASEAN logistics connectivity and inland transport hubs, Thailand has been actively involved in an e-Logistics system and transport single window effort for a decade, and has tried to overhaul the current IT systems under each government authority and related parties to achieve this objective.

In fact Thailand, along with South Korea, Japan, Singapore, Chile, Mongolia (members of the Asia Pacific Council for Trade Facilitation and Electronic Business) and the European Union  is among the original sponsors of the WTO single window initiative.

In the past, exportation of a particular good (i.e. frozen shrimp) from Thailand required the exporter to submit at least 30 documents and fill-in at least 788 data elements.  Most data elements are completed at least 30 times with at least 15 parties involved throughout the whole process of around 30 calendar days.  This is a huge time-consuming practice, quite tedious and creates a high amount of inefficient costs for the country.

Recent developments under the direction of the Ministry of Information and Communication Technology and the Electronic Transactions Development Agency are expected to improve this process by implementing a soft infrastructure and standard master plan, including back and front-end application e-Trade facilitation.  The goal is to support transactions through the Thailand National Single Window, including e-Trade, e-Payment, e-Document, e-Court, e-Evidence, e-Authentication, etc.

As such, the main value proposition for having an integrated single window system is not only to enhance efficiencies and reduce costs from related activities throughout the whole supply chain process, but also to help increase security, and reduce unintended incorrect processing and errors associated with some of the required elements, eventually increasing national competitiveness.

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[1] Such as the improvements to anti-dumping and countervailing duty laws, the prevention of evasion of anti-dumping and countervailing duty orders, the import-related protection of intellectual property rights products, the currency manipulation related to trade, and even the importation of goods made with convict labor, forced labor, or indentured labor as well as the international trade data system and automated commercial environment acting as a one-stop single window portal connected to other government agency systems which will be the key driving forces to enhance trade compliance, security, and modernize the customs systems and procedures in particular of the Customs and Border Protection Agency (CBP).