Trade facilitation and customs valuation

Based on the proposal submitted by the WCO Permanent Technical Committee (PTC) delegates the Future of Customs topic was launched at the 207th/208th Sessions of the PTC in March 2015. This came as a result of discussions on the role of the PTC where it was agreed that the Committee would take a more active role in discussing strategic matters and future-oriented topics.

The findings from the Study Report and the case studies provided in the Annex reflect a high level of Customs interest and activity in the testing and implementation of three groups of technologies in particular. Over half of the Members that responded to the WCO’s 2021 ACS are already using IoT AI and ML while only two respondents are currently deploying blockchain technology. Information on numerous pilot projects and PoCs shared by the Customs administrations and other stakeholders show the interest in expanding the use of these technologies as well as the confidence in the benefits they will bring to Customs in achieving its objectives and supporting cross-border trade.

I have long been concerned by illicit trade. As Finance Minister in my home country Nigeria I witnessed how it harms societies and impedes economic growth and development. Although the full scale of illicit trade is often obscured by its clandestine nature there is little doubt about its impacts. Spurious products threaten people’s health as well as their livelihoods. Illicit trade undermines legitimate business activity abets corruption and acts as a drain on the revenue and resources governments need to address critical social and economic priorities. And when illicit traders join forces with corrupt officials and financiers the negative impacts are amplified. Illicit trade leaves no country developing or developed untouched.

Le 12 août 2016 l’OMC a publié le rapport du Groupe spécial dans l’affaire engagée par l’Union européenne “Russie — Traitement tarifaire de certains produits agricoles et manufacturés” (WT/DS/485).

The average international trade transaction is subject to numerous procedural and documentation requirements which add to the costs of doing business as an importer or exporter and also use up scarce government resources. While these requirements can be necessary to fulfil policy objectives questions are often raised about why and how they are implemented. The Trade Facilitation Agreement (TFA) adopted by WTO Members in 2014 seeks to expedite the movement release and clearance of goods across borders and reduce these trade transaction costs - by an average of 14.3 per cent as estimated by the 2015 World Trade Report. At the same time many WTO Agreements already contain provisions aimed at facilitating trade procedures and avoiding unnecessary costs. The Agreement on Technical Barriers to Trade (the TBT Agreement) is one of these: its provisions on transparency and conformity assessment procedures some of which are applied at the border are of particular relevance in this context. The TFA and TBT Agreements are in fact complementary with the TFA introducing some new requirements/recommendations which are likely to apply to certain TBT measures. This paper maps out the linkages between these two Agreements. It does so with a view to informing TBT officials of the requirements and best practices emerging in the trade facilitation area as well as raising awareness amongst trade/customs officials of existing rules and evolving practices in the TBT area. The 2015 World Trade Report refers to “border agency cooperation” as the main TFA implementation challenge identified by developing countries and also points to the importance of cooperation and coordination between ministries as one of the main success factors. Considering that a significant share of import/export procedures and controls arise from the implementation of TBT measures a better understanding of the linkages between the TFA and the TBT Agreement (as well as other relevant WTO Agreements such as the SPS Agreement) will be crucial for effective implementation. It will also contribute to more streamlined technical assistance activities and raise awareness among TBT officials of the opportunities generated by trade facilitation projects. The procedures and practices of the WTO TBT Committee especially with regards to transparency and specific trade concerns could also be of interest to the future TFA Committee as it embarks on its task of furthering the implementation of the TFA. All these in turn will help reap the expected benefits of the new Trade Facilitation Agreement.

After a decade of negotiations and additional preparatory work the WTO Trade Facilitation Agreement (TFA) is poised to enter into force. It promises to streamline and substantially prune the red tape that all too often slows and impedes international commerce - thereby significantly reducing both cost and time needed to do business across borders. The paper chronicles the path from the conclusion of the talks at the 2013 Bali Ministerial Conference to the present day as we prepare for the Agreement to take effect. It reviews the state of the ratification process analyses implementation schedules and outlines work still to be done. The study shows that the emerging application of the TFA like its negotiation has once again confounded the sceptics – who first doubted that a TF Agreement would see the light of day and then questioned if it would ever be put into practice. While plenty remains to be done to implement the TFA across the full WTO membership its entry into force is set to happen – a valedictory moment.

We estimate the effects of trade facilitation on the extensive margins of trade. Using OECD Trade Facilitation Indicators – which closely reflect the Trade Facilitation Agreement negotiated at the Bali WTO Ministerial Conference of December 2013 – we show that trade facilitation in a given exporting country is positively correlated with the number of products exported by destination and with the number of export destinations served by product. To address the issue of causality we employ an identification strategy whereby only exports of new products or exports to new destinations are taken into account when computing the respective margins of trade. Our findings therefore imply a positive causal impact of trade facilitation on the extensive margins of trade. The results are to a large extent robust to alternative definitions of extensive margins to different sets of controls variables and to various estimation methods. Simulating the effect of an increase to the regional or global median values of trade facilitation we are able to quantify the potential extensive margin gains of trade facilitation reform in different regions.

It has become increasingly common to produce goods in a number of geographically dispersed stages linked by international trade. This tendency known by names such as “production fragmentation” “processing trade” and “vertical specialization” has important implications for the analysis of non-tariff measures (NTMs) and trade facilitation. First different types of NTMs or trade facilitation issues are naturally associated with different stages in the movement of goods. Different price gaps can be assigned to these stages making it possible to decompose the overall amount of distortion and to prioritize the policies with the largest potential efficiency gains. Second NTMs may accumulate in long supply chains implying that their trade-distorting effects are greater for goods produced in a fragmented manner than for goods with simple production processes. There is evidence that trade costs are more important for high technology goods or goods undergoing several stages of processing. Issues with product standards may be particularly important for goods with long supply chains. The link between NTMs and supply chains also has implications for economic development and for the relationship between liberalization in services and goods.

This paper assesses the impact of the 2005 multilateral Hong Kong Ministerial decision on duty free quota free (DFQF) market access for products originating in Least developed countries (LDCs) on the latter's export performance. The analysis is conducted over a sample of 41 LDCs with data spanning the period 1998-2013. The empirical analysis examines both the average effect and the short term/medium term effect. Results indicate that on average this multilateral decision has exerted a positive effect on LDCs' performance on merchandise exports with this average positive effect being solely driven by a positive effect on LDCs' export performance on primary products; the average effect on manufacturing exports has been statistically nil. In the short and medium term this decision has exerted a positive effect on LDCs' merchandise export performance as well as on the components of the latter namely both primary product exports and manufacturing exports. However the positive effect on primary product exports appears to be far higher than that on manufacturing exports. These findings have important policy implications regarding reflections on the way LDCs could utilize their policy flexibilities in the WTO Agreements to diversify their exports away from the primary sector and toward manufacturing and/or services sector.

The paper chronicles the negotiating history of the recently concluded Trade Facilitation Accord. Analysing the various stages of the decade-long effort to get the Agreement off the ground it examines what was at stake in the negotiations how they evolved and why they finally succeeded - despite many obstacles and detours along the way. The study also suggests ways in which the exercise has broken new ground – for Trade Facilitation rule-making at the global level for how WTO Members negotiate agreements and for the world trading system as a whole.

This paper reviews the main developments of trade and related policies and measures in the Asia and Pacific region during the 30 years since establishment in 1989 of the Trade Policy Review Mechanism (TPRM). The objectives of the TPRM include facilitating the smooth functioning of the multilateral trading system by enhancing the transparency of WTO Members' trade policies.