Hard Brexit? Did WTO Rules just get better?
7th May 2017
Ratification of the WTO trade facilitation agreement is a great achievement and a landmark for trade reform because it will help to cut trade costs around the world. It should help simplify and clarify international import and export procedures, customs formalities, and transit requirements
Mike Wallis, Executive Chairman Spatial Global
The WTO implemented its first multilateral deal in its 21-year history after Chad, Jordan, Oman and Rwanda signed up, taking the number of member countries to 112, two more than the 110-minimum member threshold required for ratification.
A major milestone for the global trading system was reached on 22 February 2017 when the first multilateral deal concluded in the 21 year history of the World Trade Organisation entered into force. In receiving four more ratifications for the Trade Facilitation Agreement (TFA), the WTO has obtained the two-thirds acceptance of the agreement from its 164 members needed to bring the TFA into force.
Full implementation of the TFA is forecast to slash members' trade costs by an average of 14.3 per cent, with developing countries having the most to gain. This is because it’s likely to reduce the time needed to import goods by over a day and a half and to export goods by almost two days, representing a reduction of 47 per cent and 91 per cent respectively over the current average.
Under the agreement, member nations will have set import tariffs, will be required to reform customs bureaucracies to streamline import and export times and will abolish import quotas on trade with developing nations – with tariffs only applicable to imports exceeding specified limits.
Developing nations will also be afforded simplified rules of origin processes, agricultural subsidies and receive support in implementing the changes, using funding from the Trade Facilitation Agreement Facility.
WTO Trade Deal Greeted Enthusiastically by Freight Trade Bodies
The International Federation of Freight Forwarders Associations (FIATA), said its members were rejoicing at the TFA’s entry into force. FIATA said it was hopeful that “such a milestone agreement as the WTO TFA” would “turn the tide and remind governments that trade, and logistics at its service, are key stimuli to economic growth”.
The WTO TFA is hailed by the freight forwarding industry as a great achievement for the WTO and the international trading community. As the coin turns to implementation, FIATA and its members in 160 countries stand ready to play its part and collaborate with all governments as appropriate.
Steve Morris, FIATA’s Customs Affairs Institute (CAI) Chairman
International Port Community Systems Association Welcome the ratification
Hans Rook, chairman of IPCSA, commented:
Now the work really starts, in terms of how countries are going to implement its content. Port Community Systems are there to support member states in bringing to reality the simplification that the TFA envisages. We can support and advise on the implementation of simple and efficient operational processes, the seamless transfer of information and data, and clear, simplified interfaces between trade and government systems.
It said the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit, and also sets out measures for effective cooperation between Customs and other authorities on trade facilitation and Customs compliance issues. Countries will be obliged to put into place certain measures such as coordination at the border, Single Window, publishing tariffs, pre-arrival processing and transit schemes. The TFA further contains provisions for technical assistance and capacity building in this area.
Freight Transport Association’s head of global policy, Alex Veitch, warns there is more to do
“One requirement that the UK must implement as soon as possible is a Trade Facilitation Committee. This enables coordination among the public and private sectors and among users and providers of trade-supporting services. Having such a committee in place is an obligation under article 23 of the TFA.
BIFA welcomes entry into force of the WTO Trade Facilitation Agreement
Robert Keen, Director Genral of BIFA says:
This agreement aims to simplify and clarify international import and export procedures, customs formalities and transit requirements. It should make trade-related administration easier and less costly, thus helping to provide an important and much needed boost to global economic growth."
If better border procedures and faster, smoother trade flows result from the agreement and help to revitalise global trade, BIFA members, which facilitate much of the UK’s visible trade, will benefit.
We shouldn’t forget that it has taken 16 years to get to this point and are left wondering how the world’s trading activity, in which BIFA members have a vested interest, would have developed had it not taken quite so long to get where we are today."
Of course, of late, some nations have made it clear that they intend to scale down multi country free trade deals and switch to bilateral relationships, marking a return to the bad old days of protectionism."
BIFA believes that the world has benefited immeasurably from liberalised trade. Not only has consumer choice been enriched in many countries, but also out-sourcing of production has brought valuable employment to developing economies throughout the world. BIFA members have worked to bring these products to the UK and taken UK production to customers abroad."
As of 22 February 2017, the following WTO members have accepted the TFA:
Hong Kong China, Singapore, the United States, Mauritius, Malaysia, Japan, Australia, Botswana, Trinidad and Tobago, the Republic of Korea, Nicaragua, Niger, Belize, Switzerland, Chinese Taipei, China, Liechtenstein, Lao PDR, New Zealand, Togo, Thailand, the European Union (on behalf of its 28 member states), the former Yugoslav Republic of Macedonia, Pakistan, Panama, Guyana, Côte d’Ivoire, Grenada, Saint Lucia, Kenya, Myanmar, Norway, Viet Nam, Brunei Darussalam, Ukraine, Zambia, Lesotho, Georgia, Seychelles, Jamaica, Mali, Cambodia, Paraguay, Turkey, Brazil, Macao China, the United Arab Emirates, Samoa, India, the Russian Federation, Montenegro, Albania, Kazakhstan, Sri Lanka, St. Kitts and Nevis, Madagascar, the Republic of Moldova, El Salvador, Honduras, Mexico, Peru, Saudi Arabia, Afghanistan, Senegal, Uruguay, Bahrain, Bangladesh, the Philippines, Iceland, Chile, Swaziland, Dominica, Mongolia, Gabon, the Kyrgyz Republic, Canada, Ghana, Mozambique, Saint Vincent & the Grenadines, Nigeria, Nepal, Rwanda, Oman, Chad and Jordan.