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  December 19th, 2016 | Written by

Countdown to Trade Facilitation Agreement

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  • The final countdown begins for realizing Trade Facilitation Agreement.
  • Global deal that could boost global merchandise exports by $1 trillion per year.
  • The TFA will enter into force once two-thirds of WTO membership has accepted the agreement.

Dominica and Mongolia have ratified the Trade Facilitation Agreement (TFA), putting the total number of ratifications from members at 100. With ten more ratifications from members needed to bring the TFA into force, the final countdown begins for realizing a global deal that could boost global merchandise exports by up to $1 trillion per year by slashing trade costs and cutting red tape at the border.

The Trade Facilitation Agreement will enter into force once two-thirds of the WTO membership has formally accepted the agreement.

One immediate impact from entry into force of the TFA is that all developed country members of the WTO will start applying all of the substantive provisions of the agreement from the date it takes effect. Developing countries and least developed countries (LDCs) will also begin applying those substantive provisions of the TFA they have indicated they are in a position to do so from the date of entry into force. These commitments are set out in the Category A notifications which 90 members have submitted to date.

According to a 2015 study carried out by WTO economists, full implementation of the TFA would reduce members’ trade costs by an average of 14.3 percent, with developing countries having the most to gain. The TFA also has the ability to reduce the time to import goods by over a day and a half while also reducing time to export by almost two days, representing a reduction of 47 percent and 91 percent respectively over the current average.

Concluded at the WTO’s 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues and contains provisions for technical assistance and capacity building in this area.

Besides benefiting existing traders, implementing the TFA is foreseen to help new firms export for the first time. If the TFA is fully implemented, developing countries could increase the number of new products exported by as much as 20 percent, with LDCs likely to see a much bigger increase of up to 35 percent, according to the WTO study.

At the most recent meeting of the Preparatory Committee on Trade Facilitation, the chair Ambassador Mariam Md Salleh of Malaysia noted that “intense efforts are finally about to bear fruit”.

“With that moment [of the TFA’s entry into force] now being not far away—and getting closer with every deposited acceptance instrument—I urge all delegations which have not yet tabled their Category B and C notifications to hand them in as soon as possible,” the chair said.

A developing country member’s Category B notification lists the provisions the member will implement after a transitional period following the entry into force of the TFA. The Category C notification contains the provisions where a developing country member will need assistance and support for capacity building in order to implement these provisions on a date after a transitional period.

The TFA broke new ground for developing countries and LDCs in the way it will be implemented. For the first time in WTO history, the requirement to implement the agreement was directly linked to the capacity of the country to do so. In addition, the agreement states that assistance and support should be provided to help them achieve that capacity.

A Trade Facilitation Agreement Facility (TFAF) was also created at the request of developing and least-developed countries to help ensure that they receive the assistance needed to reap the full benefits of the TFA and to support the ultimate goal of full implementation of the new agreement by all members.