Conclusion and policy recommendations

Among other specific lessons is the need to provide sufficient funds to implement TF reforms. The Enabling Protocol for the Deep Integration Process between Guatemala and Honduras established a Structural and Investment Fund, which has been crucial to the reforms. According to the regulations of the fund, each country was to contribute an initial US$5 million and to provide annual contributions to be determined. The fund could be further supported by reimbursable and nonreimbursable funds. The Central American Bank for Economic Integration, part of the Central American Integration System, provided funds for infrastructure needed at the borders between Guatemala and Honduras. Other collaborators, such as the Spanish Agency for International Development Cooperation (AECID) and the InterAmerican Development Bank, provided technical assistance for many of the information technology developments, and the World Bank formally consulted with both partners.

Another lesson is the need to involve the private sector to push for TF reforms. Private sector involvement was critical during implementation. The World Bank organized pilot exercises with regional companies, which demonstrated dramatic reductions of border-crossing time—key to project buy-in as companies saw the benefits. It also organized training for more than 150 companies.

Trade facilitation commitments in PTAs can help Latin American and Caribbean countries better integrate into regional and global value chains. Additional efforts in the region to simplify and harmonize export and import processes, through deep integration agreements as well as unilateral reforms, can further reduce trade costs and so boost participation in regional and global value chains. But many countries in the region face multidimensional challenges that might undermine the effectiveness of DTAs.

Lessons from regional experiences, including the Guatemala–Honduras customs union, suggest that PTAs in Latin America and the Caribbean that aim at promoting GVC integration should include provisions related to modern and advanced TF measures.

Most customs administrations already have processes for adopting risk-based compliance management strategies, though they are at different levels of maturity. Countries should implement integrated risk management systems across the various border agencies that control goods. To achieve more efficient clearance, border agencies should integrate risk criteria, concentrate controls and focused inspections on high-risk

consignments, and expedite the release of low-risk consignments. For imports requiring inspection, nonintrusive inspection should be the first option. Border agencies should also explore complementary controls beyond the borders, such as postclearance audits, inspections, and inventory controls.

The working hours of all public and private entities necessary for managing imports or exports and international transit in partner countries should be standardized, along with other measures and activities. Joint processes and operations to recognize certificates from accredited agencies in countries with similar or higher standards, especially for low-risk goods, should be developed. Implementing Mutual Recognition of Authorized Economic Operators between subregions, such as Central America and MERCOSUR, is another crucial point that will allow granting benefits to all AEO companies in the region, improving fiscal and parafiscal control at borders.

Prearrival processing allows for the submission of import documents and a declaration to initiate the clearance, with the risk assessment conducted before goods arrive and release taking place immediately upon arrival. The procedure significantly decreases logistics costs.

Most countries are developing national single windows for trade. A DTA can establish the requirements for automatic exchange of information; the redesign, automation, and digitization of business processes and procedures; and the interoperability of single windows, reducing formalities and requirements considerably.

Particularly given the COVID-19 pandemic, forms and physical contact should be reduced using information and communications technologies. Countries should simplify and automate processes gradually, implementing back-office and customer-facing systems, especially mobile technologies, as well as interoperable national and regional information systems. Electronic payment gateways should be used for fees, duties, taxes, and charges collected by all border agencies. And countries should incorporate technologies for more expeditious and secure cargo processing, such as nonintrusive inspection equipment, cargo tracking systems, biometrics in driver identification, surveillance cameras, and monitoring of cargo inspections (eventually with remote inspection).

Based on risk management and compliance records, benefits to AEOs should be extended. An AEO program enables regulatory and control agencies to manage compliance much more effectively, replacing costly transaction inspections at borders with voluntary compliance by operators through a certification process and submission to regular monitoring and compliance verification. For example, AEOs could pass through green channels or not be required to present physical documents, complementing these measures with postaudit practices.

The impact of the DTA provisions depends on their implementation by various parties. So, the establishment of governance structures such as customs or TF committees is instrumental to coordinating and exchanging experiences to address discrepant interpretations and better align how provisions are understood. Such governance structures also have roles in harmonizing or developing mutual recognition of requirements and formalities, and in implementing ongoing development.

PTAs face a variety of challenges. The following broad recommendations could advance TF in Latin American and Caribbean PTAs:

• Establish a robust governance framework to drive reform and ensure the commitment and participation of all agencies and the private sector. Since the approval of the WTO TFA, the national committees on TF are the main forum for developing public policies and coordinating related reform initiatives. It is recommended that a committee report to or establish an interministerial coordinating body. And the design of policies and projects must encompass commitments and buy-ins by all relevant ministries and agencies. The governance framework might also support the process of prioritizing and sequencing reforms, mobilizing and allocating resources, and establishing ongoing improvement, with milestones and deliverables clearly articulated and communicated to all stakeholders. • Establish coordinating committees to promote international cooperation and alignment in implementing agreements. Customs and other cross-border regulatory agencies would particularly benefit. For regional integration, governance structures have harmonized the legal frameworks, standards, and procedures while also continuously advancing TF. DTAs can prompt the establishment of such governance structures, as in the MERCOSUR and SIECA TF and customs committees. The joint governance structures could conduct diagnostics and assessments, identify best practices and exchange experiences, establish an appropriate results and monitoring framework, and support the development agenda.