WTO Agreement on Trade Facilitation - Highlights, Benefits & Challenges

WTO Agreement on Trade Facilitation - Highlights, Benefits and Challenges

  "Unequal Partners on level Playing Fields"

 

 

Today, USA and India reached an understanding on Food Security and this has cleared the way for much awaited WTO Agreement on Trade Facilitation.

I am placing before you  the Highlights of the Agreement on Trade Facilitation and its impact on your business.  

Good News for Most:

It is good news for those who are efficient and believes in proper documentation and systems.

This will help in faceless transactions means through emails and internet.

Bad News for some:

It is bad news for those who are inefficient, does not have systems and lacks transparency in their operations.

The purpose of Agreement on Trade Facilitation is to increase the velocity of trade it means competition will increase and efficiency and system oriented approach will survive in highly competitive market place. 

Unfortunately, for some, now delaying tactics and lobbing with governments will be of little help.  

Pl. read the Article by Article summary below and also what you have to do now:

Article	Issue	Scope	Examples of benefits for  traders
1	Publication and availability of information	Members will be required to publish information on their customs procedures, including the forms, fees and charges applicable to importation. Members must also establish Enquiry Points to answer questions and provide documentation.	Traders will be able to access forms and information on customs procedures on the internet. This will create quick and cheap access, and certainty about how their goods will be treated at the border. If traders have questions about customs procedures, they will be able to seek answers from a country’s enquiry point.
2	Opportunity to comment, information before entry into force, and consultations	Members will be required to provide an opportunity for traders to comment on new or amended customs laws and regulations, and to allow a reasonable period of time between their publication and entry into force.	Any WTO member government and traders will be given the opportunity to comment on new or amended customs legislation of other countries. Traders will be given time to adapt to new customs requirements.
3	Advance rulings	Members’ customs authorities will be required to provide rulings to traders, upon written request, confirming how the trader’s goods will be treated upon arrival to that country, e.g. how the goods will be classified.	Traders will be able to access rulings on the tariff classification of their goods, prior to exportation. This will provide traders certainty about the treatment and tariffs their goods will incur, preventing disputes at the border.
4	Procedures for appeal or review	Members will be required to provide appeal mechanisms to challenge the decisions by customs on goods, including rights to further appeal or review for traders if the decision on appeal is taking too long.	Exporters will have more rights in instances where the customs authority has failed to make a decision, or where the appeal processes are unreasonably long.
5	Other measures to enhance impartiality, non-discrimination and transparency	Sets disciplines for how Members operate systems for border controls to ensure that controls aren’t strengthened or maintained unnecessarily. Members would also be required to notify exporters if their goods are detained.	If any goods are detained for customs inspections, they will be notified.
6	Disciplines on fees and charges imposed on or in connection with importation and exportation and penalties	Members will be required to limit fees and charges to the cost of services and ensure that penalties are commensurate with the degree and severity of the breach. They will also be required to provide an explanation for any penalties imposed for a breach of customs laws.	Traders that have been subjected to penalties will receive explanations of the penalties. The penalties must be linked to the severity of the breach. Conflicts of interest with customs officials will be minimized.
7	Release and clearance of goods	Members will be required to establish procedures and objectives for customs authorities to draw upon to clear goods. The article contains nine disciplines, covering: pre-arrival processing of import documents; electronic payment; allowing goods to be released where the amount of duty still hasn’t been determined; the use of risk management procedures and post clearance audits to minimize inspections; tracking of average release times; the establishment of authorised operator schemes and expedited shipment schemes; and procedures to be used for perishable goods.	Exporters will have the option of submitting all necessary paperwork prior to the arrival of their goods in the export market, to speed up their release time Exporters will be able to take advantage of electronic payment options Border inspections should become less frequent due to the enhancement of risk management and post-clearance audit, reducing trade costs for exports Under the perishable goods provision, Customs will prioritize the examination and release of perishable goods, helping agricultural exporters.
8	Border agency cooperation	Members’ border agencies will be encouraged to cooperate domestically and with their counterparts in neighbouring countries.	The duplication of controls between border agencies will be decreased, reducing the costs and effort for traders trying to pass their goods through borders.
9	Movement of Goods Intended for Import under Customs Control	Members will be required to allow goods intended for import to be moved within its territory from one customs office to another, to the point where the goods would be released or cleared.	Goods will be able to enter territories at the most convenient point and move the goods throughout the territory, prior to clearance.
10	Formalities connected with importation, exportation and transit	Members will be required to streamline and simplify formalities (ie. forms and customs checks) connected with trade and remove some unnecessary requirements or constraints in the import/export process. Members are encouraged to establish/maintain a ‘single window’.	Customs processing will be cheaper and easier for traders.
11	Freedom of transit	Members will be required to minimize restrictions on goods transiting through their territories (e.g limitations on the amount of guarantee requested).	Exporters to land-locked countries will benefit from easier and cheaper transit regulations.
12	Customs cooperation	This provision relates to the sharing of information between governments to verify information on specific imports or exports. For example, Members shall hold all information or documents provided by the requested Member strictly in confidence, respect any case-specific conditions set out by the requested Member regarding retention and disposal of confidential information or documents and personal data; and upon request, inform the requested Member of any decisions and actions taken on the matter as a result of the information or documents provided.	This provision is primarily intended to benefit customs administrations rather than traders, and will provide the WTO Member Government with a mechanism to seek information from foreign customs administrations in cases where the truth or accuracy of information submitted by an importer/exporter is in doubt.
13-22	Special and differential treatment	Section II of the Agreement provides developing and least-developed countries with special and differential treatment to other WTO Members in its implementation requirements.	These articles are primarily intended to benefit least-developed countries. Under Article 20, Members are obliged to recognize the special situation of least-developed countries to protect them from unnecessary disputes. Under Article 21, donor countries are encouraged to help developing and least-developed countries build their sustainable capacity to implement to their commitments.
23	Committee on Trade Facilitation	This provision requires all Members to establish/maintain a National Committee on Trade Facilitation.	This provision is intended to ensure Members facilitate domestic coordination and implementation of the provisions of the agreement

What you and your company has to do now?

1. Read the agreement in detail and understand its implications for your business - from both aspects as opportunity as well as from emerging competition. If you need any help pl. contact the author

2. Please do not wait till final agreement is signed because you will also need time to gear-up your internal systems. The day it is implemented you will not get time to react because all are eying Indian market and markets will be flooded.

3. Focus on how to minimize ttransaction costs: Develop  systems oriented organizations with minimum dependency on individuals and discretionary powers. Delayed response time due to egos, silo and compartment culture and personal priorities will be reduced due to online systems approach. Any inefficiency in systems will cost you in market place. As you are aware, our customer is not interested in our internal challenges, she or he is looking for solution to his or her problems. 

Do let me know, if any help is required to study the implication of this new agreement on your business interests. and to understand implications or on how to develop systems under new trade regime.

Wishing you all the best for your future.

Do write your comments and feel free to share with your colleagues and well-wishers. 

Are you ready for the new trade regime, think about it?