On Saturday, 7 December 2013, the Ninth Ministerial Conference of the World Trade Organization (WTO) announced the successful conclusion of an agreement on Trade Facilitation (Agreement) — an agreement that is intended to streamline customs clearance procedures around the world by imposing new multilateral disciplines on customs procedures in all member countries. The Agreement imposes basic globally applicable principles for transparency, due process, and reasonableness in the development and implementation of customs clearance requirements.
This Trade Facilitation agreement is the first new agreement applicable to all WTO members since the formation of the WTO in 1995. Trade leaders and business representatives around the world have lauded the Agreement and stated it should lead to substantial gains in wealth and job formation for developed and developing countries alike. U.S. Trade Representative Michael Froman estimates that the potential cost reductions to businesses arising from the Agreement will be as much as 10 percent for developed countries and even more (15 percent) for developing countries. Estimates of the total value of such cost reductions for global GDP are about US$1 trillion, and earlier this year, the International Chamber of Commerce estimated that a successful Trade Facilitation agreement would result in an additional 21 million jobs worldwide, with developing countries gaining more than 18 million jobs and developed countries increasing their workforce by three million.1
Summary of Agreement
Key provisions of the Trade Facilitation agreement include:
- Transparency — WTO Member States are committed to publishing all importation, exportation, and transit procedures for points of entry; applied rates of duties and taxes; fees and charges by government agencies associated with importation and exportation; rules for the classification and valuation of products for customs purposes; penalty provisions for breach of customs procedures; procedures for appealing customs decisions; agreements with any countries relating to importation, exportation, and transit; and quota administration procedures. Member states further commit to make much of this information available on the Internet, where possible, in one of the official languages of the WTO.
- Public comments — Member states are committed to providing an opportunity for traders and other interested parties to comment on proposed regulations related to the movement, release, and clearance of goods prior to the implementation of such rules.
- Advance classification and country of origin rulings — Member States are committed to issue advance rulings, upon request, regarding the classification and origin of goods to be imported into their territory and to make such advance rulings available to the public, taking into the account the need to protect commercially confidential information. Member states are also committed to provide any person to whom an administrative decision has been issued a method of appealing such decision, either by administrative or judicial review.
- Transparency in inspection, detention, and audits — Member states are committed to bringing greater transparency to their procedures for inspection, detention, and audits of goods crossing their borders.
- Authorized operators – Member states are committed to providing additional trade facilitation measures, such as low documentary and data requirements, low rates of inspection, and rapid release times, to authorized operators (operators with a strong record of compliance, internal controls, financial solvency, and supply chain security).
- Disciplines on fees and charges — Member States committed to keeping fees and charges (other than export or import duties and taxes) limited to the cost of carrying out the activities associated with importation or exportation.
- Disciplines on penalty actions — Member states are committed to imposing penalties for the breach of customs rules only upon responsible persons and to provide a written explanation of the grounds for imposing such penalties; member states are also encouraged to accept and offer mitigation for voluntary self-disclosures of customs breaches.
- Streamlined entry procedures, including electronic entry — Member states are committed to establishing procedures for pre-processing import documentation; for electronic payment of duties, taxes, fees and charges; release of goods under bond; and expedited import and export procedures for authorized operators.
- Free transit of goods through member territories — Member states are committed to allowing the free transit of goods through their territory and to treat goods that have traversed the territory of third-party states on a non-discriminatory basis.
- Information sharing — Member states are encouraged to share information on best practices in managing customs compliance and to exchange information for the purpose of verifying declarations, where there are reasonable grounds to doubt the truth or accuracy of such declarations.
The Agreement is expected to enter into force by 2015 and, upon entry into force, member states will be obligated to adopt implementing legislation in accordance with the Agreement’s provisions. The Agreement also provides for the formation of an international Committee on Trade Facilitation and requires member states to form national-level committees to implement and coordinate its provision.
Administration officials expect that implementation of the Agreement can be accomplished in the United States entirely by administrative rulemaking without requiring additional legislation.