WTO TFA (1/2)

This week´s blog focuses on the WTO Trade Facilitation Agreement (TFA) – the interview of a top expert on the topic, Mr. Bryce Blegen from the US.

Hi Bryce, thanks for agreeing to join the interview for the CBRA blog on supply chain security and trade facilitation. Today we will focus on the World Trade Organization Trade Facilitation Agreement (WTO TFA), also referred to as “WTO Bali Agreement”. Can you first tell who you are and what do you do?

My name is Bryce Blegen, I am one of the founders and the CEO of Trusted Trade Alliance LLC, a US-based global consultancy advising private-sector clients on trade compliance and cross-border optimization of their operations, and public-sector clients on trade facilitation and government-business collaboration.

OK, thanks for sharing that. Now, can you please explain the basic facts, objectives and current status of the WTO TFA?

The Trade Facilitation Agreement (”TFA”) is focused on the implementation of measures designed to increase international trade by mandating the use of more efficient border processing measures, leading to reductions in the cost of moving goods across borders. It was the primary outcome of the WTO’s 9th Ministerial Meeting in Bali in 2013 and the major concrete step to date in the ongoing Doha Round. After a near-death experience last year, the final text of the TFA was submitted as an amendment to Annex 1A for ratification of the WTO members in late November, 2014. It will go into effect when 2/3rds (approximately 108) of the WTO members have deposited their notices of ratification. As of today, only 4 have done so.

The TFA (the full text of which can be found along with a wealth of related material on the WTO website at https://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm) is divided into three sections:

Section I is the core of the agreement and contains detailed requirements for WTO members to expedite the cross-border movement and clearance of goods, including transit goods. It amends and expands on articles (V, VIII and X) of the GATT, and also sets standards for inter- and intra-governmental cooperation relating to the cross-border movement of goods.

Section II contains transitional provisions focused on developing and least-developed WTO member countries (LDCs) to determine whether they will need additional time to implement (Section 1) provisions of the Agreement and to identify areas where they may need assistance and support to do so.

Section III contains provisions which are mainly institutional in nature and come in to play after the TFA goes into effect, e.g. those empowering the WTO to establish a permanent committee on trade facilitation and requiring members to set up national stakeholder committees to oversee their domestic coordination and implementation of the TFA.

In your opinion, which areas, or, articles, of the WTO TFA are likely to have the biggest positive impact in trade facilitation in industrial and in developing countries?

Many of the ideas contained in the provisions in Section I of the TFA will be instantly recognizable to those who are familiar with the Kyoto and Revised Kyoto Conventions (“RKC”), and the building blocks of the World Customs Organization’s (“WCO”) “Customs in the 21st Century” vision document from a few years back.* And many of the concepts were indeed already touched upon in certain articles of the GATT. But after 9/11 the focus on streamlining cross-border formalities which existed in the 1990s in the US and other major trading countries began to change, due to prioritization of security in the international supply chain. More recently, this trend has continued with the increased focus on imported product safety in the last few years, and the ever-expanding number of pre-notifications, registrations, and electronic- and paper-based filing requirements which traders have to deal with if they want to successfully deliver their products to customers in another country.

Over the past decade or so, trade facilitation has evolved from a trade-focused idea—policies intended to grow national economies through fostering increased and more efficient international trade (measured by objective trade statistics and lower transactional costs), to more of a trader-focused concept--where governments, working alone or in concert at the WCO, set criteria and pre-requisites which traders must meet to earn or maintain facilitated cross-border treatment. This latter version of “trade facilitation” is most clearly embodied in the WCO’s Framework of Standards to Secure and Facilitate Trade (the so-called “SAFE Framework”), which itself represents an ever-evolving documentation of today’s inter-governmental consensus (via the WCO) on such pre-requisites for any given trader (indeed any given consignment) to be granted “trade facilitation” at the border.

The TFA’s mission is very clearly to shift the focus of national policies in respect to trade facilitation back to its original trade-focused idea--back to encouraging national economic growth by fostering trade as such. This is done in part by mandating use (in the provisions of Section I of the TFA) of internationally–accepted best practices (many already contained in the RKC and some taken account of in the SAFE Framework) in national cross-border operations. The primary impact of those provisions will be to create more of a level playing field for traders by promoting more or less standard border processes worldwide. But one of the most important Articles of Section I may turn out to be Article 10, the initial portion of which is quoted in full below (emphases added):


1         Formalities and Documentation Requirements

1.1     With a view to minimizing the incidence and complexity of import, export, and transit formalities and to decreasing and simplifying import, export, and transit documentation requirements and taking into account the legitimate policy objectives and other factors such as changed circumstances, relevant new information, business practices, availability of techniques and technology, international best practices, and inputs from interested parties, each Member shall review such formalities and documentation requirements and, based on the results of the review, ensure, as appropriate, that such formalities and documentation requirements are:

(a)      adopted and/or applied with a view to a rapid release and clearance of goods, particularly perishable goods;

(b)       adopted and/or applied in a manner that aims at reducing the time and cost of compliance for traders and operators;

(c)       the least trade restrictive measure chosen where two or more alternative measures are reasonably available for fulfilling the policy objective or objectives in question; and

(d)       not maintained, including parts thereof, if no longer required.

These prescriptions are quite clear and focus squarely on rapid clearance, reductions in cost for traders/operators, and mandate that the least trade-restrictive measure is chosen when alternatives exist. And that superfluous requirements be eliminated. These provisions are designed to foster trade as such, not just to facilitate trade for government-accredited trusted traders. Moreover, they do not apply (as does the RKC) to just Customs or a country’s border agency, but rather to the Member—the entire government. Furthermore, the formalities in scope are not just import-related—the language is broad enough in scope to include export restrictions relating to export controls, so we are talking about ALL cross-border measures. And the provisions are set to become the new default rule in the Member countries ratifying them—exceptions relating to supply-chain security, product safety and the like are not necessarily to be thrown overboard but are to be viewed in the restrictive light of this Article. The impression given is that this Article may restore some necessary balance to trade-impacting border policies in the post-9/11 era, and it will be interesting to see how it affects the continued evolution of the SAFE Framework and national policies implemented under it.


* For a detailed comparison of the TFA vis-à-vis the Revised Kyoto Convention, see “Old wine in new skins: analysis of the Trade Facilitation Agreement vis-à-vis the Revised Kyoto Convention” by Wolffgang, Kafeero in World Customs Journal, Vol. 8 No. 2 (2014).