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“Ghana demonstrated an impressive technical capacity”, says shipment test report

The cargo shipment test evaluating export and import procedures in preparation for the transport of Ghanaian FLEGT-licensed timber to Europe showed that, while some administrative issues need addressing and some procedures fine-tuning, the Ghanaian system works well in principle.

The tests involved a Ghanaian timber exporter, the Forestry Commission of Ghana, timber importers in Germany and Spain as well as Competent Authorities (CAs) in Germany, the Netherlands and Spain. 

Step by step, the tests comprised:

 

 

 

  • Verification of shipment departure.
  • Ghanaian exporter sending copies of licences to EU importers or in the case of the Netherlands directly to the CA.
  • European importers’ submission of licences to their respective CA through FLEGIT (Germany) or national system (Spain).
  • EU CAs’ assessment of licences for authenticity, validity and accurate coverage of shipments.
  • Discussions between CAs and the Forestry Commission of Ghana of any issues.
  • Assessment of results.

The shipment test report identifies four major issues that need addressing, two of which refer to private sector business practice and two to technical capacities.

On the private sector side, the report found that delays in exporters’ posting shipment documents led to buyers’ receiving the documents as late as three to four days prior to arrival of the goods. This means that authorities would not have time to resolve potential issues concerning the consignment or license, which would then result in delays in custom clearance.

Moreover, a lack of communication regarding HS Codes used in export and import declarations was identified. Deviations between HS Codes used in the respective documents would again trigger interactions between licensing authorities and could also result in delays in customs clearance. This has been seen especially in the early days of FLEGT licensing in Indonesia, too.

In terms of technical/administrative capacities and procedures, the report revealed a number of inconsistencies concerning format and content of the test licenses. Furthermore, resultant communication between CAs and the Forestry Commission would have been slow and responses inconsistent.

Licenses issued after containers were sealed

While the HS Code issue needs addressing on a bilateral basis – and in the meantime requires communication between exporters and importers to agree on an HS Code – the overall number of license mismatches are expected to be much lower in Ghana, once it starts licensing, than it was the case when FLEGT licensing in Indonesia first started.

This is due to a combination of factors: Firstly, compared to Indonesia, the Ghana VPA is set in a far less complex environment. According to the shipment test report, there are only 20-30 regular exporters, the number of export products and HS Codes respectively is small – the product scope of Ghanaian exporters is mostly limited to lumber (4407), mouldings (4409), flooring (4418), veneer (4412), and panels (4412/4418) – and supply chains are straightforward. Secondly a fundamental difference between Indonesia and Ghana is Ghana issuing the licenses after containers were sealed by customs. As a result, the supplier will know the exact quantity of product in each container at the time the license is issued. In Indonesia, there is a time-lag between application and issuance of license and the actual shipment date, during which time the size of an order can change; this would normally mean the exporter has to apply for a new license, but not all companies have consistently been doing this, especially immediately after the start of licensing. Moreover, Indonesia delivers complex products, such as furniture, to Europe and especially smaller and less experienced companies do not always find it easy to determine the exact number of furniture pieces that can be fitted into a container beforehand.

The Ghanaian Wood Tracking System (WTS), which is the technical core element of GhLAS, was found to be working well overall by the test report. Unlike in Indonesia, the Ghanaian system is not based on certification but on online wood tracking, verification of sales contracts and controls of mills’ related inputs and outputs (link to older article with info on system). By the time the shipment tests were conducted the roll-out of the electronic version of the WTS to the offices across the country was not yet complete. However, the system is now fully rolled out and has been up and running since February 2018. Online, real time wood tracking is now enabled.

Other key findings of the shipment test report included:

  • Participating exporters showed a good understanding and support of the VPA process and the shipment test.
  • The FC is closely linked to exporting companies and permanent staff at all major plants ensures effective communication on FLEGT-related issues between government and private sector.
  • The FC showed a high level of commitment to the FLEGT process.
  • The GhLAS would easily allow for fully electronic processing of FLEGT licenses, including data transmission into the EU’s central and Member States national IT systems. Both the involved CAs and the FC would support electronic licensing and do not see need for the issuance of paper-based copies.
  • European CAs were not satisfied with the response time to questions concerning the license format and content. There is a need for clarifying procedures and protocols.
  • The licenses issued for the shipment test had a series of formatting and content issues, e.g. the watermark was missing or HS Codes were only to be provided at a 4-digit instead of 6-digit level. The formatting discrepancies need to be adapted to fully reflect VPA provisions.
  • Due to the formatting issues and inconsistencies, the German and Dutch CAs would have rejected the test licenses.
  • The Spanish IT system required a particular number format to be given to the license. The FC changed the respective test license accordingly. The Spanish system will need to be adapted for processing other number formats – it works for licenses from Indonesia though.
  • Shipments from Ghana to EU ports take 3-4 weeks, which leaves limited time for licensing authorities to carry out investigations or corrective measures. By way of comparison, shipments from Indonesia take around 6 weeks.

According to the report, “the shipment test has initiated increased dialogue between Ghana and the participating CAs”. “Effective communication between the involved authorities” is considered crucial “for a functioning licencing scheme and especially the avoidance of delays at customs clearance in the EU”.

FC launches action plan to address issues

Taking feedback from the report and CAs into account, the FC has developed an action plan to address the issues mentioned above. Planned actions include:

  • Working through the private sector trade associations to communicate the need for prompt transmission of shipment documents to their importers
  • Training of exporters to exchange information on HS codes with their importers to ensure harmonisation prior to completion of export documentation
  • Developing a clear communication protocol, setting out response times, for dealing with queries from CAs and assigning staff of TIDD to a designated desk for this purpose
  • Ensuring continuous issuance of ‘mock licenses’ with every export permit issued as from May 1 2018 to ensure that all data gaps are closed and also that users of the system are thoroughly familiar with the requisite procedures
  • Working with the software service provider for the electronic wood tracking system to ensure that the necessary system upgrades are actioned at the earliest opportunity

The plan is to be implemented from March 2018 onwards.

Background

Ghana and the EU FLEGT Facility launched the shipment test procedures in autumn 2017, in preparation for the Final Joint Assessment of the GhLAS, which is to begin in May 2018. The shipment test does not mean that FLEGT licensing is imminent, although it indicates the country is getting close. The rationale behind carrying out the shipment test before the Final Joint Assessment was that potential issues could be addressed at an early stage rather than being raised during the Assessment.

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