Identifying and ranking factors affecting the facilitation of legal trade

Dissertation for Master's Degree

Commercial Management Major: International

Abstract

Increasing the power of competition in the business arena requires detailed and continuous planning in order to facilitate business. Various factors can affect trade facilitation. Therefore, in the above research, we identified and ranked the factors affecting trade facilitation. For this purpose, after examining the background of the subject, a number of factors were identified and in order to rank each of them, after designing a questionnaire of paired comparisons and distributing them among managers and relevant experts, hierarchical analysis method was used. The research results showed that among the main factors, business environment, physical infrastructure, information and communication technology and administrative-executive factors have the highest priorities respectively. Also, the comparison of the sub-factors showed that adherence to international conventions and standards, infrastructure quality of customs and ports, and expanding the use of the Internet in business have the highest priorities in facilitating trade.   

Key words: trade facilitation, hard and soft infrastructure, export development, AHP method

) Introduction

The growth of trade volume is a clear priority for governments and the basic foundation for achieving the social and economic well-being of citizens. Greater participation in international trade has long been recognized as an essential element in reaching these goals. Governments and international organizations around the world have pledged to do their best to establish an extensive international trade system, to reduce tariffs and trade liberalization policy.

The primary goal of trade facilitation is to reduce transaction costs and the complexity of international trade for businessmen and increase the business environment in a country, while at the same time making the level of government control effective. The dual role of governments in providing trade facilitation—while fulfilling legal requirements in ongoing security—informs the international environment.

A commercial transaction is not complete until the traded goods are delivered to the buyer and payment is made to the seller. In order for a product to be able to compete in global markets, the cost of trade transactions should be reduced to the lowest possible amount. Supply chain management tools, which try to manage the entire activities related to the trade of goods, are a necessity in this context. However, they must be completed by effective procedures at national borders so that no unforeseen delays and excessive additional costs are possible. Therefore, the satisfactory completion of an exchange relies on:

the efficient movement of goods from the seller's place to the buyer's place;

matching the goods with the buyer's needs;

acceptable commercial documentation;

following the regulations and completing the required procedures and any other documents and procedures when crossing the border

necessary arrangements for efficient payment

It transforms trade from a subject focused on business documentation and conventional procedures to a broader field, including the physical movement of goods. International trade necessarily requires crossing borders, which can cause many technical and managerial problems for traders. Therefore, countries should not limit themselves to national regulations and procedures, but should cooperate with other countries to achieve coordination, facilitation and international standardization of procedures and documents, such as the coordination and standardization of national trade and components of the transportation system (Midari and Gudjani, 1387: 35). Cost effective methods and costs of international trade are supported. Trade facilitation is a key element in competition and increasing trade volume as it will become more precise in the future. The international community now pays great attention to the extensive development and implementation of trade facilitation indicators and tools. The purpose of trade facilitation is to provide a stable, clear and predictable environment for national and international trade.Apparently, these goals of the society should be fulfilled based on acceptable international norms and experiences resulting from the following factors: 1) Simplification of formalities and procedures, 2) Standardization and growth of infrastructure and physical facilities, 3) Harmonization of relevant laws and regulations (Shujie and Shilu, 2009). Upon the establishment of the United Nations, David Mitrani wrote, "The problem of our time is not to keep nations away from each other, but how to actively bring them together" and this is the root of our challenge in trade facilitation (Chamber of Commerce, 2016). Trade facilitation was first officially included as an internationally accepted concept in 1996 on the agenda of the Ministerial Meeting of the World Trade Organization in Singapore, and since then it has been included as a goal under the same title in the documents of this organization. Although before that date, many of the approvals and agreements of this organization were actually in the direction of commercial facilitation. Since there are different interpretations of the term trade facilitation, different definitions have been provided about it. For example, in the scientific studies conducted in this regard, its broad concept is usually considered and includes the environment in which business takes place; And it means establishing transparency, standardization, establishing coordination with international and regional arrangements, strengthening the legal environment and moving towards the professionalization of commercial institutions (Morad Hasel, 2017: 45).

In today's competitive world, despite the changes, we all have realized the importance of facilitating trade and feel its necessity. In the challenging and, of course, the international environment, the business environment of any country is one of the most important effective elements in creating added value, which includes its productivity factor with various branches from social welfare to national authority.

In today's world, trade has two aspects, domestic and foreign, and foreign trade also has two aspects, export and import. From the point of view of an economist, a market includes all buyers and sellers who are trading certain goods or services. From the point of view of a marketer, the market is the set of all potential and real buyers that exist for a product. And from the point of view of a politician, the market is a place to ensure the peace of society and maintain the balance of power. All the effects of trade from the simplest level to the most complex state will be focused on categories such as buyers, sellers and producers, the realization of price reduction and productivity increase can only rely on the facilitation of processes between market and trade elements.

Trade facilitation in the export sector, which leads to an increase in the country's exports, consequently increases domestic production and supports the country's workforce and capital; In addition to using the empty production capacities of the country, this also uses new labor and capital, of course, it may also lead to an increase in imports in the form of foreign investment or the import of certain goods for domestic production. Commercial empowerment is measured with an index under this title. If the value of this index increases (decreases), it means improvement (difficulty) in business development conditions. It should be noted here that in order to maintain and improve the commercial empowerment index in the current situation where the country is under the pressure of western countries, it is necessary to adopt a suitable solution to overcome this situation in order to prevent capital flight by increasing exports and reducing the cost of imported goods. In general, trade facilitation is important because it helps countries to maintain their status and improve the competitiveness of their trade, and this role is due to the fact that the implementation of trade facilitation policies will lead to countless results. Studies show that the cost of trade facilitation, especially the standardization of documents and business processes, is only between 4 and 7 percent of traded goods. Also, the results of a research conducted by the Asia-Pacific Economic Cooperation Organization show that the income from the implementation of an effective trade facilitation system is 0.26% of the gross domestic product of the members of the organization, which is about 45 billion dollars. Trade facilitation by improving the flow of trade by speeding up the processes of declaration and clearance of goods, increases the attractiveness of investment in countries and helps to reduce the costs of trade exchanges and improve competitiveness.