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The Trade Facilitation Agreement: A New Hope for the World Trade Organization

  • ANTONIA ELIASON (a1)
Abstract

The new WTO Trade Facilitation Agreement (TFA) is a significant step forward for the international trading regime, representing new hope for the relevance of the WTO.

The TFA is the first multilateral agreement since the creation of the WTO in 1995 and includes novel measures to help developing countries build capacity, while also taking into consideration regulatory concerns of WTO members through the application of the general GATT exceptions to the new agreement. While the TFA may appear narrow in scope, with regards to goods it is arguably the broadest WTO Agreement besides the GATT, since all goods that cross national borders find themselves subject to trade facilitation measures. If the TFA is properly interpreted, the combination of capacity-building measures, a focus on technological improvements and the judicious invocation of Article XX could result in a win-win situation wherein routine positive trade is streamlined, reducing time required to cross borders, while negative trade is more easily controlled and regulated at the border.

Despite regulatory questions concerning implementation, it is likely that the TFA will reduce the cost of trading across borders, while improving trade for developing countries and allowing WTO members to better control trade flows, through a combination of procedural streamlining and regulatory discretion.

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Corresponding author
*Email: aeliason@olemiss.edu
References
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1 The final text of the Trade Facilitation Agreement is available at http://www.wto.org/english/tratop_e/tradfa_e/tradfa_e.htm.

2 Kazmin, ‘Modi's Move to Thwart WTO Deal Causes Confusion’, Financial Times (1 August 2014), http://www.ft.com/intl/cms/s/0/c67cfc5a-197f-11e4-9745-00144feabdc0.html#axzz3IhKrLl1l; ‘India and the US Reach WTO Breakthrough over Food’, BBC (13 November 2014), http://www.bbc.com/news/business-30033130.

3 ‘Hong Kong, China First to Ratify WTO's Trade Facilitation Agreement’ (10 December 2014), http://www.wto.org/english/news_e/news14_e/fac_10dec14_e.htm.

4 ‘United States Takes Final Step Toward WTO Trade Facilitation Agreement’, Press Release, Office of the United States Trade Representative (23 January 2015), https://ustr.gov/about-us/policy-offices/press-office/press-releases.

5 Pascal Lamy, Former Director General of the WTO, Speech to the Chittagong Chamber of Commerce (1 February 2013), http://www.wto.org/english/news_e/sppl_e/sppl265_e.htm.

6 Ibid.

7 ‘The WTO Trade Facilitation Agreement – Potential Impact on Trade Costs’, OECD, February 2014, http://www.oecd.org/trade/facilitation/The%20WTO%20Trade%20Facilitation%20Agreement%20%E2%80%93%20Potential%20Impact%20on%20Trade%20Costs.pdf.

8 Yukyun ‘Harry’ Shin, New Round and Trade Facilitation: Proposing a Tentative Draft Agreement on Trade Facilitation Measures’, 35 Journal of World Trade (2001) 229, at 229.

9 World Trade Organization, ‘Singapore Ministerial Declaration of 18 December 1996’, WT/MIN(96)/DEC/1, I.L.M. 8 (1996).

10 Grainger, A., ‘Trade Facilitation: A Conceptual Review’, 45 Journal of World Trade (2011) 39, at 41 (citing a WTO training note posted to its website).

11 Creskoff, S., ‘Trade Facilitation: An Often Overlooked Engine of Trade Expansion’, 3 Global Trade and Customs Journal (2008) 1, at 4.

12 Djankov, S., Freund, C., and Pham, C. S., ‘Trading on Time’, 92 The Review of Economics and Statistics (2010) 166, at 166.

13 Ibid. 167.

14 J. S. Wilson, C. L. Mann, and T. Otsuki, ‘Trade Facilitation and Economic Development: Measuring the Impact’, World Bank Policy Research Working Paper Series, Working Paper No. 2988, 2003, at 3–4. Wilson et al. find these indicators more useful than single parameter trade facilitation indicators to measure trade facilitation. Other economic studies have also focused on these types of indicators.

15 Ibid. at 8.

16 Ibid. at 13.

17 Creskoff, ‘Trade Facilitation’, supra note 11, at 8.

18 Convention and Statute on Freedom of Transit, 20 April 1921, 7 L.N.T.S. 11, International Convention Relating to the Simplification of Customs Formalities, 3 November 1923, 30 L.N.T.S. 371, Articles 3, 4, and 11.

19 Article X of GATT 1994 – Scope and Application, TN/TF/W/4, 12 January 2005, 2.

20 Convention and Statute on Freedom of Transit, art. 1, 20 April 1921, 7 L.N.T.S. 11.

21 International Convention on the Simplification and Harmonization of Customs Procedures, 18 May 1973, O.J. L 100, 21/04/1975, 1 (amended 2006).

22 Negotiating Group on Trade Facilitation, Communication from the World Customs Organization, 9 February 2005, TN/TF/W/16.

23 Resolution of the Policy Commission of the World Customs Organization on the Conclusion of an Agreement on Trade Facilitation by the World Trade Organization, 11 December 2013.

24 World Trade Organization, Singapore Ministerial Declaration of 18 December 1996, WT/MIN(96)/DEC, 1, 8 (1996). The declaration stated, regarding trade facilitation: ‘We further agree to … direct the Council for Trade in Goods to undertake exploratory and analytical work, drawing on the work of other relevant international organizations, on the simplification of trade procedures in order to assess the scope for WTO rules in this area.’

25 Annex D of the Doha Round Working Programme.

26 Agreement on Safeguards, preamble, 15 April 1994, O.J. L336, 23/12/1994, 184.

27 Agreement on Safeguards, art. I, 15 April 1994, O.J. L336, 23/12/1994, 184.

28 Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Antidumping Agreement), art. 1, 15 April 1994, O.J. L336 23/12/1994, 103.

29 Agreement on Subsidies and Countervailing Measures, footnote 13, 15 April 1994, 1869 U.N.T.S. 14, for example.

30 TFA, preamble.

31 Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, 12, WT/DS22/AB/R (21 February 1997).

32 WTO Agreement, Annex 1A General interpretative note to Annex 1A.

33 Brazil–Desiccated Coconut, supra note 31, at 14.

34 Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R (14 December 1999), para. 83.

35 Ibid. at para. 77 (citing the panel report, para. 8.58, paraphrasing the panel report in Brazil–Desiccated Coconut, para. 227).

36 Ibid. at para. 84.

37 Panel Report, United States – Anti-Dumping Act of 1916, WT/DS136/R (31 March 2000), para. 6.195.

38 Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R (9 September 1997), para. 155–157.

39 Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R (3 March 2005), para. 549.

40 United States–Anti-Dumping Act of 1916, supra note 37, para. 6.195.

41 World Trade Organization, Agreement on Trade Facilitation: Draft Ministerial Decision of 6 December 2013, WT/MIN(13)/W/8 (2013).

42 TFA, Article 24.6.

43 See, e.g., Appellate Body Report, Japan – Taxes on Alcoholic Beverages, 21, WT/DS8/AB/R (4 October 1996). The AB here described the concept of ‘likeness’ as ‘a relative one that evokes the image of an accordion. The accordion of “likeness” stretches and squeezes in different places as different provisions of the WTO Agreement are applied’.

44 Article V of GATT 1994 – Scope and Application, Note by the Secretariat, TN/TF/W/2, 12 January 2005.

45 Article VIII of GATT 1994 – Scope and Application, Note by the Secretariat, TN/TF/W/3, 12 January 2005.

46 Article X of GATT 1994 – Scope and Application, Note by the Secretariat, TN/TF/W/4, 12 January 2005.

47 Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry, WT/DS366/R (27 April 2009).

48 Ibid. at paras. 7.427–7.430.

49 Ibid. at para. 7.401.

50 Ibid. at paras. 7.465–7.467.

51 Appellate Body Report, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R, WT/DS394/AB/R, WT/DS398/AB/R (30 January 2012), para. 235.

52 Panel Report, Argentina – Measure Affecting Imports of Footwear, Textiles, Apparel, and Other Items, WT/DS56/R (25 November 1997), paras. 6.75, 6.77, 6.79.

53 Appellate Body Report, Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel, and Other Items, para. 64–74, WT/DS56/AB/R (27 March 1998).

54 United States Customs User Fee, L/6264 – 35S/245, 25 November 1987.

55 Appellate Body Decision, European Communities – Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R (13 July 1998), para. 115.

56 Panel Report, European Communities – Selected Customs Matters, WT/DS315/R (16 June 2006); Appellate Body Report, European Communites – Selected Customs Matters, WT/DS315/AB/R (13 November 2006).

57 TFA, Article 5.1, 5.1(b).

58 TFA, Article 13.1 and 13.2.

59 See, e.g., TFA, Article 1.2.1 compared to Draft TFA v.17, Article 1.2.1; TFA, Article 3.7 compared to Draft TFA v.17, Section I, Article 3.5.

60 Draft TFA v.17, Section I, Article 5.1(a).

61 TFA, Article 5.1(a).

62 Article 10.1.2 and 10.4 of the Trade Facilitation Agreement.

63 EC–Selected Customs Matters, Request for Consultations by the United States, WT/DS315/1, G/L/694, 27 September 2004.

64 General Agreement on Tariffs and Trade, Art. X, 15 April 1994, 1867 U.N.T.S. 187, para. 1.

65 EC–Selected Customs Matters Panel, supra note 56 at para. 7.51.

66 WorldTradeLaw.net Dispute Settlement Commentary, Panel Report, European Communities–Selected Customs Matters, 10.

67 EC–Selected Customs Matters Panel, supra note 56 at para. 2.69–70.

68 Ibid. at para. 2.70.

69 Ibid. at para. 2.72.

70 See ‘WTO Negotiations on Trade Facilitation: Development Perspectives’, South Centre Report, 15 November 2013, http://www.southcentre.int/wp-content/uploads/2013/11/Trade-Report-on-Trade-Facilitation_EN.pdf).

71 N. Basu, ‘India Demands Changes in WTO Trade Facilitation Agreement’, Business Standard (21 September 2013), http://www.business-standard.com/article/economy-policy/india-demands-changes-in-wto-trade-facilitation-agreement-113091800886_1.html.

72 South Centre Report, supra note 70, at 2.

73 Ibid. at 2.

74 Basu, ‘India Demands Changes in WTO Trade Facilitation Agreement’, supra note 71.

75 S. Donnan, ‘WTO chief Roberto Azevedo warns on red tape at borders’, Financial Times (12 November 2013), http://www.ft.com/intl/cms/s/0/e51deefc-4bc2-11e3-a02f-00144feabdc0.html#axzz3IhKrLl1l.

76 World Trade Organization, Bali Ministerial Declaration of 7 December 2013, WT/MIN(13)/38, WT/L/913.

77 TFA, Article 21.1, 21.3.

78 TFA, Article 21.2.

79 TFA, Article 14.

80 Ibid.

81 Draft TFA, version 17, Section II, 4.1(a), TN/TF/W/165/Rev.17.

82 TFA, Article 16.1(b).

83 TFA, Article 16.1(d).

84 TFA, Article 16.1(e).

85 TFA, Article 20.3.

86 TFA, Article 18.

87 TFA, Article 21.4.

88 In the SPS Agreement, for instance, Article 9 provides for technical assistance to be extended to developing countries, but in aspirational terms, suggesting that importing members ‘shall consider’ providing such technical assistance. Agreement on the Application of Sanitary and Phytosanitary Measures, 15 April 1994, O.J. L336, 23/12/1994, 40.

89 TFA, Article 22.

90 Agreement on Trade-Related Aspects of Intellectual Property Rights, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations 320 (1999), 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994), Article 65.

91 TFA, Article 20.

92 Appellate Body Report, US–Shrimp (Article 21.5 — Malaysia), para. 109.

93 Japan–Alcoholic Beverages, supra note 43, at pp. 107–108.

94 TFA, Article 24.6.

95 TFA, Footnote 23.

96 Peat, D., ‘The Wrong Rules for the Right Energy: The WTO SCM Agreement and Subsidies for Renewable Energy’, 24 Environmental Law and Management (2012) 3.

97 Agreement on Government Procurement, Article XXIII:2 reads: ‘Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent any Party from imposing or enforcing measures: necessary to protect public morals, order or safety, human, animal or plant life or health or intellectual property; or relating to the products or services of handicapped persons, of philanthropic institutions or of prison labour.’

98 See, e.g., Condon, B. J., ‘Climate Change and Unresolved Issues in WTO Law’, 12 Journal of International Economic Law (2009) 895 for a discussion of this debate.

99 Panel Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R (12 August 2009).

100 Panel Report, China – Measures Relating to the Exportation of Rare Earths, Tungsten, and Molybdenum, WT/DS431/R (26 March 2014).

101 GATT, Article XX. The chapeau reads: ‘Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures.’

102 Creskoff, ‘Trade Facilitation’, supra note 11, at 1.

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