Agreement on Trade Facilitation (TFA) is a significant milestone in the World Trade Organization’s (WTO) efforts to reform global trade. Adopted during the Bali Ministerial Conference in December 2013 and entered into force on February 22, 2017, the TFA aims to expedite the movement, release, and clearance of goods across borders. It seeks to simplify customs procedures, make trade-related administration easier and more efficient, and reduce trade costs, thereby contributing to economic growth and development worldwide.
Objectives of the TFA:
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Simplify Customs Procedures
Streamlining customs regulations and processes for the efficient clearance of goods.
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Enhance Transparency
Making trade rules and processes more transparent to reduce trade barriers and costs.
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Reduce Trade Costs
Lowering trade costs for member countries, which is particularly beneficial for small and medium-sized enterprises (SMEs) and developing nations.
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Promote Cooperation
Encouraging cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
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Improve Appeal Rights
Establishing or maintaining procedures for appeal or review of administrative decisions regarding customs and trade facilitation.
Key Features:
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Section I:
Contains provisions for expediting the movement, release, and clearance of goods, including goods in transit. It sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
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Section II:
Deals with special and differential treatment provisions for developing and least-developed country (LDC) members. It recognizes that these countries may face significant challenges in implementing the TFA’s provisions and provides for flexibility and assistance.
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Section III:
Contains provisions for technical assistance and capacity building in the context of trade facilitation. It establishes a permanent committee on trade facilitation at the WTO and sets out requirements for information sharing between members regarding implementation.
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Section IV:
Covers the final provisions, including the need for a legal scrub and the protocol of amendment to insert the TFA into the WTO Agreement.
Implementation
TFA is unique in that it allows developing and least-developed countries to set their own timetables for implementing the agreement based on their capacity to do so. The implementation of the TFA is divided into categories A, B, and C, with each category defining the level of support and the timeline needed for implementation:
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Category A:
Contains provisions that a developing country or LDC member commits to implementing by the time the Agreement enters into force (or within one year after accession for acceding countries).
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Category B:
Includes provisions that a member will implement after a transitional period following the entry into force of the Agreement.
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Category C:
Encompasses provisions for which a developing country or LDC member will implement at a later date and requires technical assistance and support for capacity building to implement.
Impact and Benefits
TFA is expected to have a significant impact on global trade by reducing trade costs, enhancing participation in the global value chain, and improving transparency, thereby making it easier for businesses, particularly SMEs, to trade internationally. The WTO estimates that the TFA could reduce trade costs by an average of 14.3% and potentially increase global merchandise exports by up to $1 trillion per year. The agreement is also seen as an important step in achieving inclusive economic growth and providing a boost to commerce worldwide, especially benefiting developing and least-developed countries by providing them with the tools and support needed for effective implementation.
