Author
Jocelyn Vargas
Customs Consultant
Costa Rica
E-mail
Costa Rica has made significant strides in pursuing a paperless cross-border e-commerce system driven by market demands and its inherent benefits.
The paperless cross-border trade initiative established under the framework of the World Trade Organization’s (WTO) Trade Facilitation Agreement aims, among other objectives, to digitalize the flow of information necessary for the movement of goods and services across borders. The initiative seeks to eliminate paper-based processes and transition to digital systems, such as electronic customs declarations, port management systems, and electronic single windows, to process trade-related information electronically.
This initiative gained momentum during the COVID-19 crisis when countries, including Costa Rica, saw an urgency to migrate to paperless trade systems. Physical distancing measures limited the exchange of paper documents, revealing the importance of connectivity and trade agility in mitigating potential disruptions to trade and interconnected economies reliant on global value chains.
In this context, paperless cross-border trade offers significant benefits, including faster processing, reduced transaction times, and lower operational costs in foreign trade operations. It also supports environmental sustainability by eliminating the need for paper to transmit, process, and exchange information. According to studies by the International Chamber of Commerce (ICC) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), the digitalization of cross-border trade could increase trade and efficiency for micro, small, and medium-sized enterprises (MSMEs) by 25% to 35%, and reduce export times by 24% with partial implementation and up to 44% with full implementation.
Costa Rica has made significant progress toward paperless cross-border e-commerce, driven by market demands and the associated benefits. Examples of this progress include the implementation of non-intrusive inspection equipment, random control systems for cargo dispatch, the use of electronic signatures to ensure the integrity of signed documents and verify the signer’s identity, and the establishment of the Authorized Economic Operator (AEO) program, among others.
What does Costa Rica need to continue advancing toward a paperless cross-border trade economy and fully leverage its benefits?
According to recommendations from the WTO Secretariat, in collaboration with UNESCAP, Costa Rica should take the following steps:
- Establish an Appropriate Legal Framework
Creating a legal framework that recognizes electronic transactions and documents as functional and legally equivalent to paper-based counterparts is crucial. This framework should ensure the identity verification of senders and receivers of electronic documentation and guarantee the non-alteration of these documents over time. - Develop a Favorable Technical Framework
A robust technical framework is essential to instill confidence and security in the interactions and transactions within a paperless trade system. Such structure includes ensuring the authentication of document issuers and recipients, enabling electronic payments, ensuring data transfer compatibility, and establishing a telecommunications infrastructure that supports seamless connectivity. - Promote Effective Governance and Stakeholder Participation
Effective governance is crucial to the success of paperless trade. The participation of both public and private sector stakeholders is essential. Political support from the government is especially critical to enable the electronic exchange of information between businesses and government, government-to-government, and business-to-business. This multi-stakeholder collaboration is necessary to implement successful paperless cross-border trade in Costa Rica.
Costa Rica stands at a pivotal moment in modernizing its cross-border trade processes. By establishing legal, technical, and governance frameworks, the country can position itself as a leader in trade facilitation, improving its competitiveness on a global scale while fostering sustainability and operational efficiency.