By Melissa Miller Proctor
On February 22nd, the WTO’s multilateral Trade Facilitation Agreement (TFA) formally entered into force and is expected to usher in new trade facilitation reforms by each of the signatory countries including the United States. Multinational companies and companies eager to expand into global markets should anticipate significant regulatory changes ahead! The TFA is intended to reduce regulatory requirements, increase transparency in customs procedures, and expedite the international movement, release, and clearance of goods around the world. The TFA also calls for increased cooperation between the countries’ customs authorities on trade facilitation and compliance issues and provides technical assistance to developing and lesser developed countries. The WTO estimates that full implementation of the TFA by the signatory countries will reduce global trade costs by 14.3 percent, increase imports and exports by up to $1 trillion per year, reduce import clearance times by 47 percent, and slash export clearance times by 91 percent of the current average.
The TFA is divided into three separate sections. Section I focuses on the movement, release, and clearance of goods, and developed signatory countries have committed to immediately implement these TFA provisions upon its entry into force. Importers and exporters should expect to see new rules and regulations relating to the following:
- The release of goods before final determinations on duties, fees, and taxes owing are made
- Expedited customs release for certain air cargo and perishable goods
- Online publication of import and export procedures
- Automated customs processing including the use of electronic documents
- Acceptance of e-payments for duties, fees, and taxes
- Creation of a single window for customs clearance
- Assessment of customs fees based on the approximate cost of the services rendered
- Harmonized processes and standards for customs clearance
- Greater border agency and customs cooperation
- Opportunities for importers and exporters to comment on proposed trade facilitation rules
- Rights of WTO members to appeal customs administrative decisions
- Provision of technical assistance to lesser developed countries in their rollout of the TFA
Section II lays out the Special and Differential Treatment (SDT) provisions that will enable Developing and Least-Developed Countries (LDCs) to determine when they will implement the various provisions of the TFA, and to identify the provisions for which they will need technical assistance and capacity building support for implementation. LDCs are required to prioritize the TFA’s provisions into three separate categories according to specified timelines. Category A provisions are those that an LDC agrees to implement on the date of the TFA’s entry into force (or within one year thereafter). Category B provisions will be implemented by an LDC after a transitional period following the TFA’s entry into force. Category C provisions are those that will require technical assistance and capacity building support, and which will be implemented after a transitional period following the TFA’s entry into force.
Section III of the TFA sets forth the provisions for establishing a permanent WTO trade facilitation committee and will require members to create national committees to facilitate domestic coordination and implementation of TFA provisions.
The introduction and implementation of trade facilitation measures under the TFA will invariably result in new import and export regulations. Companies are urged to stay up to date on proposed rules as they are issued and the final implementation of new requirements in their home countries, in their suppliers’ countries and in the countries to which they plan to market their products—adjusting their policies, processes, and operations accordingly. Companies will also need to ensure that they can roll out new electronic protocols to enable them to submit trade documents and pay duties, fees, and taxes electronically through newly established automated single window processes.
If you have any questions pertaining to the TFA or other international trade issues, please feel free to contact a member of Polsinelli’s International team.