Out-Law News 2 min. read

WTO trade facilitation agreement comes into force


The World Trade Organisation's (WTO) Trade Facilitation Agreement (TFA) has entered into force, aiming to cut customs-related red tape, simplify customs procedures and speed up the clearance of goods.

In what the WTO described as a "major milestone for the global trading system", the TFA received the final ratifications that it needed to reach two-third acceptance from the WTO's 164 members.

This launches "a new phase for trade facilitation reforms all over the world and creates a significant boost for commerce and the multilateral trading system as a whole", the WTO said.

Full implementation of the TFA is forecast to slash members' trade costs by an average of 14.3%, with developing countries having the most to gain, the WTO said.

The TFA is also expected to reduce the time needed to import goods by over a day and a half and to export goods by almost two days, a reduction of 47% and 91% respectively over the current average, the WTO said.

The European Commission welcomed the WTO announcement and said that EU customs authorities will play a leading role in the implementation of the agreement, acting "both as an example to follow and as an engine for further progress in trade facilitation within the EU and at international level".

The EU has committed €400 million to assist developing countries with making the reforms needed to comply with the rules set by the agreement, the Commission said.

WTO Director-General Roberto Azevêdo  said: "This would boost global trade by up to $1 trillion each year, with the biggest gains being felt in the poorest countries. The impact will be bigger than the elimination of all existing tariffs around the world."

Commissioner for trade Cecilia Malmström said: "Better border procedures and faster, smoother trade flows will revitalise global trade to the benefit of citizens and businesses in all parts of the world. Small companies, that have a hard time navigating daily bureaucracy and complicated rules, will be major winners."

Developed countries have committed to implementing the agreement immediately with a range of trade facilitation reforms including improvements to the availability and publication of information about cross-border procedures and practices, improved appeal rights for traders, reduced fees and formalities connected with the import / export of goods, faster clearance procedures and enhanced conditions for freedom of transit for goods. The agreement also contains measures for effective cooperation between customs and other authorities on trade facilitation and customs compliance issues.

The agreement allows developing and least-developed countries to set their own timetables for implementation, under a Trade Facilitation Agreement Facility (TFAF) that was created at the request of developing and least-developed countries. The TFAF aims to provide the assistance needed to reap the full benefits of the TFA and to support the ultimate goal of full implementation of the new agreement by all members, the WTO said.

These countries will immediately apply only the TFA provisions they have designated as 'Category A' commitments. For the other provisions, they must indicate when these will be implemented and what support is needed to help them do so. 

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