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EuropeAid 1 Trade Facilitation in the Philippines: Testing the EC governance framework Political Economy at Work Brussels, 11-12 January 2011 Bryan Fornari.

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Presentation on theme: "EuropeAid 1 Trade Facilitation in the Philippines: Testing the EC governance framework Political Economy at Work Brussels, 11-12 January 2011 Bryan Fornari."— Presentation transcript:

1 EuropeAid 1 Trade Facilitation in the Philippines: Testing the EC governance framework Political Economy at Work Brussels, January 2011 Bryan Fornari Unit E2, EuropeAid, European Commission

2 EuropeAid 2 How did we get to the Philippines case study 1.General framework defined in the Reference Document Analysing and Addressing Governance in Sector Operations 2.Methodology being applied to Trade Facilitation as a pilot sector 3.Ongoing TF programme in Philippines tackling governance issues, but need to go beyond technicalities 4.Desk + field work to apply methodology to the Philippines context Involved in the exercise: Delegation, DEVCO E4+E2, ECDPM consultants

3 EuropeAid 33 The governance analysis framework Political system/government Rule making and executive actors at different levels Non-state actors Citizens, voters, consumers, user groups economic agents, elites, media… Checks and balances organisations Supervise sector organisations or handle complaints (auditors, judiciary, ombudsmen,…) Frontline service providers Public and private providers delivering services Core public agencies Sector ministries, agencies with regulatory or supporting roles, … Context Donors, international organisations Influence on sector governance and accountability relations Governance Accountability

4 EuropeAid 44 The TRTA 2 project in the Philippines 6.5 million, Project purpose: Support selected agencies and non-state actors to implement deeper integration into the international trading systems Some expected results: - Integrate 35 agencies into a National Single Window - Risk Management System enhanced - Custom Transit System at ports improved - Strengthened Bureau of Customs (including perception of its standards of integrity)

5 EuropeAid 55 The case study in practice – the process Longstanding involvement of the Delegation in the sector Programme already addressing governance issues Desk and field work – one week of meetings with key stakeholders (lead by Delegation + one consultant) Mix of Internal (EC) and external work/discussions

6 EuropeAid 6 STEP 1 – Key features of the context 6 LevelFeaturesIndicators/Sources Sector In customs emphasis on revenue generation TF with strategic plan but slow progress (resistance); greater automation BoC mistrusted within government, probs of principal-agent mechanisms, appointments by executive/legislative powers National and Export Development Plans Doing Business Indicators Strategic Action Plan of the Bureau of Customs National Economy heavily regulated; High corruption Public sector reform is slow, low salaries New Administration (fighting corruption) Congress with short mandates EC country assistance reviews, governance assessments, TI index Regional / Intnation al Pressure from globalisation for competitiveness, International and ASEAN commitments ASEAN TF Programme; WTO Trade Policy Review

7 EuropeAid 77 STEP 2: Mapping the actors Stakeholders: blurred boundaries Political system/govern ment Congress Executive body Non-state actors Media Importers/Exporter s Shipping Companies Producers Checks and balances organisations Judiciary Congress Commission on Audit Frontline service providers Customs officials Core public agencies Customs Authority, Trade Ministry Context Donors, international organisations EC, JICA, US Aid, ASEAN, WCO, WTO

8 EuropeAid 8 STEP 2: Mapping the actors 8 Cluster of Actors Key ActorsPower / Interests Driver of change Core Public Agencies Bureau of Customs (Department of Finance) – senior officials Holds key TF powers Interests: greater efficiency in TF, subject to budget and capacity constraints, need to improve image Potentially, with varying degrees depending on who in the top management Department of Trade and Industry Interest in improving TF, but little power to influence policy or performance; also prefers to concentrate on trade negotiations Limited (but potenital) driver of change Frontline Service Providers Customs officials Interest: interst to keep status quo for rent seeking, but image problem Overall resitance to change Non-State Actors: Private Sector Operators Exporters Interest: improved TF (while maintaining cosy status quo relationship with government) Weak driver of change MediaQuite independent, focuses on negative corruption stories Potentially can mobilise public opinion

9 EuropeAid 9 STEP 2: Mapping the actors Cluster of ActorsKey ActorsPower / InterestsDriver of change? Non-state actors Farmers/ Producers Little power to affect policy: lack of organisation, information on TF and capacity to build positions and lobby Driver of change Checks and Balance Organisations Judiciary Interest in persuing customs transgressors Driver of change but prob of capacity Checks and Balance Organisations Commission on Audit, Congress Political System / Government Congress, Senate Difficulty to pass TF legislation due to vested interest groups Limited driver of change International Organisations ASEAN, WCO, WTO Interest in TF harmonisation but little power at natl level Potentially, if mandate strengthened DonorsEC, JICA, US AidImproved TF, leading ulitmately to increased trade and development Driver of change

10 EuropeAid 10 Step 3: Analysing governance relationships Customs – Political system: o Annual targets based on revenue collection o System of appointments at all levels o Members of parliament formerly BoC Commissioners o Low salaries of customs staff would require major reform Private Sector operators – Customs o Limited involvement in reform issues o Focus on short term profit – privileged relationships Government – donors o Focus on technical issues to address governance o Limited leverage by donors, focus on supply-side

11 EuropeAid 11 Step 4: Summing up Cluster of Actors Key Features Key Strengths Opportunities Weaknesses Threats Major Trends Broader Context Globalisation and competition. New technology. New political leadership. Weak national accountability institutions. External pressure exists on Philippines to reform. External pressures (e.g. falling revenue) may end up making reform more difficult. Context is increasingly favourable. Jury is out on new administrations anti-corruption push Actors, interests and incentive s Strong political interests limit incentives for deep reforms. New president committed to fighting corruption, including in BoC Reformers may lack power against vested interests. Donor-driven technical reforms have had success, but future progress may require tackling governance issues. Governan ce Relations Cliental relations between BoC and politicians. Revenue targets for BoC. Accountability gaps in BoCs relations. Wide range of knowledgeable reform demandeurs, albeit currently unorganised and disparate. Lack of clear driver for deep governance reform in sector. Public apathy on prospects for real reform. Despite dynamic context and technical reforms, little change in underlying governance roles between key actors.

12 EuropeAid 12 Towards some conclusions / considerations The dichotomy between technical solutions and institutional change Look beyond TF at some key features (political influence, salaries, accountability) Encouraging private sector to be more engaged in reform, increasing accountability of BoC to stakeholders Building capacity of stakeholders (congressmen, academia, media) could also strengthen the demand side of governance Address overall corruption issues, not only within Customs

13 EuropeAid 13 More general questions about the tool Added value of the Governance Analysis Framework? It helps? Supports analysis / dialogue? How to improve it? Additional steps after the analysis?

14 EuropeAid 14 Some considerations Clarity of objectives: For who is the analysis? Donors, stakeholders, internal EC? Need for further reflection on how to engage with stakeholders on the use of the tool Timing: context specific (in case study, EC programme + new political developments) Format of study: Good mix of EC officials / external support. Delegation key role Approach in interviews: long preparation, ask right questions (in case study, good open dialogue with stakeholders) Methodology: difficulty in placing actors in specific categories Difficult balance for donors in supporting without being perceived as taking sides: from analysis to action is not easy…

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