Harnessing the Benefits of the WTO TFA

08/02/2017

The imminent entry into force of the Trade Facilitation Agreement (TFA) creates a great opportunity for participating developing and least developed countries that are committed to implementing customs reform and opening their borders for business. If implemented, the TFA will create transparency and expedite the movement, release and clearance of goods, as well as secure effective cooperation between trade and customs authorities.

A feature of the TFA is that it provides developing and least developed countries a discretionary transition period for implementation of specific provisions once they have built up sufficient capacity. Businesses should be aware of the implementation schedules and use available resources to ensure commitments are being met in order to take advantage of what the TFA has to offer. As of 7 February 2017, 108 World Trade Organization (WTO) Members have ratified the TFA and only two more ratifications are required to enable the TFA to come into effect.

How will the TFA be implemented by developing and least developed countries?

Providing the flexibility for developing and least developed countries to identify the specific categories of TFA provisions that require a longer time for implementation and technical assistance for capacity building has costs and benefits. There will be inconsistent timeframes in implementation of the TFA that will create some costs due to complexity however, there will also be opportunities in those countries committed to implementation.

It is important for businesses to be aware of each participating country’s implementation schedule. The implementation schedules are based on three Categories of provisions: Category A includes those provisions implemented at the time the TFA enters into force; Category B includes provisions implemented after a transitional period following entry into force; and Category C includes provisions that require assistance and support for capacity building. Having an awareness of each country’s implementation schedule will help businesses to better evaluate their supply chains and trade costs.

Additionally, the TFA offers the Trade Facilitation Agreement Facility, a framework for developing countries to receive the needed technical assistance from developed nations. The TFA also allows countries a grace period within which to establish an understanding of the rules and procedures governing the settlement of disputes.

Here are a few of the TFA’s key goals:

  • Transparency: The TFA contains provisions requiring the publication and streamlining of laws, regulations and information pertaining to the movement of goods; the establishment of feedback channels on new and amended laws; procedures for administrative appeal and judicial review; and transparent advance ruling procedures. Member Countries will also be required to implement measures to enhance impartiality in relation to customs inspections and additional fees imposed on imports and exports.
  • Efficiency: The TFA introduces measures such as pre-arrival processing, electronic payments and post-clearance audits intended to secure the expedited release and clearance of goods. Special provisions for the proper storage of perishable goods are made to ensure their quick release in order to prevent avoidable loss or deterioration. In addition, the TFA aims to introduce a “single window”, whereby traders are required to submit documentation through a single entry point to participating authorities, to simplify import, export and transit procedures.
  • Heightened co-operation between Member Countries: The TFA aims to secure co-operation between Member Countries’ customs authorities and border agencies through various means including the exchange of information, reciprocity and bilateral and regional arrangements.

Is the TFA working for your business?

Given that both multinational businesses and small and medium sized enterprises (SMEs) operating in developing countries stand to gain from the TFA if their governments act, the following questions are worth considering:

  • Are the authorities in your jurisdiction actively identifying and amending regulations and procedures in order to facilitate the free transit of goods?
  • Are your jurisdiction’s border agencies coordinating with those of bordering WTO Member Countries to facilitate cross-border trade?
  • What are the authorities in your jurisdiction doing to improve transparency in relation to existing and amended regulations, customs procedures and advance ruling applications? Have the authorities established channels for feedback and consultation? Have any disciplines been established in relation to fees imposed on the import or export of goods?
  • Have the authorities in your jurisdiction adopted procedures to begin processing prior to the arrival of imports, with a view to expediting the release of goods upon arrival?

What can businesses do to take advantage of the TFA?

In order to effectively take advantage of the TFA businesses should consider:

  • Establishing a dialogue with the agencies in your country that are responsible for customs reform.
  • Reaching out to the representatives responsible for TFA negotiations and urge them to secure technical assistance and capacity building from the resources made available by the TFA framework.
  • Conducting the WTO Trade Facilitation Needs Assessment to identify what kind of technical assistance your country needs, and establish how long your government needs to implement the TFA.
  • Identifying the facilities and organizations available to countries that will assist with the implementation of the TFA. The following organizations offer a number of programs:
  1. Attend the OECD’s Trade Facilitation and Monitoring Workshop, which aims to equip policy makers and other participants on various trade implementation measures.
  2. Review UNECE’s Trade Facilitation Implementation Guide, an online portal that assists businesses in understanding TFA priorities and implementation strategies
  3. Reach out to organizations such as United Nations Conference on Trade Development, United Nations Economic Commission for Europe (UNECE) and Organisation for Economic Co-operation and Development (OECD), which offer workshops, guides and programs to build awareness on formulation of trade policies, negotiations and agreements
  • Galvanizing support from international donor assistance programs. Such programs include:
  1. The World Bank’s TFS (Trade Facilitation Support) program, which provides funding and grants to assist least developed countries meet the administrative costs imposed by the TFA; and
  2. The EU’s regular donations to the WTO trade facilitation trust fund to enable least developed country officials to participate in Trade Facilitation meetings.

Baker McKenzie - Eugene Lim and Frederick (Fred) R. Burke

Source: Lexology