Bali High: Customs Treaty First WTO Agreement Since 1995 Founding

International Trade & Customs Update

Date: January 06, 2014

On December 16, 2013 in Bali, Indonesia, the World Trade Organization (WTO) announced that its 159 members had agreed on a wide range of measures to reduce bureaucratic delays, simplify customs procedures, reduce costs and improve efficiency in global trade. The WTO Trade Facilitation Agreement (TFA) should reduce costs for developed countries by 10 percent and for developing countries by 15 percent, resulting in global GDP gains of nearly $1 trillion. Under the TFA, the United States could increase its GDP by 3 percent and exports by 11 percent.

The TFA marks the first time in WTO history that consensus has been reached on a membership-wide agreement since the WTO’s 1995 founding and represents the first tangible results of the Doha Development Agenda, the WTO’s fourth ministerial conference launched in Doha, Qatar in 2001. Before the TFA, momentum for trade agreements had increasingly shifted away from the WTO toward bilateral and regional trade agreements. Adopting the TFA, WTO Director-General Roberto Azevêdo stated, will help restore faith in the WTO and bolster multilateralism. President Barack Obama agreed, adding that the TFA “represents the rejuvenation of the multilateral trading system that supports millions of American jobs and offers a forum for the robust enforcement of America’s trade rights.” Once implemented, the TFA will allow U.S. companies and manufacturers, including small- and medium-sized businesses, to cut through red tape and expand their export markets. For brokers, shippers and other logistics providers, the TFA will reduce unnecessary paperwork, reduce border-related impediments and expedite the movement of goods.

TFA Benefits

The TFA creates binding commitments for all WTO members to expedite the movement, release and clearance of goods, increase customs efficiency, cut high transaction costs and reduce documentation requirements. The TFA will require both developing and least-developed countries to implement reforms and procedures for enhanced customs cooperation and will provide technical assistance to the least developed countries for TFA implementation.

The TFA addresses these customs topics:

  • Publication of Laws, Regulations & Procedures
  • Internet Publication of Practical Steps to Import, Export and Transit Goods
  • Enquiry Point for Trade Information
  • Information on New Laws & Regulations Before Implementation
  • Provision of Advance Rulings
  • Enhanced Right of Appeal
  • Notification of Detained Goods
  • Disciplines on Fees and Charges
  • Penalty Disciplines to Prevent Conflicts of Interest
  • Pre-Arrival Processing of Goods
  • Use of Electronic Payment
  • Use of Guarantees to Allow Rapid Release
  • Promoting Risk Management
  • Creation of Authorized Operator Schemes
  • Procedures for Expedited Shipments
  • Quick Release of Perishable Goods
  • Reduced Documents and Formalities
  • Utilizing Common Customs Standards
  • Promoting Use of Single Window
  • Uniformity in Border Procedures & Documents
  • Temporary Admission of Goods
  • Simplified Transit Procedures
  • Customs Cooperation
  • Facilitate Developing Country Implementation

The United States demanded coverage of several of these topics – including advanced rulings, Internet publication, expedited shipments and penalty disciplines. The availability of a country’s trade, transit and customs procedures and documents on the Internet will improve transparency. Establishing and maintaining procedures for expedited shipping through air cargo facilities will minimize documentation requirements and quicken the release of goods after arrival. Many of the TFA provisions are expected to reduce (if not eliminate) opportunities for bribery and corruption by customs officials.

TFA Implementation

Much work remains to be done to implement the TFA. A WTO Preparatory Committee will perform a legal review of the TFA and prepare a protocol for adoption no later than July 31, 2014. At that time, the protocol will be open for approval until July 31, 2015. The TFA will enter into force once two-thirds of the WTO members have signed the protocol. The U.S. Trade Representative has stated that the TFA does not require congressional approval.

WTO’s Post-Bali Agenda Unclear

Beyond the TFA’s implementation, the WTO’s “post-Bali” agenda is less clear. The TFA itself calls for “a clearly defined work program on the remaining Doha Development Agenda issues.” There will be an informal meeting later this month, where trade envoys hope to identify issues for further discussion. WTO Director-General Azevêdo is encouraging member countries to move past topics addressed in the TFA and renew efforts to implement other aspects of the Doha Development Agenda.

U.S. trade officials have indicated that it is too soon to accurately predict next steps. One official stated that the TFA, while historic, covered the “easy stuff” and that key issues of the Doha Development Agenda, such as agriculture and tariff negotiations, “will be very difficult.” Enhancements to the Trade in Services Agreement, industrial tariffs, agricultural market access and the Information Technology Agreement are just a few of the issues to be addressed in the WTO’s post-Bali agenda.

FOR MORE INFORMATION

For more information, please contact:

Charles A. Hunnicutt
202.263.4148
Charles.Hunnicutt@ThompsonHine.com

David Michael Schwartz
202.263.4170
David.Schwartz@ThompsonHine.com

Scott E. Diamond
202.263.4197
Scott.Diamond@ThompsonHine.com

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