We are living in an interconnected world where international trade helps countries scale up their own markets and gain access to commodities that are not available in their own country.
The role of international trade is more crucial in ensuring food security, which, according to the Food and Agriculture Organisation (FAO), is maintained when everyone consistently has physical and economic access to enough safe and nutritious food that meets their dietary needs and preferences for an active and healthy life.
Trade helps move food from surplus to deficit countries, increases the availability of food and reduces food prices, which in turn helps people avail themselves of safe and nutritious food needed for sustainable living.
To facilitate the trade process globally, levels of tariffs have been reduced significantly, and transportation and communication systems have made significant advancements.
But still there are trade barriers due to inefficient and overly burdensome administrative and regulatory procedures, most of which occur when agencies take non-tariff technical measures to regulate the import and export process.
The intent of the non-tariff technical measures is good. Through these measures, regulatory agencies want to provide legitimate safeguards against the import and export of products that pose any risk to consumer health and safety. They also want to protect plant and animal health and the environment.
The measures ideally do not contradict a simplified trade process. Problems arise when these measures create compliance burdens for businesses. The problem becomes more severe with increasing trade volume. It becomes nearly impossible for regulatory agencies to inspect all consignments due to their limited human resources and technical capacity. This problem has created more complexity in the import of sensitive products, which can pose risks to human and animal health and the environment.
Trade facilitation and RMS
The idea of trade facilitation – simplification, modernisation and harmonisation of export and import processes – emerged following concerns associated with trade barriers created by complex administrative procedures or ‘red tape’.
In 2013, the members of the World Trade Organisation (WTO), the intergovernmental organisation that regulates and facilitates trade, concluded negotiations on a Trade Facilitation Agreement (TFA), which came into force in February 2017 after ratification by two-thirds of member countries.
Bangladesh ratified TFA in September 2016 as the 94th member of WTO and 12th LDC country. The main objective of TFA is to accelerate the movement, release and clearance of goods. TFA sets out three categories of measures that need to be implemented by member countries within a timeline.
Risk Management System (RMS) is one of the key measures WTO TFA advised for simplifying the trade process. TFA called for applying risk-based selectivity to all participating government agencies, including customs. Paragraph 4.3 of Article 7 states that the risk management system has its application in customs and beyond customs: “Each Member shall concentrate customs control and, to the extent possible, other relevant border controls, on high-risk consignments and expedite the release of low-risk consignments.”
Globally, most customs authorities have transitioned to automated systems and adopted some form of risk-based clearance process. They consider specific shipments for inspection and scrutiny, while most shipments are cleared without any further processing or delay. The world has seen significant reductions in tariffs over the last two and a half decades due to this approach. In line with this, Bangladesh Customs has also already initiated a risk-based clearance process.
But prevailing non-tariff technical measures that are not under the jurisdiction of customs are the actual reasons for administrative delays and disruption in the trade process. The 100 per cent inspection principle of other government agencies, except customs, is highly time-consuming, costly and unfair to compliant traders.
To meet the obligations of TFA, Bangladesh must implement a risk management system by 30 June 2026. Additionally, international agreements such as the SPS Agreement, TBT Agreement and Kyoto Convention require a risk-based system to ensure a streamlined trading process.
Benefits of risk-based clearance
The United States Department of Agriculture (USDA) funded the Bangladesh Trade Facilitation Project (BTF), which supported Bangladesh from 2020 to 2025 in the C category measures of TFA, where Bangladesh requires technical assistance from other countries and development partners.
One of the key components of this project was supporting Bangladesh in implementing a risk-based clearance process. In line with it, BTF conducted a study to construct a hypothetical situation to understand the benefits of the risk-based clearance principle in the trade process. Several products were selected for analysis from four sub-sectors of agriculture, including plant, fisheries, livestock and processed food. The import process of these products has been analysed considering a mixed methodology.
For each item, time and clearance data from January 2023 to February 2024 were collected from the ASYCUDA system using the respective HS Codes. The calculation of the average release time under the 100 per cent inspection regime showed that times ranged from 4.45 days to 18.45 days, with the maximum release time for a product being 98 days.
According to risk profile analysis, none of these products are high-risk and consequently do not require 100 per cent inspection. Most are low-risk and some medium-risk products. If the risk-based clearance principle is applied, full physical inspection will not be required for any of these products.
The study showed three scenarios – existing 100 per cent inspection for all products, 30 per cent inspection for medium-risk products and 10 per cent inspection for low-risk products.
If 30 per cent physical inspection is applied for medium-risk and 10 per cent for low-risk products, average release times decrease significantly. RMS reduced average release times by around 70–85 per cent, ranging from 2.14 days to 3.6 days for medium-risk and 1.34 days to 2.75 days for low-risk consignments.
Longer clearance times and full inspections not only delay trade but also increase costs. Additional processes such as inspection and testing raise overall product costs, making them more expensive for consumers. One product in the study showed port demurrage of $276 per consignment. Testing fees for many products are also high, contributing further to costs.
International experiences show that countries have modernised import-export procedures by making them science- and evidence-based rather than implementing ad-hoc regulations. Risk management is widely practised. RMS does not compromise risk but identifies and manages it using scientific methodology.
While Bangladesh is struggling to improve its clearance process compared to relevant countries, the study shows that RMS alone can significantly reduce the hassle of clearing goods at port. Processed foods benefit most, as risk levels are low due to high processing.
The USDA-BTF study also found that costs can be reduced, market prices checked and efficiency improved. With growing trade volumes and limited human resources, RMS ensures that only high-risk consignments are scrutinised and the majority are cleared without delay. Inspection focus on high-risk products simplifies the process and makes the overall system easier for all parties.
Other regulatory agencies, especially agro-regulatory bodies handling perishable products, should adopt RMS to make procedures time- and cost-efficient. Agencies may focus on identifying risk levels for each product, developing compliance databases of traders, C&F agents and exporting countries, assigning risk thresholds and inspection rates, creating legislative tools, automating risk assessment, training officials for documentary checks, piloting gradual inspection reductions and establishing mutual agreements with key trading partners.
The author is Additional Communication and Advocacy Director at Business Initiative Leading Development. He also worked as the Technical Coordinator at the USDA-funded Bangladesh Trade Facilitation Project. He can be contacted at [email protected]
