The Agreement on Trade Facilitation (ATF), which came into force on 22 February 2017, has the potential to boost global exports by US$1 trillion.
We discuss its contents and its implications for New Zealand exporters.
The agreement was concluded in December 2013 but required ratification by two-thirds of all World Trade Organisation (WTO) members to become binding. That threshold was achieved when Rwanda, Oman, Chad and Jordan submitted their instruments of acceptance on 22 February.
The ATF seeks to standardise and simplify customs procedures in order to move goods across borders more efficiently.
Key provisions include:
- a mandatory obligation on governments to provide access to complete and accurate trade-related information, and to publish it promptly and in an easily accessible manner
- traders and other interested parties to be given the opportunity and reasonable time to comment on proposals for new laws or regulations related to the movement, release or clearance of goods, including those in transit, and
- a mandatory obligation on governments to provide, on request, an advance ruling or written decision on the tariff classification or origin of goods prior to importation and encouragement to provide advance rulings on other matters
- requirements on governments to:
- facilitate pre-arrival processing and expedited release by permitting traders to submit import documentation prior to arrival of the goods
- allow an importer to obtain release of goods prior to final determination and payment if the Member is delayed in determining the duty or other charges payable
- to the extent possible, have a risk management system which concentrates customs control on high risk consignments and expedites the release of low risk consignments
- provide additional trade facilitation benefits to “authorised operators" (i.e. those who present a low risk of non-compliance with legal requirements), and
- have procedures to facilitate the import of perishable goods
- requirements on governments to exercise best endeavours to:
- review and simplify or reduce formalities and documentation requirements
- have a “single window" for the submission of information and documents
- where appropriate, accept authenticated copies of required documents which have been provided to another government authority
- remove the use of pre-shipment inspections in relation to tariff classification and customs valuation
- subject to certain exceptions, apply uniform documentation requirements and uniform release and clearance procedures throughout their territories, and
- develop tailored processes for temporary admission (e.g. goods for display at trade exhibitions), inward processing of goods (e.g. goods returned for repair) and outward processing of goods (e.g. goods sent abroad for repair and re-imported)
- an obligation to eliminate regulations or formalities related to transit if they are no longer required or have been superseded by a less trade-restrictive solution, and a prohibition on applying them in a manner that would be a disguised restriction on trade.
Special treatment for developing countries
The ATF allows developing and Least Developed Country Members to determine when they will implement individual provisions and to identify provisions that they will only be able to implement upon the receipt of technical assistance and support for capacity building.
Businesses exporting to these countries will need to clarify in advance what they can expect at the border.
Chapman Tripp comment
While studies to date indicate that the ATF presents a significant opportunity to reduce trade costs and enhance participation in global value chains, many of its provisions are aspirational rather than strictly legally binding. This does not mean that these provisions are completely void of meaning, but the impact is obviously less than with a strict legal obligation.
New Zealand is already largely compliant with the ATF, but we expect that New Zealand exporters will have a strong interest in its implementation in export markets, particularly the provisions on advance rulings, release and clearance of goods, and those related to formalities connected with import, export and transit.
With strong private sector engagement, the ATF has the potential to engender significant change, so it is worth paying attention to. As the WTO Director-General, Roberto Azevedo, says:
“If it's truly implemented and done well, there will be almost no contact between the client and the (customs) authority … when that happens the room for corruption basically disappears. And we know that at the border, corruption is a problem for many countries".