Impact at IFC: Keeping Business Flowing in Serbia Amid COVID-19

Serbia is at a crossroads. Although current growth rates are improving incomes, the country is not getting closer to average living standards in the European Union fast enough. As a candidate country for accession to the European Union, Serbia is embracing an ambitious agenda for reform in order to reach the European levels of economic prosperity. The ‘New Growth Agenda’ focuses on seven key areas, including trade and bringing trade practices in line with international trade agreements.

One critical trade practice is the determination of whether a good complies with a country’s trade commitments on where a product is made – its rule of origin. Before any product crosses the border, customs officials make these judgments through “advance rulings.”

“In the past, submitting requests for advance rulings on the origin of goods took several days and required traders to submit their requests and supporting documents physically at customs,” said Sonja Lazarevic, Assistant Director, Tariff Sector, Serbia Customs Administration.

Automating the rules of origin

Simplifying complex rules of origin for some products can increase trade. In 2019, the Serbian Customs Administration automated the business processes for the origin of goods, with help from IFC. A new, easy-to-use IT application enables three core business processes: post-clearance verification of the origin of goods; approved exporters; and the advance rulings on the origin of goods. These new automated processes bring Serbia closer to international trade standards, such as the World Trade Organization Trade Facilitation Agreement (WTO TFA).

At the onset of the project, the IFC team assisted the government to source a local company, SafeNet, to partner on the design and implementation of the new IT application. IFC also provided training, workshops and user manuals for customs officers and the private sector to ensure the effective implementation of the new web-based system.

“The new IT application for the origin of goods reduces the costs and time to trade and enable customs to better control imports and exports,” said Lazarevic.

Benefits for customs and for business

The new IT application for the origin of goods enables customs to work faster, more efficiently, and be more responsive to traders’ needs. The average initial response time of the administration on the applications or requests for rules of origin has been reduced by 94% (from 32 to 2 days). There has also been a 50% increase in the number of applications received from traders.

For businesses, two new electronic services can now be accessed through the Customs Administration’s website and are available free of charge. Traders can access documents electronically, submit requests and supporting documents, and be awarded advance rulings for the origin of goods online. They are notified via email regarding any changes in the status of their request.

Traders who regularly export cargo and who have good compliance records and book-keeping systems can qualify for the approved exporter status. Before the new IT system, traders could only make applications online or via email. Now traders can now submit applications and necessary documentation, and schedule the rules of origin exam online – a requirement to be awarded the preferential approved exporter status.

“Our goal is to become an approved exporter, which will make our exports much easier. That’s why I applied for the rules of origin knowledge exam. The application process is very simple and it only took 10 minutes,” said Marija Radjenovic, analyst at a food manufacturer in Lajkovac and first user of the new electronic service.

In a recent survey, over 66% of businesses reported that the new electronic services have made a positive impact on trade. The average time needed for the submission of an application or request has been reduced by 86% (from 2 to 0.28 days) and the fees have been eliminated (from 2,983 RSD to 0).

“The companies from the association that have used the electronic services for the origin of goods so far have all reported that the new system is easier and faster for the business community,” said Amalija Pavic, Deputy Director, AmCham Serbia.

A first step towards further digitalization of custom processes

The current COVID-19 crisis is a new wake-up call for governments to speed-up the adoption of digital processes and further align with international trade standards. To ensure that trade continues to flow during the Covid-19 pandemic and beyond, the IFC team is supporting customs to further automate customs processes, including through the development of tools to electronically sign movement certificates on origin of goods, and to enable the online verification and authenticity of movement certificates.

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Support for the initiative was provided by the World Bank Group with funding from the Trade Facilitation Support Program (TFSP). The TFSP is funded by nine donor partners: Australia, Canada, the European Commission, the Netherlands, Norway, Sweden, Switzerland, the United States, and the United Kingdom. This initiative—implemented by IFC and the World Bank—provides assistance to countries seeking to align their trade practices with the World Trade Organization Trade Facilitation Agreement (WTO TFA).

Published in August 2020

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