General Issue
Vol. XI, No. 1
(Summer '19)

Increasingly recognized as delivering a wide range of economic benefits, there are growing indications that the Trade Facilitation Agreement (TFA/the Agreement) also impacts trade cooperation and commerce in a broader sense. As governments progress with the implementation of the Accord, one finds it to change the way in which countries approach cooperation and negotiations at the multilateral level. By pursuing a new approach—resting on the premise that ‘free trade’, on its own, is not enough and that global trade also requires global trade cooperation to function effectively—the Agreement has already transformed the policy debate and spawned a new generation of ‘facilitating’ initiatives. The article reviews the state of the TFA’s implementation process and analyses whether initial expectations have been met. It also looks at the bigger picture and examines indications of new approaches, such as a paradigm shift in the focus of trade agreements and altered mindsets about how trade cooperation should advance in the future.

The Trade Facilitation Agreement (TFA) entered into force on February 22, 2017. It has re-oriented thinking on special and differential treatment at the World Trade Organization (WTO). Developing and least-developed countries can make their obligations conditional on the receipt of effective technical assistance that creates the necessary relevant capacity. They can also choose the implementation periods for provisions of the TFA in accordance with their own needs. These innovative approaches may be suitable for adoption in other agreements.

This article explores the role the private sector can play in the implementation of the Trade Facilitation Agreement (TFA). Notwithstanding that World Trade Organization (WTO) Members’ governments bear the responsibility to implement the obligations arising from the TFA, the agreement creates direct implied rights for the business community. In conformity with the domestic legal framework of each WTO Member, private sector actors may enforce nationally their implicit rights deriving from the TFA as well as advocate towards their own governments to challenge other WTO Members for not implementing the agreement. To enhance the private sector’s participation in trade facilitation reforms, this article suggests ways of involving economic operators in the trade facilitation policymaking and implementation process, notably through public-private dialogue (PPD) entrusted in the National Trade Facilitation Committees (NTFCs), as a key way to cooperate and coordinate with public border agencies on the implementation of the TFA.

While trade facilitation has a broader context encompassing a number of areas that can facilitate trade between countries, the thrust of the World Trade Organisation’s (WTO) Agreement on Trade Facilitation (TFA) focusses on key procedural issues such as transit, fees and formalities for export and import, and publication and administration of trade regulations.

Some of the arguments propounded for trade facilitation in a developing country like India are reduction in compliance costs, benefits for Micro Small and Medium Enterprises (MSMEs), obviation of procedural barriers, and improvement in infrastructure. Nevertheless, the history of the TFA negotiations suggests that many developing nations including India were not very enthusiastic since it was felt that an asymmetrical burden would be created on them for compliance. However, with the snail-paced progress on the Doha Development Agenda (DDA) and a slowdown in the multilateral negotiations, there was a push for concluding the TFA with a view of ensuring the relevance of the multilateral institution. The developing countries thus joined the bandwagon with the negotiations ensuring that their specific concerns were taken cognizance of and the texts were in line with their domestic regimes for those where commitments had to be made on entry into force. The flexibility to take longer transition periods, resulted in marginal improvements in the obligations above the domestic regimes. Finally, there was an additional flexibility of utilizing capacity building resources from other WTO Members to implement a third set of commitments.

The article explains the three parts into which the TFA has been divided into namely Section I on substantive trade facilitation disciplines, Section-II on Special & Differential Treatment provisions for developing countries and Least Developed Country Members, and Section III on Institutional Arrangements and Final Provisions. Section I which includes twelve Articles and 239 sub provisions of commitments have then been explained, specifically with reference to the commitments and their categories taken by India. These Articles include those on publication and availability of information, opportunity to comment, information before entry into force, and consultations, advance rulings, procedures for appeal or review, other measures to enhance impartiality, non-discrimination and transparency; disciplines on fees and charges imposed or in connection with importation and exportation and penalties, release and clearance of goods, border  agency coordination, movement of goods intended for import under customs control, formalities connection with importation, exportation and transit; freedom of transit, and customs cooperation.

The focus is then on other aspects of the TFA, such as its entry into force, level of commitments by Members, India’s commitments, India’s implementation mechanism, and the progress made through the institutional mechanism. The work plan of the National Trade Facilitation Action Plan (NTFAP) has then been highlighted, including the role of the working groups on legislative changes, trade related infrastructure, outreach programmes, and time release study.

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Finally, the article highlights the progress made by India on trade facilitation in terms of the rankings on various indices and the domestic measures being undertaken. It ends with the focus on the boundless opportunity that trade facilitation offers, which we can ill-afford to miss.

Mediocre trade facilitation is impairing India’s trade in goods and its overall economic growth. Trade facilitation relates to reductions in the time and cost of trading goods internationally. The World Trade Organization has estimated that improvements in trade facilitation could increase world trade by as much as one trillion dollars annually. India is currently lagging behind developed economies such as the Netherlands, Germany, Korea, Japan and the United States, as well as middle income economies such as China, in measures of trade facilitation performance and in implementation of the provisions of the World Trade Organization’s new Trade Facilitation Agreement. India’s performance can be improved by developing an active public-private partnership dedicated to implementing trade facilitation improvements. This should result in regular and accurate measurements ofIndia’s trade facilitation performance, improved functioning of India’s National Trade Facilitation Committee, legal reforms necessary to implement all measures required by the Trade Facilitation Agreement and the improved transparency and functioning of India’s trade regime through the use of modern information technology.

A sound logistics environment is key to a country’s trading opportunities. Poor trade logistics performance—understood as the cost, the time and the complexity involved in import and export activities—precludes many countries from diversifying their economies and can thus hamper trade, growth and employment. This is particularly relevant for developing countries, where a weak logistics environment oftenimpedestrade.Delays in the supply chain, for instance at border crossings, increases transportation and thereby increases product costs, making exports less competitive. They force companies to hold higher inventories to avoid production stoppages due to delays in procuring preliminary products. Increasing supply chain performance can foster trade, growth and competitiveness more than tariff reductions can and is typically politically more feasible. High logistics performance is closely linked to trade facilitation as the latter deals with trade procedures that can impede trade once formal trade barriers such as tariffs have been eliminated. The World Trade Organization’s Trade Facilitation Agreement (TFA), which entered into force in 2017, represents a major step forward for fostering trade globally and for developing countries. The TFA can be expected to increase the reliability and predictability of supply chains and thus may support higher logistics performance. The purpose of the paper is to take stock of the current state of knowledge about a country’s logistics environment as an enabler of international trade, with a focus on developing countries. The paper is based on the key words logistics, international trade, exports, growth, and development. The studies reviewed underline the strong link between a well- functioning logistics environment and a country’s trading opportunities. Logistics often acts as a bottleneck for countries wishing to increase their exports. High logistics performance increases firm productivity and can thus contribute to higher economic growth. Policymakers concerned with the welfare of their countries often strive to provide an enabling environment for private sector actors to export higher volumes and more sophisticated goods. This paper shows why it is worthwhile for policymakers to focus some of their efforts on improving the logistics environment. The paper summarizes the state of knowledge in the field. It identifies knowledge gaps and directions for future research. Its findings may be of value to researchers and policymakers, especially in countries with a weak logistics environment or with external constraints such as being landlocked, that wish to foster an enabling environment for high value exports and for integration of their country into global value chains.

In the current protectionist trading environment that undermines the multilateral trading system, the Trade Facilitation Agreement (TFA) is the first and only global trade agreement that has been successfully negotiated since the creation of the World Trade Organization (WTO). The TFA consists of provisions to achieve the objectives of transparency, non-discrimination and expedition of movement of goods by harmonising customs formalities and procedures. The Special and Differential Treatment provision is an innovative and flexible step that grants developing countries and least developed countries (LDCs) the right to self-determine their transition periods for full implementation. However, the implementation of the TFA could face tangible roadblocks with the rise of uncertainty in the multilateral trading environment that could weaken the confidence in WTO institutions like the Trade Facilitation Agreement Facility. The overhaul required to implement the TFA could face potential conflicts with domestic public interests like national security, public health and environmental concerns. The TFA Committee could act as an important conduit to encourage full implementation; along with efforts to strengthen communication lines between custom offices and domestic public authorities. Moreover, given the important role of developing country Members to global trade in the coming decade, the WTO should be more responsive to persuade Members to seriously consider the set agenda for negotiations to develop the proposed TF agreement for trade in services.