News / Logistics industry applauds WTO trade facilitation agreement

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The logistics community has welcomed ratification of the WTO trade facilitation agreement, describing it as a “great achievement”.

The agreement will mean trade costs cut significantly, expedited exports and more volumes.

The WTO implemented its first multilateral deal in its 21-year history after Chad, Jordan, Oman and Rwanda signed up, taking the number of member countries to 112, two more than the 110-minimum member threshold required for ratification.

Under the agreement, member nations will have set import tariffs, will be required to reform customs bureaucracies to streamline import and export times and will abolish import quotas on trade with developing nations – with tariffs only applicable to imports exceeding specified limits.

Developing nations will also be afforded simplified rules of origin processes, agricultural subsidies and receive support in implementing the changes, using funding from the Trade Facilitation Agreement Facility.

Chairman of FIATA’s customs affairs institute Steve Morris said the freight forwarding industry hailed the TFA’s passage as a “great achievement” for the international trading community.

“As the coin turns to implementation, FIATA and its members in 160 countries stand ready to play their part and collaborate with all governments as appropriate,” said Mr Morris, who has followed development of the WTO agreement since its inception in Bali in 2013.

The World Customs Organization (WCO) described it as an “important milestone” that would expedite the movement, release and clearance of goods, and would set out measures for effective cooperation between customs and other authorities.

“The WCO has been, and will continue to be, fully committed to making the TFA a success in practical terms,” said WCO secretary general Kunio Mikuriya. “We will do this by helping our member customs administrations which have asked for support in implementing the agreement’s trade facilitation measures. This will improve economic competitiveness, contribute to economic growth and alleviate poverty.”

A study conducted by WTO economists forecasts savings in member trade costs of 14.3%, as well as cutting a day and a half from import times and almost two days from export times, representing a 47% and 91% reduction, respectively.

The study also expects a rise of 20% for developed nations and 35% for developing nations in export volumes once the TFA is fully implemented.

Director general of the WTO Roberto Azevêdo said the TFA would boost global trade by up to $1trn a year, with the biggest gains being felt in the poorest countries.

“The impact will be bigger than the elimination of all existing tariffs around the world,” said Mr Azevêdo.

But he added: “But this is not the end of the road; the real work is just beginning. This is the biggest reform of global trade in a generation and it can make a big difference for growth and development around the world.”

However, Lloyd’s Loading List quoted a source at FIATA as having said: “On the technicalities of the treaty, in fact the trade facilitation agreement does not necessarily mean free trade: one has to do with facilitation instruments and the other with trade barriers, such as duties, taxes and quotas.

“Obviously it all gets connected in the end, but in principle you could have the highest level of trade facilitation with the highest level of taxes and duties as these are separate items of negotiation in the WTO.

“This being said, practically, if you push for trade facilitation, it is very likely that you aim at benefiting from free trade and you are ready to open to trading partners on a peer-to-peer basis.

“In short, freight forwarders see that the pie gets bigger if trade is free and facilitated.”

But the Freight Transport Association’s head of global policy, Alex Veitch, warned The Loadstar that the UK would be required to accede to the TFA on its own right once it leaves the EU, which is expected to occur sometime in 2019.

“One requirement that the UK must implement as soon as possible is a Trade Facilitation Committee. This enables coordination among the public and private sectors and among users and providers of trade-supporting services. Having such a committee in place is an obligation under article 23 of the TFA.”

Director general of the British International Freight Association (BIFA) Robert Keen said it would help to simplify and clarify international import and export procedures, customs formalities, and transit requirements.

“It should make trade-related administration easier and less costly, thus helping to provide an important and much-needed boost to global economic growth,” added Mr Keen.

“If better border procedures and faster, smoother trade flows result from the agreement and help to revitalise global trade, BIFA members, which facilitate much of the UK’s visible trade, will benefit.”

FedEx released a statement describing itself as a strong supporter of the TFA, adding that ratification by more than 100 countries represented a significant achievement that would help stimulate global trade and reduce costs.

“Simplifying the process of trade will help exporters, especially small and medium size companies, as they are most affected by complicated customs procedures around the world,” it said.