The eleven TFIs are composed of several specific, precise, and fact-based variables related to existing administrative processes at the border and their implementation in practice (e.g. the average time between publication and entry into force of new or adjusted trade-related regulations, the proportion of trade transactions that can be processed in advance to the arrival of goods at the border, or the coverage of certified trader programmes). The indicators take values between zero and two, with two indicating the best trade facilitation policy environment which can be achieved.
The TFIs mirror the substantive provisions covered by Section I of the TFA, spanning TFA Article 1 (Publication and Availability of Information) through to Article 12 (Customs Co-operation). An additional OECD indicator going beyond the scope of the TFA has been added to capture elements of good governance and impartiality of border administrations.
The indicators can support policymakers in developed and developing countries alike to assess the state of their trade facilitation efforts, pinpoint challenges, and identify opportunities for progress.
The TFIs cover four main policy areas.
Transparency and predictability, which includes:
TFI (A) Information availability – publication of customs and trade-related regulations and information, feedback mechanisms, and specific functions for businesses (dedicated webpages/portals, user manuals etc.).
TFI (B) Involvement of the trade community – structures, guidelines, and frameworks for consultations with stakeholders.
TFI (C) Advance rulings – the rules and processes applying to prior statements by the administration to requesting traders concerning the classification, origin, valuation method, etc., applied to specific goods.
TFI (D) Appeal procedures – the possibility and modalities to appeal administrative decisions by border agencies.
TFI (E) Fees and charges – disciplines on the fees and charges imposed on imports and exports.
Automating and streamlining procedures, which includes:
TFI (F) Documents – harmonisation and simplification of trade-related documents, in accordance with international standards.
TFI (G) Automation – aspects such as the electronic exchange of data and use of automated risk management.
TFI (H) Procedures – aspects such as the streamlining of border control (inspections, clearance), implementation of trade single windows, or certified trader programmes.
Border agency co-operation, which includes:
TFI (I) Internal border agency co-operation – institutional frameworks, mechanisms, and IT systems for domestic co-operation between various border agencies.
TFI (J) External border agency co-operation – institutional frameworks, mechanisms, and IT systems for co-operation between various border agencies with neighbouring economies and other trading partners.
Governance and impartiality, which includes:
TFI (K) Governance and impartiality – transparency of customs structures and functions, as well as accountability and ethics policies.
The approach taken to scoring in the TFIs is to transform qualitative regulatory information into a multiple binary scheme where the top score (2) corresponds to the best performance: variables representing measures within each of the 11 aggregate TFIs are coded with 0, 1, or 2. These seek to reflect not only the regulatory framework in the concerned countries but also delve – to the extent possible – into the state of implementation of various trade facilitation measures.
Where variables depend on numerical answers, these are broken down on thresholds to which 0/1/2 scores are applied. A scoring system that assigns discrete numerical values according to some metric of performance requires determining thresholds for what is best, worst or in between. In most cases, there are “natural” thresholds, as for example for a variable such as the “Establishment of a national Customs website”. Thus, a country without a customs website will be assigned a score of 0; a country with a customs website will be assigned 1; and a country with a customs website which makes available a minimum set of information related to import or export procedures in one of the official WTO languages will be assigned a 2. In the cases where no natural thresholds can be identified, in order to reconcile the complexity of trade facilitation policies and implementation with the multiple binary scoring scheme, non-binary measures are broken down to multiple thresholds: if the variable is numerical in nature (e.g. percentage of trade transactions covered by pre-arrival processing; percentage of post-clearance audits; percentage of physical inspections; share of traders covered by certified trader programmes etc.), the score can be determined by its percentile rank (e.g. below the 30th percentile of the country sample, between the 30th and 70th percentiles, above the 70th percentile of the country sample).
The TFIs are derived by aggregating variables across each of the 11 composite areas. There are no hierarchies between variables. Within one aggregate indicator, variables are given equal weights. The TFIs represent a compromise between the comprehensive handling of the issues under review and the risk of including in the set certain variables for which the country coverage is incomplete.