“Bureaucratic delays and ‘red tape’ pose a burden for moving goods across borders for traders. Trade facilitation—the simplification, modernization and harmonization of export and import processes—has therefore emerged as an important issue for the world trading system.” (WTO introduction on trade facilitation. 2017. WTO website)

Overview

The Trade Facilitation Agreement (TFA) was negotiated and concluded by WTO members at the Bali Ministerial Conference in December 2013. The said Agreement had been legally reviewed and finally adopted on November 27, 2014, in Geneva, which officially came into force on December 22, 2017, with the approval of two-thirds of WTO members.

The objectives of the Agreement include (1) facilitating trade, ensuring a balance between benefits and legal compliance; (2) promoting the movement, clearance of goods; (3) promoting cooperation between Customs and other agencies; (4) enhancing technical assistance and capacity building.

The General Council adopted the Protocol of Amendment of the WTO agreement (Marrakesh Agreement) on November 27, 2014, which inserts the WTO Trade Facilitation Agreement into Annex 1A of the WTO Agreement. Vietnam officially approved the content of this agreement on December 15, 2015.

Structure of the TFA

The TFA consists of 24 articles divided into three main sections that focus on expediting the movement, release, and clearance of goods (including goods in transit). In addition, the TFA regulations provide for effective cooperation between Customs and other authorities on trade facilitation and customs compliance. The Agreement also mentions technical assistance and capacity building in this area:

Part I: Provisions on technical measures in the publication and management of information, mainly consist of five main contents: a) Publication, ensuring access to information related to import, export and transit; b) Enhancing impartiality, non-discrimination, and transparency; (c) Promoting the movement, release, and clearance of goods, including goods in transit; d) Clarification and improving Articles V, VIII, and X of GATT 1994; e) Customs cooperation.

Part II: Provisions on special and differential treatments (SDT) for developing and least-developed countries (LCDs) which allow these countries to implement individual provisions of the agreement. They will be able to implement upon the receipt of technical assistance and support for capacity building. In order to benefit from SDT, a member of the Agreement must categorize each provision in the TFA and inform other WTO members of the specific timeline for implementation. There are 3 categories of commitment:

  • Category A contains provisions that the member will implement immediately upon the entry into force of the TFA Agreement, or within 1 year from the date of entry into force of the TFA for LDCs;
  • Category B contains provisions that the member will implement after a transitional period following the effective date of the TFA; and
  • Category C contains provisions that the member will implement after a transitional period following the effective date of the TFA and require the acquisition of technical assistance and support for capacity building.

While designating provisions as Group B and Group C, the member state shall specify the date of enforcement.

Part III: Institutional arrangements and final provisions. The institutional agreement stipulates the establishment of a permanent committee on Trade Facilitation in the WTO, which is in charge of periodically reviewing the operation and implementation of the Agreement, as well as the establishment of a Committee in each country who facilitates coordination within the country and implementation of the TFA. Final provisions detail the validity of the TFA Agreement, the obligations of the Member States in implementing the TFA Agreement, the legality of the Schedule A, B, C commitments; the reservation as well as the rules of dispute settlement.

The TFA has opened up new opportunities for developing countries and LDCs in the way they implement TFA. This is the first WTO agreement that allows WTO members to define their own implementation schedule and the progress of the schedule is highly dependent on the technical and financial capacities of each country. The WTO, the World Customs Organization, and the United Nations Conference on Trade and Development (UNCTAD) cooperate to provide technical assistance and support for capacity building. In tandem with the TFA, the Trade Facilitation Agreement Facility (TFAF) was issued in July 2014 to ensure that developing countries and LCDs would access the assistance in implementing the Agreement upon request.

Benefits of TFA

It is estimated that if the TFA is implemented comprehensively, trade costs will fall about 14.3%, while global trade will grow up to $ 1 trillion per year, the poorest countries in the world will be the most beneficiaries. Research and analysis by WTO economists in 2015 reported the benefits of implementing TFA:

(1) Relieving the bottlenecks in terms of high trade costs that have been isolating developing countries, widening the economic gap between countries and creating unevenly negative impacts on small and medium enterprises (SMEs);

(2) Simplifying, reducing the costs of customs and trade procedures, leading to a reduction in trade costs;

(3) Increase in the world export output (up to 2.7% per year) and the world GDP increases over 0.5% per year;

(4) Developing countries benefit from a growth of nearly US $ 1.9 trillion in exports, an increase of nearly 0.9 percent in economic growth per year;

(5) Diversifying products for export with new markets and wider array of products;

(6) The number of new exports increased by 20% in developing countries and by 36% in least-developed countries;

(7) Lightening the burden of administrative procedures on SMEs;

(8) Attracting more foreign investment (FDI);

The TFA proposes various measures to improve the transparency and predictability of cross-border trade and create the least discriminatory business environment, including consultation and appeal mechanisms. Provisions of the TFA improve the availability and disclosure of information on cross-border procedures; improve the rights of traders; reduction of fees and procedures related to import and export of goods; automation, digitalization in customs clearance; improve the conditions of freedom of transit of goods.

The implementation of the TFA in Vietnam

On October 13, 2016, the Prime Minister of Vietnam issued Decision 1969/QD-TTg approving the plan for preparation and implementation of the WTO Trade Facilitation Agreement. The Decision contains purposes, requirements, and a list of missions that are assigned to several ministries. Among others, the Ministry of Finance is the head agency that takes full responsibility for implementing the TFA.

According to Decision 1969/QD-TTg, relevant authorities are mainly obligated to:

  1. Public extensively and spread the news about the content of the TFA;
  2. Set up guidelines and detailed handbook for other state bodies about the TFA’s provisions and missions;
  • Build up schedule for implementing the agreement and ensure the consistency in applying and implementing;
  1. Classify commitments in Category B and Category C;
  2. Support enterprises to take whole advantages of the TFA as well as the technical assistance and capacity building provided by international organizations such as WTO, WB, WCO, UNCTAD, ADB…or by developed countries, i.e. the USA, Britain, Japan, and Australia;
  3. Report the implementing process to WTO;

Along with the Government’s direction, the General Department of Vietnam Customs established and launched an electronic trade portal named VTIP on July 12, 2017, with the help of World Bank group, for publicizing regulations and procedures on customs. Also, a lot of workshops and seminars related to the subject have taken place. At the APEC 2017-SOM 3 on August 16, 2017, the Ministry of Finance in cooperation with the General Department of Vietnam Customs held a workshop on “Enhancement of stakeholder engagement in the implementation of WTO TFA” to discuss and to expedite the co-working between Vietnamese Customs and regional Customs agencies within ASEAN.

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