The Trade Facilitation Agreement: how is its implementation proceeding?

Legislation | | MIC Customs Solutions |

Significant progress has been made towards the global implementation of the Trade Facilitation Agreement, but further work is still needed to achieve full ratification.

It has been more than a year since the Trade Facilitation Agreement (TFA), a flagship trade initiative developed by the World Trade Organization (WTO), came into force. Since then, governments worldwide have been working hard to ensure that the benefits of this agreement are realized as soon as possible.

The WTO expects that the deal, once fully implemented, will greatly improve trade conditions for all WTO members, with the less economically developed nations set to see the most significant gains. However, for this to be achieved, a number of countries still need to take additional action to bring the TFA into effect.

The basics of the deal

The TFA represents the first multilateral deal concluded in the 23-year history of the WTO, and came into force on February 22nd 2017. It seeks to expedite the movement, release and clearance of goods across borders, with the overall aim of improving trade conditions and stimulating economic growth.

A 2015 study carried out by WTO economists showed that this deal could reduce members' trade costs by an average of 14.3 per cent, while also reducing the time needed to import goods by more than a day-and-a-half, or two days for export goods. This would amount to a reduction of 47 per cent and 91 per cent respectively over the current average.

The TFA has been described by WTO director general Roberto Azevedo as "one of the biggest trade reforms in a generation", who said it "will really bring great benefits for all WTO members, especially developing countries".

What has been done so far?

To date, 136 of the WTO's 164 member nations have completed the TFA ratification process, equivalent to 83 per cent of the total. Countries to have recently submitted their instruments of acceptance include South Africa, Indonesia, Israel, Argentina, Namibia, Cuba, Benin and Kuwait.

Commitment levels are gradually increasing, with a 100 per cent implementation rate among developed nations, falling to 58 per cent for developing members and 21.2 per cent for least-developed countries (LDCs). This is to be expected, as one of the core principles of the TFA is that it allows countries to set their own implementation timetables according to their respective capacities, with LDCs granted more time and practical assistance.

Overall, 112 members have agreed to category A commitments, signifying the fastest timetable for ratification, while the number of category B and C commitments stand at 62 and 52, respectively. With all factors taken into consideration, the current TFA implementation rate stands at 59.7 per cent as of May 17th 2018.

What is happening next?

The progress towards full implementation of the TFA was recently discussed during the May 2nd meeting of the WTO's Committee on Trade Facilitation, during which several members were commended for their ambitious implementation timetables, while others were reminded to submit outstanding notifications.

Of those members that have ratified the TFA and for whom the agreement has taken effect, only four have not yet provided any notifications, all of them being LDCs. Efforts will be made to encourage renewed progress for those countries lagging behind, with experience-sharing sessions being held to help countries discuss successful strategies, national issues and regional initiatives relating to the resolution of implementation challenges.

Moving forward, several leading WTO members, including the US, EU, Canada and China, have suggested that more stocktaking discussions on the progress of TFA implementation be included in future committee meetings to provide greater visibility, while technical assistance and support for capacity-building will continue to be given when needed.

It is hoped that these steps will help the WTO and its members to realize the full benefits of the TFA in a timely manner.