After trade agreements are signed by leaders and
regulations are published by government ministries, what is left is the prosaic
task of putting the agreements into practice.
This is the realm of trade facilitation, where the text is put into
action by governments.
At its core, trade facilitation consists of a change
in mindset for national customs authorities.
Historically, the customs authorities were the last line of defense
representing the fundamental expression of national sovereignty at the nation’s
borders. This is why the traditional
symbol of the customs authority is a gate.
Furthermore, the import duties collected by customs were a major source
of revenue for the national treasury.
All of this meant that the customs authorities historically focused on protecting
national borders and collecting duties, both reactive, defensive measures.
Trade facilitation, on the other hand, attempts to
recast the thinking of customs authorities from a reactive mindset to a proactive
mindset, at least in terms in import duties and other aspects of trade. This modern customs administration approach
views expediting trade as a greater priority.
Importers and exporters are to be assisted in legitimate trade, not
frustrated by defensive measures to protect national borders.
Yet despite decades of multilateral and regional
trade agreements, there remains a significant gap between the promise of the
agreements and their actual implementation on the ground. Hence more recent trade agreements have explicitly
incorporated the concept of trade facilitation in their texts. The
basic commitments of trade facilitation contained in these agreements consist
of (1) compliance with agreements, (2) transparency, (3) simplification, (4)
harmonization and (5) technical assistance.
The effectiveness of the ASEAN Economic Community
(AEC) will correspond to how ready ASEAN members in trade facilitation. The ASEAN Trade in Goods Agreement (ATIGA),
as well as some of ASEAN’s free trade agreements (FTAs) with its regional trading
partners such as Japan, contain trade facilitation term, as do Singapore’s
bilateral FTAs. Finally, the current
Trans Pacific Partnership and Regional Comprehensive Economic Partnership
negotiations both envision strong trade facilitation commitments as part of
their final texts.
The readiness of ASEAN members to take on trade
facilitation commitments can be viewed through the WTO
Trade Facilitation Agreement (TFA), which was concluded at the Bali
Ministerial Conference in December 2013.
The TFA will enter into force once two thirds of the WTO members have
completed their domestic ratification process.
To date twelve members – Niger, Nicaragua, Trinidad and Tobago, the
Republic of Korea, Hong Kong China, Singapore, the United States, Mauritius,
Malaysia, Japan, Australia and Botswana
– have notified the WTO that they have done so.
The TFA has three sections. Section I contains
provisions for expediting the movement, release and clearance of goods. It clarifies and improves Articles V, VIII
and X of the GATT 1994. Section II
contains special and differential treatment provisions for developing and
least-developed countries aimed at helping them implement the provisions of the
agreement. To invoke the special and
differential treatment provisions, countries must submit notifications to the
WTO indicating which TFA obligations they are willing to accept immediately
upon the TFA’s entering into force, and which obligations which will require
additional time to implement. Section
III establishes a permanent committee on
trade facilitation at the WTO and requires members to establish national
committees on trade facilitation.
Although it will be quite some time for the TFA to
take effect, by analyzing the notifications which had been submitted so far to
the WTO, we can see to what extent ASEAN governments feel comfortable with the
obligations imposed by the TFA. A
recent ESCAP study has done just that for the region and gives us an
indication of which aspects of the TFA will be more likely to be implemented by
Asian countries immediately and which will require more time. ASEAN’s
notifications are summarized graphically as follows:
Implementation of TFA (12) Articles
|
||
Full
|
Partial
|
|
Brunei
|
5
|
3
|
Cambodia
|
0
|
0
|
Indonesia
|
0
|
3
|
Laos
|
0
|
0
|
Malaysia
|
Fully Ratified
|
|
Myanmar
|
0
|
0
|
Philippines
|
7
|
4
|
Singapore
|
Fully Ratified
|
|
Thailand
|
4
|
8
|
Vietnam
|
2
|
7
|
The general commitments of the TFA fall within two
classifications, transparency and
fees/formalities.
Articles 1-5 of the TFA deal with general obligations
of transparency. Under these TFA
articles, WTO members agree to publish information and make it generally
available, as well as provide the public with the opportunity to comment on
measures and submit information before such measures take effect, and allow
other members to enter into consultations on the measures. WTO members also agree to issue advance
rulings on customs issues and other cross-border issues before shipments are
made, so that exporters and importers have greater certainty in doing
business. Finally, WTO members agree to
allow for appeals and review of customs decisions. Based on the ESCAP analysis, 56% of
notifications indicated general readiness to implement these TFA obligations.
Articles 6-12 deal with fees and formalities involved
in the customs clearance process. WTO
members are obligated to follow disciplines on fees and penalties. They also
must adhere to general principles on the release and clearance of goods.
Customs authorities of WTO members under the TFA must cooperate on border
measures. Finally, the TFA establishes rules for dealing with goods under
customs control, e.g., inward and outward processing of inputs, as well as
freedom for goods in transit. Based on
the ESCAP analysis, 51% of notifications indicated general readiness to
implement these TFA obligations.
The ESCAP paper conducted a more detailed analysis of
the notifications and found that Asian countries were more willing to commit to
the TFA’s obligations on procedures for review of appeal (Article 4), and
movement of goods under customs control (Article 9), as well as freedom of
transit (Article 11). However, Asian
countries were less willing to commit to TFA obligations to cross-border
exchanges of information and confidentiality.
Hence there are lower rates of notifications for food safety (Article
5.1), average release times (Article 7.6), authorized operators (e.g., trusted
traders) (Article 7.7), single windows (Article 10.4) and customs cooperation
on information (Articles 12.2, 12.5 and 12.6).
ASEAN countries will have quite some time before the
TFA takes effect. They will need that time.
ASEAN governments need more capacity building and resource development
(in both human resources and information management) if they are to implement
all aspects of the TFA. Moreover, they need to change the mindset of customs
officials from a defensive posture to a positive, business-friendly approach. In this way, the promise of trade agreements
can be transformed into reality.
