Good news for traders: WTO Trade Facilitation Agreement enters into force

The TFA is designed to cut red tape and speed up the flow of good across borders. Under the agreement, member states of the WTO have agreed to accept e-payments, minimize requirement of imports and exports fees, and harmonize trade standards, as well as other measures to simplify trade between members. The TFA came into force in February 2017, following ratification by two thirds of the member states.

Ratification took place on the 22nd February 2017 after Rwanda, Oman, Chad and Jordan submitted instruments of acceptance of the TFA to the WTO. This brought the total number of acceptances to 112 out of a total of 164 members of the WTO.

This was a significant development in the global trading system. The TFA is expected to expedite the movement, release and clearance of goods across borders. It launches a new phase for trade facilitation reforms all over the world and creates a significant boost for commerce and the whole multilateral trading system.

The WTO has indicated that it expects implementation of the TFA to not only reduce the cost of trade (by 14.3% on average) and the time needed to import and export goods (thanks to streamlined Customs procedures) but also to add 2.7% to global exports by 2030, and create more jobs and growth on a global scale. Overall, the agreement demonstrates the commitment of the WTO member states to trade reform, and increased confidence in the multilateral trading system.

The World Bank Group continues to provide support developing and under-developed countries, assisting them to set up Trade Information Portals as part of their programs for the implementation of, and compliance with the TFA.

Trade Information Portals are expected to provide a critical tool to help traders to assess information relating to the import, export and transit of goods as per Article 1 of the TFA. Up until now, the WBG has supported various countries to set up information portals. These include the PDR of Laos, Bangladesh, Malawi, Cambodia, Lesotho, and Vietnam, among others. Assistance from the WGB is viewed as necessary to reap the full benefits of the TFA and to support the goal of full implementation of the new agreement by all members.

In Vietnam, the TFA was ratified by the Vietnam National Assembly on November the 27th 2015. During that time, the WBG provided technical assistance and support for the Vietnam Trade Information Portal (VTIP) to allow it to implement the provisions of the TFA. The VTIP is expected to help traders use information relating to the import, export and transit of goods more efficiently, which in turn will facilitate trade and compliance with the provisions of the TFA.

As part of the response to the TFA, the VTIP is designed for importers, exporters, logistics providers, and related Government agencies. It provides easy access to legislation, standardized procedures, and tariff related information. It is expected to reduce the risk of misunderstanding and confusion relating to import and export transactions, which may increase logistical delays at borders.

The VTIP will provide a “one-stop shop”, with an accessible, logical and helpful window for traders to access regulatory and procedural information. It is an important step to improving predictability and transparency of trading laws and processes that are considered greater predictability for traders. Transparency attracts investment.

The VTIP is in line with Vietnam’s commitment to its obligation as a member of the WTO to comply with Article 1 of the TFA. It also provides a tool for the Government of Vietnam and other stakeholders to help reduce, modernize and simplify regulations in accordance with international best practice. The VTIP is supported by the WBG, hosted by the General Department of Vietnam Customs (GDVC), with content developed by the PM Group. The VTIP is expected to be ready for launch by Q2, 2017.

The provisions of the TFA include improvements to the availability and publication of information about cross-border procedures and practices, improved rights of appeal for traders, reduced fees and formalities connected to the import and export of goods, faster clearance procedures and enhanced conditions for freedom of transit of goods. The TFA also contains measures for effective cooperation between Customs and other authorities involved in the facilitation of trade and Customs compliance issues.

The impact of TFA implementation will be a very significant step, and may be compared with the worldwide reduction and elimination of tariffs.

At the time of writing this review, the following WTO members had accepted and ratified the TFA:

Hong Kong China, Singapore, the United States, Mauritius, Malaysia, Japan, Australia, Botswana, Trinidad and Tobago, the Republic of Korea, Nicaragua, Niger, Belize, Switzerland, Chinese Taipei, China, Liechtenstein, Lao PDR, New Zealand, Togo, Thailand, the European Union (on behalf of its 28 member states), the former Yugoslav Republic of Macedonia, Pakistan, Panama, Guyana, Côte d’Ivoire, Grenada, Saint Lucia, Kenya, Myanmar, Norway, Vietnam, Brunei Darussalam, Ukraine, Zambia, Lesotho, Georgia, Seychelles, Jamaica, Mali, Cambodia, Paraguay, Turkey, Brazil, Macao China, the United Arab Emirates, Samoa, India, the Russian Federation, Montenegro, Albania, Kazakhstan, Sri Lanka, St. Kitts and Nevis, Madagascar, the Republic of Moldova, El Salvador, Honduras, Mexico, Peru, Saudi Arabia, Afghanistan, Senegal, Uruguay, Bahrain, Bangladesh, the Philippines, Iceland, Chile, Swaziland, Dominica, Mongolia, Gabon, the Kyrgyz Republic, Canada, Ghana, Mozambique, Saint Vincent & the Grenadines, Nigeria, Nepal, Rwanda, Oman, Chad and Jordan.