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  • WTO Trade Facilitation Agreement

New Trade Facilitation Agreement Opens Global Doors for Companies of all Sizes

By | 2018-05-23T18:27:01+00:00 February 24th, 2017|

There is a powerful new reason to shift your company’s import/export strategy in to higher gear, and it comes in the form of a groundbreaking Trade Facilitation Agreement (TFA) that was recently ratified  by the World Trade Organization (WTO) through its member countries. By seeking to make it easier, faster and more affordable to move goods across borders, the TFA is good news for your business and your ability to engage with customers on a global scale, especially through e-commerce. It will help if you are truly ready to make international trade a meaningful part of your overall mission through careful planning.

Now ratified by 110 countries and standing as the first multilateral trade agreement to be concluded since the WTO was established 20 years ago, the TFA is predicted to have enormous repercussions on the international flow of goods.  The WTO indicates that the TFA could reduce global trading costs by nearly 14.5 percent; create up to 20 million jobs; and add over $1 trillion to global trade flows.  The TFA will help realize these goals by streamlining Customs processes and procedures, providing transparency and predictability in border clearance, and ultimately increasing the movement of goods around the world.

How, specifically, will a long-negotiated, sweeping agreement involving hundreds of countries help your business?  If you are currently moving goods abroad, then you understand how challenging it can be to navigate complex Customs requirements, strict border clearance rules and processes, and the vast amounts of paperwork involved.  As we have discussed here on the pages of DHL Expressed, many countries, including the U.S., have been working to streamline the Customs and border clearance process through automation and mutual recognition agreements, and by raising of the de minimis threshold for low-value shipments.  What’s important and unique about the TFA is the number of countries involved in an effort to make border clearance faster and easier, as well as the commitment of these nations to support developing countries through technical assistance and capacity building.  This effort means that your business should ultimately see lower costs to move goods across borders, along with increased opportunities to export to, and import from, emerging markets.

Here are some of the key benefits of the TFA:

Expediting the movement of goods

As mentioned, the TFA aims to expedite the Customs clearance process by promoting automation and cooperative agreements and rules, which means reduced transportation and administrative costs for your company.

Provisions for low-value goods

Currently, many countries require duties and taxes on very low-value goods, which slows the process of moving individual items across borders – and adds expenses.  Many of these low-value items are part of the explosive growth of global e-commerce activity, and the TFA  encourages countries to adopt higher thresholds. That’s important for your company if you are part of the international e-commerce marketplace.

Increased cooperation

The agreement encourages cooperation between Customs authorities in different countries, promoting Customs data exchanges, regulatory harmonization and integration of Customs processes.  This should create consistency and simplicity for traders.

Trusted trader programs

The TFA encourages countries to adopt trusted trader or authorized operator programs which allow frequent traders to agree to provide governments with supply chain information in exchange for either expedited clearance and/or reduced fines and penalties.

Global development

As mentioned, the agreement contains special provisions for developing countries, including a mechanism to allow for public and private sector funding to improve Customs infrastructure.

If your company is engaged in global trade or considering it, the WTO’s Trade Facilitation Agreement holds great promise.  Let us know what you think on Twitter @DHLUS.

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