Trade facilitation in WTO terms refers to government procedures and controls that influence the speed and costs of movement of goods across national borders and efforts to reduce costs and improve efficiencies consistent with safeguarding legitimate regulatory objectives. In 2004 the WTO General Council adopted by consensus the negotiation’s framework known as the “July Package” that included Annex D – Modalities for Negotiations on Trade Facilitation. The opening paragraph states, “Negotiations shall aim to clarify and improve relevant aspects of Articles V (Freedom of Transit), VIII (Fees and Formalities Connected with Importation and Exportation) and X (Publication and Administration of Trade Regulations) of the GATT 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit. Negotiations shall also aim at enhancing technical assistance and support for capacity building in this area.”
The need for changes worldwide is evident from the World Bank’s “Doing Business” indicators from June of 2010. Procedural requirements for exporting and importing a standardized cargo of goods were analyzed for 183 countries based on the amount of paperwork, the days to get clearance for export and import and the cost per container to export and import. The U.S. numbers are typical of developed countries. Exports need four documents and imports needed five documents, with six days and five days, respectively, to export and import. The costs were $1,050 for exports and $1,350 for imports. Canada needs seven and 11 days at $1,600, while Mexico needs 12 days both ways at a cost of $1,420 for exports and $1,880 for imports. Saudi Arabia requires 13 and 17 days at a cost of $580 and $686, and Brazil needs 13 and 17 days at costs of $1,700. China needs 21 and 24 days at cost of just over $500. South Africa was at 30 and 35 days at a cost of $1,531 and $1,807, and Russia needs 36 days for each at a cost of $1850 each.
As with the rest of the negotiations, the trade facilitation language is a work in progress and is not final until all provisions are concluded. Special and differential treatment is provided for developing and least developed countries. The proposed language includes making procedures and fees readily available including on the internet with an “entry point” to easily answer reasonable inquires from governments, traders and other interested parties. A reasonable amount of time should occur between announcing changes in rules and their entry into force. New procedures will be established for advanced ruling on issues. An appeals procedure for administrative decisions would be established, including court appeals. An import alert/rapid alert system could be established to address animal health, plant health or food safety issues. Fees and other charges should be related to the cost of services, and disciplines should be related to the seriousness of the problem.
An electronic processing system would be created for pre-arrival processing of documents. Procedures should allow for release of goods before all customs duties, fees, taxes and charges have been paid if a guarantee of payments is provided. A risk management system for border control would be established with a focus on the highest risk areas. Air cargo should be provided with an expedited process if the operator has a good record of compliance. Border control officials should coordinate with other officials to facilitate movement. Relevant international standards would be used when appropriate. A “single window” is to be created to submit documents or data for goods at a single entry point. Countries would not require mandatory use of customs brokers. Goods in transit would only be assessed an administrative fee consistent with the cost of services provided. A WTO committee on trade facilitation would be established.
Trade facilitation is not just a WTO issue. U.S. Trade Representative Ron Kirk speaking recently to the U.S. Customs and Border Protection Annual Trade Symposium noted trade facilitation issues in the Trans-Pacific Partnership (TPP) free trade agreement negotiations and with the Asia-Pacific Cooperation Council (APEC). On the TPP FTA, Kirk said, “…it will also feature cross-cutting issues not tackled in previous trade agreements. These include promoting connectivity to deepen the links of U.S. companies to emerging Asia-Pacific production and distribution networks; increasing the compatibility of regulatory systems of TPP countries so that U.S. companies can operate more seamlessly in these markets…” He followed with comments about APEC, “You and your customers may also be pleased to know that APEC is working to reduce the time, cost, and uncertainty of moving goods through the Asia-Pacific region with the Supply Chain Connectivity Action Plan.”
Trade facilitation cannot be pursued without considering border security. Since the terrorist attacks of September 2001, the U.S. government has had to strike a balance between the flow of goods and security threats. Some traders have said there is too much emphasis on security, but that is not likely to change. In a late-March ceremony in El Paso, Texas, four area Customs and Border Protection (CBP) officers received the Trade & Facilitation Award for their work on a cargo diversion program at the Ysleta Port of Entry. That was a small recognition of the trade facilitation mission of CBP as being equal to the enforcement mission.
The response to the chairs’ documents has been less than enthusiastic and resulted in renewed talk of a “limited” Doha proposal fashioned from what can be agreed to at this point. The trade facilitation draft text has plenty of bracketed text where issues need to be resolved, but all importers and exporters benefit from trade policy changes that allow trade to flow more efficiently by removing paperwork and regulatory bottlenecks. Regardless of what happens to the rest of the Doha trade policy agenda, trade facilitation is worth the extra effort to achieve an agreement.