The WTO Trade Facilitation Agreement

This article first appeared in the 2017 winter edition of Across Borders magazine, published by the Freight and Trade Alliance

The Trade Facilitation Agreement (TFA) commits World Trade Organization (WTO) members to implement common sense customs reforms, which will make procedures around the international movement of goods faster, cheaper and more transparent.

Australia’s commitment to open trade and investment has helped deliver a quarter of a century of economic growth. To build on this Australia must continue to reduce red tape for traders. The WTO Trade Facilitation Agreement (TFA) entered into force in February this year and will do exactly that. It is the first new agreement involving all members of the WTO since it began in 1995.

Australia has been a strong supporter of concluding the TFA, which simplifies, modernises and harmonises export and import processes. The TFA makes the movement, release and clearance of goods quicker, easier and cheaper.

One of the ways the TFA does this is through the prioritisation of customs clearance of perishable goods. This is a win for regional exporters, as it means their goods will spend less time waiting for clearance at ports overseas. This reduces operating costs for exporters and makes their goods a more affordable and attractive option for international customers.

Under the TFA, exporters can submit import documentation for processing before their goods even arrive in port. They can also have their goods cleared prior to the final determination of duties and charges. Australian businesses will be able to obtain specific, binding information on the tariff classification for their goods before arrival at foreign destinations. Benefits will also flow from new requirements that WTO members publish relevant procedures and forms online for importing goods.

These changes will make it easier for businesses to navigate overseas customs procedures, make it easier for Australian exporters to move into new markets, and help Australian importers whose overseas counterparts have to navigate these market conditions as well. Ultimately, these changes will reduce the amount of time it takes for goods to reach their final destination.

While Australia is a leader in trade facilitation best practice, we stand to benefit from implementation of the agreement by our trading partners. A 2015 OECD study found that Australia stands to benefit, in terms of bilateral trade flows and reducing trade costs, through adoption of measures including: information availability, advance rulings, fees and charges, automation and the streamlining of procedures.

The biggest Australian beneficiaries are likely to be small to medium sized enterprises who, unlike larger firms, do not have the resources or large trade volumes to power through complex customs procedures.

The OECD has estimated that full implementation of the TFA could reduce trade costs globally by up to 17.5 per cent. In addition, the Peterson Institute has estimated that the TFA could increase global GDP by US$1 trillion per annum and create up to 21 million jobs.

The TFA adds to a suite of trade agreements that will benefit Australian businesses and the wider community to build a prosperous future for us all.

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