Have you talked to them? Public-private dialogue and trade facilitation

11.13.2020 | Laura Escalante

The Global Alliance for Trade Facilitation team within CIPE is working to help Ecuador strengthen its competitive participation in the global economy. To foster local ownership of potential reform initiatives, GATF held several meetings with public and private sector stakeholders to grasp their insight into the issues affecting cross-border trade.

During the process, participants helped us flag costly and time-consuming procedures that disincentivize foreign commerce. Contributions that ranged from precise data to humorous anecdotes increased our understanding of the context in which the team will be working and shed light on key players, as well as opportunities for market-oriented transformations.

However, a few times our guests expressed doubts about whether the other sector (either public or private) is actually committed to trade facilitation efforts. There were insinuations about laziness and corruption in the government, as well as tax evasion tendencies and negligence on the side of businesses. These excuses were used as explanations for a lack of progress in certain matters.

Finding Common Ground

In the specific case of Ecuador, the lack of knowledge in both groups about the burdens and constraints the other sector faces in trade-related matters is evident, but improvement may be on the way. The country has only recently established a National Trade Facilitation Committee (a permanent public-private group for domestic coordination and implementation of the provisions of the WTO Trade Facilitation Agreement), so stakeholders are still building trust and recognizing the advantages of collaboration. But in economies were democratic governance is flawed or completely absent on trade matters, or overall, relations between public and private sectors tend to be enduringly antagonistic.

Technical assistance teams should always be prepared to encounter this situation. After all, discussions about economic challenges can easily turn into cathartic sessions. Frustrated participants may tend to pair their problems with biased perceptions of other actors, especially if the parties involved are as distinct in nature and purpose as the public and private sectors.

This blog post will offer some ideas on how to leverage dialogue and build trust through technical assistance. It is based on lessons learned from co-creating for trade facilitation when there is little or no confidence between public and private stakeholders.

There are two elements that should not be left to chance when dealing with stakeholder division or prejudice, at least in the international trade sphere.

First, safeguarding impartiality. Maintaining the team’s objectivity (not subscribing to a single perspective) minimizes unforeseen risks for project execution and generally leads to more durable results. The key is having the disposition to research and listen to stakeholders with authentic interest; vocation, practice, and failures help perfect this skill.

Second, preventing partisan assumptions from shaping the public and private decision making. A team working on a trade facilitation project cannot tackle a country’s socio-economic or political framework, but it can create a suitable environment within the scope of their work so that stakeholders’ choices are objective and knowledgeable. The most effective way to generate such context is promoting dialogue.

The Importance of Conversations

To start, the need for an exchange must be justified. So, when preconceived ideas of one sector about another make their appearance (commonly accompanied by expressions like “they don’t want to collaborate,” “we know they won’t adhere to this,” or “that doesn’t affect them”) the best option is to confront the stakeholders with a simple query: Have you talked to them? The question will help dismantle unfounded perceptions, giving the project team an opportunity to propose a consultation with “them,” whoever they may be.

The first time I realized the efficacy of this question I was working with a multidisciplinary group about eight years ago. We were analyzing opportunities to optimize border controls for a sanitary agency in Central America. The entity’s field officials supervised the fumigation of all land transportation entering the country. Fumigation itself was done by autonomous machines (like a carwash), but the officials were stationed at a shack (in 95°F tropical weather, with no A/C) collecting cash fees for the service and printing receipts.

These tasks were clearly hindering the personnel’s more relevant technical duties, including the  inspection of agricultural goods (many of them perishable). Hence, it was consensually agreed that the process should be modified, freeing valuable human resources that could be allocated to other areas of work, increasing the efficiency and effectiveness of the institution.

Automation seemed the best way to get rid of the cash payments done by truck drivers and the related interventions of officials. The process could be substituted by an electronic transaction in the national single window (an online system for diverse trade processes). Nonetheless, the border officials raised concern about two issues: fumigation fees varied in accordance with the transportation size and type of the vehicle, which was checked in person. Also, empty trucks were not required to use the single window for anything else, thus the use of the platform would be seen as a new requirement for some trade operators.

The group studied both matters. The difference between the fees was relatively small and the flow of empty units into the country seemed well distributed among all importers, so the use of a prorated flat charge, payable only by loaded units, was suggested. But agency officials insisted: “they [the users] will never accept that.”

Of course, when someone inquired, “have you talked to them?” the agency representatives admitted they had not. They said they were making an informed assumption and tried to justify it. At some point the officials even seemed to be protecting the financial interests of the private sector—or what they believed those interests were. The officials were so attached to their perspective that they couldn’t visualize any reason why the private sector would be interested in collaborating with them to improve border controls.

After some persuasion, the officials agreed to participate in a meeting with private sector associations to discuss the concept. During the consultation, the project’s goals and expected results were explained, and the traders were asked if they would support the amendment of the fumigation fee, even though that would mean a discount for some and a markup for others. The business leaders surprised the government employees by saying that the time saved by trucks stopping one less time at the border was more valuable to them than the highest fumigation fee and without hesitation they endorsed the prorated flat fee proposal.

About three weeks later, electronic payments were implemented and the process at the border was streamlined. After a while everyone put the matter aside and complaints about the fumigation procedures were never again raised to the sanitary agency.

Of course, the potential benefits the private sector saw in the initiative differed from those pursued by the government agency (and the multidisciplinary group working with them). That is precisely why the officials were not able to envision the sector’s support in the first place and why the discussion was crucial. Identification of common goals is not the outcome of a successful public-private dialogue. The objective is to determine whether diverse aspects of stakeholder demand can be aligned toward a shared course of action that delivers gains for everyone. Incidentally, more often than not, the concerted path will also be the simplest and cheapest — once the parties involved perceive advantages, creative answers for a swift implementation will come along.

This sanitary agency example illustrates how public-private dialogue can enable trade facilitation reforms and change how stakeholders interact, leading to more benefits in the long run. In the context of an international trade project, complications derived from assumptions and limited perspective will likely cause higher costs and waste time, the exact opposite of facilitation. Hence, investing in collective strategies is a worthy insurance. And again, optimal solutions are more easily identified if a broad range of actors take part in the analysis of the problems and the co-creation of solutions.

An Idea that Can be Exported

Around the world, experts and organizations use public-private dialogue as a means to successfully advance the multilateral trade facilitation agenda, but case studies have demonstrated its applicability in all areas of trade. Mainstream recommendations range from the all-purpose consultations under Article 2 of the WTO’s Trade Facilitation Agreement, to WCO’s standards on trader-government partnerships and mechanisms indorsed by UNCTAD specifically for the protection of intellectual property in the global exchange of goods.

CIPE and the Global Alliance for Trade Facilitation apply these guidelines as well as bespoke methods to bring together governments and businesses, as equal partners, to address cross-border trade and competitiveness challenges. Certain that market-oriented reforms can be enhanced by the dissemination of ideas, our team encourages past and conceivable partners to network and share knowledge on their experiences. Please contact us if you want to know more about our public-private collaboration approach and our projects.