Electronic trading documentation: A promising innovation opportunity Gerard McMullen, Grain Trade Australia 23rd January, 2018 – Kuala Lumpur, Malaysia The IGTC has rolled out a comprehensive work program on e-documentation and phytosanitary certificates with the aim of facilitating trade and calling for more efficient, faster and more flexible solutions to managing important trade facilitating documentation. This is on the proviso that the system meets critical requirements for its member associations and Corporate Stakeholders that include the key elements of reliability, confidentiality and choice of competitive options.   The IGTC has developed an ‘e-docs’ Working Group– to seek member feedback via regular communication and for this cross-section of industry representatives to develop grain trade policy in order to be able to advise the IPPC on key grain trade issues as it aims to set up a global ‘e-Phyto Hub solution’. www.igtcglobal.org ● secretariat@igtcglobal.org

27 associations, 8000 businesses Eastern Africa Grain Council 85 countries COCERAL CGC RGU NAEGA, NCGA, NGFA, USGC, USW, CRA, USSEC , GAFTA UGA Geneva, Switzerland CNFA, CNAGS, CGBA Eastern Africa Grain Council ABIOVE ANEC GTA, AGEA ANIAME, APPAMEX CAPECO SOPA, SEA CIARA-CEC SACOTA

IGTC agenda Accommodate production methods Innovate information management – digitization Accommodate production methods Improve regulatory compliance & trade communication Advance responsiveness Common voice because there are common problems potentially threatening the efficient global movement of grain – also common opportunities to improve trade and efficiencies of operation

Annual Average Continent-to-Continent Trade of Grains and Oilseeds 2011-2015 $78,440,052 $78,440,052 $2,832,486 $3,904,316 Europe $2,966,868 $15,813,733 $20,373,125 $1,066,792 Americas Asia $474,250 $2,138,955 $7,843,454 $239,393 $10,665,957 $138,898 GRAIN IS A GLOBAL BUSINESS. In 2016 agricultural specialists Rabobank reported that global trade of all gains & oilseeds has grown by about 150 million tons in the last five years, exceeding the growth of the previous five years by more than 50%. The traded volumes of pulses have increased by 48% over the last decade, from 9 million tons in 2005 to 14 million tons in 2015, positioning them between barley and sorghum in terms of global trade. This means that not only is the role of the grain trade increasing, but also venues such as the IGC and IGTC, as we work to form alliances to secure outcomes in trade facilitation. $6,690,174 $3,904,316 $9,675,705 $678,924 Africa $452,601 $11,585 Oceania $761,770 Values in 1000USD Source: The United Nations Conference on Trade and Development International Trade Data Center. Updated 10/25/2016 VLM.

Features of the global grain trade Well developed and highly globalised Large, growing and increasingly complex Utilises sophisticated infrastructure and processes to provide safe, cost effective, reliable supply Moves product in high volumes with interchangeability of commodity, transportation, handling and infrastructure Constant improvement and innovation

Benefits of electronic documentation Commercial Value Exporters Importers Savings: Time – reduced end to end transaction time Costs – reduced time means faster payment Costs – reduced resources and effort to supply original and any re-worked documents Security & Risk: Eliminates risk of loss of documents Eliminates risk of fraud Reduces risk of non payment Improved quality & integrity of data Efficiency: No paper documents to process, manage, track, send and archive Reporting capability Early arrival of electronic paperwork assisting rapid and uninterrupted discharge of grain Potential to reduce demurrage costs Visibility of transactions to assist inventory planning Removal of the need to use Letters of Indemnity to allow discharge of goods Costs of paper transactions are difficult to estimate given the variable nature of activities associated with these transactions. Many of the benefits arising from ePhytos for exporters will transfer directly or indirectly to importers and others involved in the paperwork supply chain – there are many intermediaries

Industry preparing for digitization Widespread use of e-docs already occurs However, companies currently do not use electronic documents for all transactions Increasing number of industry players aiming for at least 50% of transactions to move to electronic documentation by 2018 Industry planning for the wholescale adoption by 2025 - 75- 100% of electronic trade documentation for all documents in one transaction IGTC poll, 2016 Key is to ensure system developed to transact all documents otherwise full benefits may not be fully achieved

IGTC fostering an enabling environment IGTC seat on the ‘Industry Advisory Group’ of ePhyto Solution Grain trading companies ready to assist in ‘testing’ of the ePhyto exchange ASAP as acceptable for ESG and NPPOs IGTC member questionnaire (2016) revealed clear picture of hopes/challenges for the system Above all, IGTC seeking more efficient, faster and flexible solutions to facilitate trade documentation Grain trade seeking to assist and lead the process of adoption where possible

(1) IGTC reactions to the Business Modelling report of the ePhyto Solution Report was received by IGTC on 1st December, 2017 Strong interest among global grain trade community in the report - initial reactions are emerging IGTC wishes to see a stronger emphasis on ultimate aim: wholesale transition towards ePhytos, with no going back to paper docs Like many members of the Industry Advisory Group (IAG), concern is how to ensure sustainable and robust uptake of the ePhyto Solution by countries

(2) IGTC reactions to the Business Modelling report of the ePhyto Solution Emphasis on the need for a fully working system to be in place There is value in establishing a ‘pre-paid’ model until the system is fully operational and all other associated elements are completed Cost-benefit analysis should be carried out as soon as possible - should include expected costs of implementation, impact on time, impact on efficiencies, reduced costs from less errors and lost certificates, etc. of both NPPOs as well as industry What role for bilateral/multilateral agreements? A ‘model agreement’ could be developed as a reference for countries to use to support ePhyto exchange Any transaction fee should take into account efficiency gains obtained by NPPOs, it should be proportionate and not significantly higher than the current average costs of phytosanitary certificates

(3) IGTC reactions to the Business Modelling report of the ePhyto Solution Questions: How reliable are the figures on projected ePhyto uptake and cost per ePhyto (3.4 million/year by 2024, costing 0.31USD)? Can private sector be included in the 5-day ‘expert missions’ to provide training and capacity, especially in developing countries? Can the results of the NPPO survey be so simply compared to the results of the industry survey (e.g. pages 6, 13 and 14)? Our impression is that NPPOs and ePhyto ‘Users’ approached the survey differently, with many ‘Users’ answering as individuals, including potentially various perspectives from within companies How to make sure that industry can have regular updates from IPPC on NPPOs on adoption, transition to system by country and timing? Can work be developed on the cost incurred by companies applying for certificates?

Importance of Government / Industry Partnerships Opportunity for closer working relationship Implementation of systems that assist both government and industry processes Adoption of improved practices for key transactions Ability to link in with all key systems used to support export process Potential to reduce duplication of effort and inclusive of all documents Potential to increase transparency of documents required Industry works closely with Governments to implement appropriate practices to facilitate trade. Any assistance in that regard should be encouraged as by assisting industry it assists Government and shows commitment of industry to meet and improve regulatory compliance practices

A word of thanks to our colleagues on the Industry Advisory Group! And our hosts the Malaysian governments The IGTC remains one of the trade flows represented on the Industry Advisory Group (IAG) of the hub - overseen by WTO, IPPC and key governments such as Australia and The Netherlands. The collective task of this cross-section of industry representatives is to advise the IPPC on the needs of the private sector and provide strategic insights.

Thank You! Please contact us at: Secretariat@IGTCglobal.org IGTC seeks partnership with governmental bodies and other international interest groups. For-profit entities supporting IGTC are welcome to be identified as IGTC Corporate Stakeholders and help guide our work.  Trade Associations and Councils working to support international trade of grains, oilseeds, pulses and other agri-bulks are welcome to apply for IGTC   Thanks to MYS for hosting this workshop Please contact us at: Secretariat@IGTCglobal.org +41 78 932 96 18