Great interview with Tom Butterly who is at the cutting edge of International Trade Facilitation and the drive to reduce paperwork and delays when goods have to cross international borders.
What is your background briefly?
I am currently a freelance consultant, based in Geneva, Switzerland and Valentia Island in county Kerry. I have worked globally for over 30 years, 15 of which were at the United Nations in Geneva where I was Deputy Director of International trade and responsible for the UN Centre for Trade Facilitation and Electronic Business (UN/CEFACT). I am an economist by trade, specifically a labour economist, and got involved in estimating the labour impact of the Canada US Free Trade Agreement while working in Canada. We were trying to evaluate where the jobs of the future would come from, the training requirements, and how we would tackle planning for the future. This led me into international trade research and developing new export markets. I am personally a strong believer in international trade, as much economic growth has come from trade and I have seen its positive impact on job creation in developing countries. But this is not without risks and governments need to have very strong policies and institutions to ensure that the potential benefits from trade are realised in a way that benefits the entire economy. This is the role of government, to protect workers’ rights and invest in human capital and infrastructure required to ensure that citizens have the right skills and capacities to take up employment opportunities from enhanced trade. It cannot just be left to the market. Right now, trade is impacting on low-skilled jobs – and it’s a risk if governments don’t plan to combat this. The biggest challenge in many countries today is increasing income inequality and this will only continue to deteriorate without strong government intervention. And this is not contrary to economic growth and prosperity! Quite the contrary as evidenced by the strong economic performance of Scandinavian countries which have much better equality of income distribution.
What does the future of work look like to you?
Today, countries have more wealth and resources than ever before. However, more and more of this wealth is concentrated in private as opposed to public ownership. This trend is totally unsustainable and if left to reach its inevitable conclusion, will result in severe social unrest. Ideally, we need a better tax system such as a tax on wealth so that governments have the resources to invest in the fundamental requirements to create a sustainable economy for the future. For example, governments need to invest more in higher education and research, to help prepare the skills and imaginative thinking for the jobs of the future. We do not even know yet what many of these jobs will be but it is clear that critical thinking and creativity will be a fundamental requirement for success.
We then spoke about the trends and implications arising from the World Customs Organization (WCO) conference that we met at in Tbilisi in June 2017.
There is tremendous work going on at present to dematerialise trade documents and in fact to completely overhaul the international trade regulatory system. The ultimate objective is to reduce the extent of red tape and ensure that the required trade information for regulatory purposes is provided to the necessary parties in advance of the arrival of the goods. This allows for pre-arrival clearance and other security related checks before the goods even arrive in the country. The World Trade Organization (WTO) estimates that the trade facilitation measures agreed under the recent WTO Trade Facilitation Agreement could save the global economy over 1 trillion dollars annually, and the majority of these benefits could accrue to developing countries.
A good example of this is a project that I am currently working on for the UN Food and Agriculture Organization (FAO) in Rome. We are working to replace the existing paper based Phytosanitary Certificate that controls the movement of plants and related food items internationally, with what is called an ePhyto certificate that can be exchanged electronically between countries. Not only will this be more secure and simple to operate, it will provide a great example of the advance information facilities I mentioned above This could significantly assist developing countries in the export of food related products.
The fundamental principle behind trade facilitation is you can’t reduce the physical distance to market, but you can reduce economic distance, and the more you can get data there before the goods, the faster they can clear Customs and other regulatory procedures, all of which reduces delays and wastage. Smart food chains, for example, and the single window we discussed in Tbilisi, speed up processes, integrate them, and help to harmonise and standardise information inflows. This is especially helpful in developing countries, where bureaucratic procedures often make it too costly to trade internationally, so it will help them to reduce the invisible barriers to trade, and make it easier to get their goods to the market.
To achieve this simplification, you need people to work together, and have a complete change of mindset. We need to achieve a concept of partnership between government and business through which everyone benefits. It is a big challenge, intellectually, and also a heartset that needs changing. The whole project needs to be seen inclusively, and holistically. Some countries have done this very well, for example, Mauritius, Costa Rica, Swaziland, and it works! Rwanda too has been innovative, with strong leadership, countries need to let go of old ways of thinking. In previous times, you would be worried about the customs officer coming to inspect your company, but under this open and cooperative approach, Customs actually work to see how they can help companies to export, by making it simpler and easier for them to do so. As I said, it is a complete change of mindset and so rewarding when it can be achieved.
— Ghana Single Window (@Ghanatradehub) March 2, 2016
Overall what are you excited about, will we achieve a smoother, easier trading system, or will individual countries / trading blocks not look to completely support this?
We should not walk away too quickly from trade blocks and trade agreements. Ireland, for example, has had many benefits from EU membership. As I said earlier, one also needs to be wise and strong when entering free trade arrangements- it is not for the faint of heart. Governments need to be very clear on what they must do to protect the rights of workers and prepare the country to take advantage of the agreements. The private sector cannot do this as its time horizons are too short for the longer-term adjustments required. So governments have to work to ensure that the potential benefits are well distributed across the whole economy. They need to retool, support skills changes and provide the necessary infrastructure and policy foundation for distributed growth. Otherwise we end up following populist agendas and dismantling valuable international agreements that have many benefits.
Any final thoughts…
Well, I could not end this discussion without mentioning the potential for technology to reverse the economic decline in rural Ireland. For the knowledge based economy of the future, geographic location is not a limiting factor. Once a community has the right information infrastructure it can compete on an equal footing with Silicon Valley! This might seem an outrageous statement but we are living in a world of ideas where imagination and creativity provide the competitive edge. Not everyone wants to live in California or New York and projects such as the Valentia Cable Station, which is looking to reconnect with the pioneering energies of the first Trans-Atlantic Cable from 150 years ago, have enormous potential once the government provides the necessary bandwidth to enable a high speed communication link to the global world. What a pleasure it would be to have high value added, environmentally friendly and creative employment in Valentia that could sustain the community for generations to come. As in the laying of the first Trans-Atlantic Cable, the key factors for success were the imagination and fierce belief that it could be done!