On
February 22, 2017, Roberto Azevedo, Director General of the World
Trade Organization, stood in front of the international press and
said: “I am very happy to announce that the WTO Trade
Facilitation Agreement (TFA) has now entered into
force.”
There
is indeed reason to be happy, if you consider that this marks the end
of a 13 year long negotiation and ratification process.
Section
I: Provisions for expediting the movement, release, and clearance of
goods, including goods in transit.
Imagine
the following: My friend Expo lives in Exland, close to a river which
marks the frontier with Imland. Just on the other side of the river
lives his friend Impo. Expo produces crops and vegetables. Every
Monday, he crosses the river by boat and visits his friend Impo. Impo
has a farm and criers cows. They trade with each-other: Expo sells
crops and vegetables to Impo and Impo sells milk and meat to Expo.
This
works quite well until Expo and Impo go beyond buying for themselves:
They buy stuff from each-other to sell it to their neighbors. This is
where it becomes complicated. The neighbors actually want to know
where the stuff comes from, be sure of its quality, and have a
recourse if the quality doesn’t meet their expectations. After all,
the neighbors don’t know both Expo and Impo personally, so why
should they put confidence in both if them?
Beyond
expectations, Expo and Impo still achieve satisfying all neighbors.
But the next problem is looming: Indeed, Impo has a neighbor who also
produces crops and vegetables – not actually the same but quite
similar ones. And Impo’s neighbor obviously doesn’t like Expo and
his products. He starts complaining with his neighbors, saying they
shouldn’t actually buy products from the other side of the river:
Not only does the transport deteriorate the quality of the products
but, in addition, neighbors should support each-other instead of
supporting people from the other side of the river, he says.
This
is how both Exland in Imland develop, over time, export-, import-,
and transit procedures. The TFA wants to streamline, simplify, and
standardize those procedures.
“Reductions
in time and costs to trade can make the difference between a country
seamlessly linking up to an integrated global production chain or
being left on the margins of a big part of world trade.”
Article
1 – “Tell me what you need!”
If
Exland and Imland put in place export-, import-, and transit
procedures, they must tell people what those procedures consist of.
If you have something to say today, you should do so over the
Internet, in a language that everybody (on the WTO planet)
understands.
Article
2 – “Let me comment!”
As
they are concerned by trade relations, Expo and Impo should be able
to comment on them.
Article
3 – “I am different!”
If
Expo’s or Impo’s goods are special, they should receive special
treatment, both with regard to tariff classification and origin of
goods rules.
Article
4 – “Let me complain!”
If
Expo or Impo are unhappy about customs decisions, they should be able
to complain.
Article
5 – “If you want a special control, you must tell me
before.”
Foods,
beverages, and feedstuffs might need special control – but Expo and
Impo should be know that before.
Article
6 – “I want to pay less fees and no penalties!”
Indeed,
but if they are appropriate and regularly reviewed, Expo and Impo
must accept them anyway. Penalties should remain what they actually
mean: A punishment for violating a rule. Expo and Impo should also
get a written statement of what they have done wrong.
Article
7 – If I know that I come tomorrow, can we start the
administrative stuff today? If I come every day, do we really need to
go through the same stuff every day? Can I leave early if I provide
guarantees?
On
the first question: Yes! On the second question: No! On the third
question: Yes!
Article
8 – Two border agencies – One frontier = 1.5 Formalities
Ideally,
2 – 1 = 1. But the WTO world is not ideal. At least, border
agencies should cooperate and, thus, achieve a result below 2.
Article
10 – Why do you bother me if you can have the same result
without bothering me?
Indeed
a legitimate question, which the WTO answers saying that “least
trade restrictive measures should be chosen where two or more
alternative measures are reasonably available for fulfilling the
policy objective(s) in question”.
Article
10 – “Modern technology and international standards are there to
be used! I don’t need a customs broker, I can do it alone!”
The
WTO applauds...
Article
10 – “No import = No taxes!”
Imagine
Expo only passes goods to Impo for him to (process or repair them and
subsequently) return or export them again. Why should anybody in
Imland bother or charge a fee? After all, nobody in Imland ever uses
the stuff.
Article
11 – “Transit means transportation charges. Full stop!”
This
expands on Article 10: If nobody consumes goods in Imland, Imland
cannot charge more than transportation charges. It can ask Expo for
guarantees as long as they are limited to those charges.
Article
11 – Let’s play a game: How many times do you have to read
the following sentence to understand it?
“Each
Member shall accord to products which will be in transit through the
territory of any other Member treatment no less favorable than that
which would be accorded to such products if they were being
transported from their place of origin to their destination without
going through the territory of such other Member.”
If
you need less then five times, you qualify for a WTO stuff member
position. Here is what I understand: The fact that goods are
transiting through another WTO member state is no reason for a less
favorable treatment of such goods.
Section
II: Special and differential treatment (SDT) provisions for
developing and least-developed countries (LDC)
Category
A provisions need to be implemented upon entry into force, Category B
provisions after a transitional period, and Category C on a date
after the transitional period.
Section
III: Permanent WTO Committee on Trade Facilitation
If
you cut red tape, you need even more red tape to fix the cut… This
is perhaps not fair – after all, there needs to be someone who
controls the cut if you want to the sure that somebody cuts at all.
It’s
actually funny that a treaty meant to combat administrative burden is
written in the worst administrative language that you can imagine.
But could this actually be different? I don’t think so: If
governments talk to each other, they use their administrative jargon.
And if they ultimately publish a result, why should such result be
any different?
Resource:
WTO
Trade Facilitation Agreement dated November 27, 2014