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Global Agreement to Lower Customs Barriers to Trade Takes Effect

Thursday, February 23, 2017
Sandler, Travis & Rosenberg Trade Report

A globe-spanning agreement designed to speed international trade and significantly lower costs for importers and exporters took effect Feb. 22. The World Trade Organization’s Trade Facilitation Agreement aims to standardize, streamline, and accelerate customs processes around the world, thus helping to expedite the movement, release, and clearance of goods. The TFA was concluded at the WTO’s 2013 ministerial conference and has now been ratified by two-thirds of organization members.

The Office of the U.S. Trade Representative has said the TFA includes provisions on the following issues.

- publication of laws, regulations, and procedures

- Internet publication of practical steps to import, export, and transit goods
- providing information and opportunity to comment on new laws and regulations before implementation
- providing advance rulings
- enhanced rights of appeal
- notifications of detained goods
- disciplines on fees and charges
- penalty disciplines to prevent conflicts of interest
- pre-arrival processing of goods
- use of electronic payment
- use of guarantees to allow rapid release
- promoting risk management
- creating authorized economic operator programs
- procedures for expedited shipments
- quick release of perishable goods
- reducing documents and formalities
- utilizing common customs standards
- promoting use of the single window
- uniformity in border procedures and documents
- temporary admission of goods
- simplified transit procedures
- customs cooperation

Developed country WTO members have committed to immediately implement the TFA, but many if not most of these countries were already largely in compliance. Sources say the U.S. believes it has met its obligations under the agreement and is therefore not required to make any changes.

Developing countries and least-developed countries, on the other hand, will immediately apply only those TFA provisions they have indicated they are in a position to do so. These members will then have the flexibility to tailor their remaining implementation schedules according to their specific needs and capacities. A TFA Facility has been created to provide any needed capacity building assistance.

Studies have estimated that the TFA could cut trade costs by nearly 15 percent for low-income countries and 10 percent for high-income countries, increase global trade flows by up to $1 trillion a year, and create up to 20 million jobs. The WTO states that the agreement is also likely to shorten the average times needed to import goods by more than a day and a half (47 percent) and to export goods by nearly two days (91 percent).

The WTO has said the majority of TFA benefits will accrue to developing and least-developed countries. These include economic diversification, with the number of new products exported increasing by as much as 20 percent for developing countries and 35 percent for LDCs; access to new markets, which could increase by 30 percent for developing countries and 60 percent or more for LDCs; and improvements in trade facilitation structures that could help these countries improve their participation in global value chains, attract more foreign direct investment, reduce the scope for corruption, and increase the amount of revenues collected.

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