The Transportation & Logistics Committee applauds the implementation of the revised notice and comment period under the Administrative Procedure Act (APA) in 2017. It provides an important framework for better communication between the industry and our regulators, such as the Customs Administration within the Ministry of Finance (MOF), to address customs clearance challenges and new legislation impacting international trade. In this regard, we thank Customs for considering our input in the development of new regulations and closing the regulatory gaps between express and postal services.
AmCham Taipei looks forward to working with various ministries to improve the regulatory environment for the logistics and transportation sector, enhancing Taiwan’s role as an important trade and transportation hub in the Asia-Pacific region. Considering the importance of transportation and logistics as critical backbones of the economy, as well as the rapid changes taking place in the international trading environment, continued regulatory reforms are vital to help Taiwan achieve more economic growth and efficiency and sustain investment in trade-related sectors. In 2018, we would like to propose two key topics for inclusion in the government’s reform agenda:
Trade facilitation for cross-border e-commerce.
Removal of unnecessary regulatory requirements for ground transportation.
Suggestion 1: Improve trade facilitation for cross-border e-commerce.
E-commerce is a critical enabler for the globalization of businesses both large and small, but especially for micro, small, and medium-sized enterprises (MSMEs). It significantly reduces upfront capital investment and operating costs, while opening up regional and global markets to Taiwanese MSMEs. For MSMEs to take advantage of e-commerce opportunities, it is necessary to establish a business environment that supports the efficient cross-border movement of goods, services, information, payments, and transportation. The Transportation & Logistics Committee encourages the government to review all policies necessary for a healthy e-commerce ecosystem to thrive, while also addressing existing or emerging barriers.
To strengthen Taiwan’s position as an e-commerce hub, the Committee recommends that Customs consider the following principles in the developing of e-commerce regulations:
Adopt streamlined and simplified border processes, following standardized procedures developed by international organizations such as the World Customs Organization (WCO), World Trade Organization (WTO), and Asia-Pacific Economic Cooperation (APEC).
Collaborate with the trading community to enhance compliance.
Ensure fair competition between different trade channels.
Implementation of these recommendations does not require a separate clearance channel or platform for e-commerce shipments. Instead, the government can leverage and further enhance existing customs infrastructures. This approach will both save governmental resources and avoid adding complexity to the regulatory system.
Suggestion 2: Simplify customs clearance processes for low-value shipments, aligning with international best practices.
It is not feasible to discriminate among like goods based on how they are distributed. It is also operationally impossible to distinguish between shipments containing goods for commercial or personal purposes without adding undue complexity to the rules and severely slowing down border clearance. We therefore recommend a trade facilitation regime for e-commerce that is based on a common threshold value of goods, and on simplified procedures and documentation for clearance, taxation, and return of goods.
We propose the following measures to simplify and automate registration, documentation, clearance, returns of low-value shipments, and duty and tax remittance. These measures align with the existing mechanisms recommended by the WCO’s Immediate Release Guidelines:
A) Simplify import-export procedures and documentation.
Support simple registration procedures for importers and exporters.
Support electronic submission of documents.
In accordance with the WCO Data Model and related WCO recommendations and guidelines, streamline and align the required documentation and data elements for an identified common threshold value of goods.
Reduce and harmonize documentation requirements.
B) Facilitate customs clearance.
Support simplified entry clearance and immediate release procedures for shipments below an identified common threshold.
Permit consolidated or bulk clearance processes per declaration
C) Simplify the payment and collection of duties and taxes.
Simplify and publish tax rates, and review duty and tax waiver thresholds.
Permit electronic payment of duties and taxes.
Adopt smart tax collection methodologies such as account-based processing, and periodic payments of duties and taxes.
D) Simplify returns procedures.
Establish seamless returns procedures, including duty-drawback opportunities and informal declarations when matched with outbound invoice details.
In addition to these principles, we suggest that MOF and Customs carefully evaluate different revenue collection methods, clearance models, and international standards being developed by the WCO before deciding on an e-commerce clearance model for Taiwan. These references will help Taiwan avoid the unintended consequences of bad regulations. Furthermore, as a relatively small economy highly dependent on international trade, it is important for Taiwan to align its policies with international practices and ensure that its regulations are flexible enough to facilitate different trade and business models.
As our member companies closely engage with the WCO, WTO, and APEC in the development of e-commerce standards and operate in markets that face situations similar to Taiwan’s, we would be pleased to offer our observations and input to the authorities.
Suggestion 3: Collaborate with the trading community to enhance compliance for e-commerce goods.
To reduce the risk of illicit shipments and support the implementation of the above-mentioned trade facilitation regime for low-value shipments, we encourage Taiwan to establish compliance standards for shippers selling e-commerce goods across borders. This step would allow e-commerce businesses to be audited and accredited to facilitate a positive risk profile when shipments are processed. Akin to Authorized Economic Operator (AEO) schemes, which are primarily focused on supply chain security as guided by the WCO SAFE Framework, an “e-commerce trusted trader compliance standard” would cater to the specific idiosyncrasies and operating models of e-commerce trade to assist with risk management. A separate clearance channel or platform is not recommended.
The standards for e-commerce traders to comply with should be created in consultation with key stakeholders, including e-commerce retailers and express delivery services who understand current and emerging challenges and opportunities in e-commerce supply chains. For greater clarity, once traders are accredited or have adhered to the established standards, they should be accorded benefits in addition to the simplified clearance requirements already available for low-value shipments. Potential benefits include:
Extension of existing green lane privileges to shipments with expedited clearance treatment and low risk ratings.
Simplified procedures for returned shipments and duty refunds.
Lower inspection rates.
Suggestion 4: Ensure fair competition between the express and postal channels.
The development of cross-border e-commerce has transformed the parcel delivery landscape over the last few years. Traditionally mainly carrying letters and documents, postal services have become major carriers of cross-border e-commerce parcels. According to the Universal Postal Union, globally the international parcel segment of postal services grew by about 7.4% in 2015, with the postal services carrying over one-third of the total cross-border e-commerce volume. The continued growth of e-commerce is expected to further markedly increase the parcel volume in postal networks. Thus, effective e-commerce regulation must take this sizeable postal segment into account. All market players should be subject to the same laws, rules, regulations, and market disciplines. No competitor should be given special treatment.
We commend Customs for its recent revisions to the Customs Clearance Measures for Import and Export of Postal Parcels, which are a good start toward closing the regulatory gaps between express and postal services. We look forward to the implementation of this regulation and encourage the government to continue taking into account the need for equal treatment between express and postal services when preparing future regulations.
From the implementation perspective, the postal system is still largely paper-based, and postal shipments do not need to provide advance information to Customs, which prevents Customs from consistently collecting duties on postal shipments. On the contrary, express carriers are required to supply full data sets for each shipment and are subject to increasing data requirements. Discrepancy between the postal and express channels not only creates a competitive disadvantage to private carriers who bear greater compliance costs, but also poses security issues and perpetuates revenue leakage from potentially millions of shipments that are inappropriately declared in the postal channel. We urge the government to further look into the implementation of postal regulations and ensure that rules are equally enforced in practice.
The Committee applauds the government’s forward-looking plan for infrastructure development. A modern infrastructure system is important to the development of the transportation and logistics sector, as well as to Taiwan’s economic competitiveness. While the physical infrastructure, such as railways, airports, and seaports, provides the basic foundation for business activities, the soft infrastructure – policies and regulations – can significantly shape our business operations through their impact on operational costs for businesses. Thus, in addition to investment in the hard infrastructure, we encourage the government to look into regulations that may unnecessarily create burdens for transportations. One such example is the requirement for commercial automobile businesses to rent outside parking spaces.
Suggestion 5: Removing the requirement for commercial automobile businesses to rent outside parking spaces.
As discussed in our 2017 White Paper, the Approval Rules for Commercial Automobile Businesses stipulate that commercial automotive businesses, including car rental services and express delivery companies, among others, must have contracts for parking spaces from government-approved vendors for at least one-eighth of their total fleet. However, due to limited parking spaces available in metropolitan areas, companies are forced to contract external parking spaces in areas that they never use, which does not support the regulation’s original objectives. Moreover, it incurs unnecessary costs to companies with large fleet of vehicles.
The Transportation and Logistics Committee would like to express our gratitude to the National Development Council and the Ministry of Transportation and Communications (MOTC) for holding initial discussions with our members to review this issue. Based on those discussions, we believe that companies which already have sufficient parking slots in our own facilities should not be required to rent outside parking spaces solely for the purpose of obtaining licenses. We look forward to working closely with MOTC to find a solution to this issue in the very near future.