How is the UK Doing in Relation to the WTO Trade Facilitation Agreement

The World Trade Organisation TFA came into force in February 2017, much earlier than expected. Under the terms of the agreement all member states of the WTO, less developing countries, were required to be operating to the requirements of the agreement by the time it came into force. Developing countries are allowed ‘Special and Differential Treatment’ to apply the agreement which involves categorising the measures into those which have been implemented in the country, which will require time to implement and those which will require time and technical assistance before implementation can take place. In the last two categories timescales have to be provided.

So, in the United Kingdom, we should, by February 2017, have implemented every measure within the 13 technical articles of the agreement. There is some latitude. Whilst most of the measures are compulsory, some are not mandatory. The latter can be identified where terminology such as use of the word ‘may’ instead of ‘must’ is used or phrases such as ‘must use best endeavours’ or ‘to the extent possible’ occur. It would, however, be reasonable to assume that OECD countries / other large economies would implement every measure within the agreement. Certainly, that is the spirit of the protocol.

 So does this matter, is the TFA important? Well, yes it is, let’s consider what the agreement should, or could, achieve in the UK and in emerging markets and the connectivity between the respective economies:

  • Customs will have to up their game and increase efficiency in import and export operations
  • Reduced cost of doing business for importers, globally, will increase buying power with UK exporters
  • Reduced costs of doing export business, increased competitiveness
  • More global value chains will open up – new markets for everyone
  • Social impact – increased trade leads to economic growth, globally, and poverty reduction in developing and emerging economies
  • Supports migration to electronic procedures

It is certainly true to say that the UK regulatory agencies, in particular HMRC, are amongst the most efficient in the world – a glance at the IFC annual Ease of Doing Business / Trading Across Borders and the World Bank Logistics Performance indices  clearly evidences this. It is also true to say that, from the current high baseline, incremental improvement is not always easy to notice. Having said that, there is always room for improvement. At a recent conference HMRC stated that they have implemented every article of the TFA. The counter-argument is that just because something has been implemented it does not necessarily mean it is performing well. Definitions are also important – HMRC stated that the gov.uk access point is a Single Window platform – a TFA requirement.  This is very disputable. A true Single Window is where a trader, electronically, enters trade related information, to any authority that needs it, once and once only. This is certainly not the case where, for example, licences have to be applied for. There are other examples of, at best, partial compliance with the agreement. Availability of information (Article 1) is one example. Depending on any Brexit agreement outcome, the border between the Republic of Ireland and Northern Ireland could become another test of how the agreement will be applied in UK. Article 8, Border Agency Co-operation - requiring collaborative border management, for example between Customs, Standards, Agriculture and Immigration – could become an important feature even in a soft border environment.

However, HMRC themselves recognise that, possibly, the biggest gap in the UK relates to the requirement to establish a National Trade Facilitation Body / Committee. They refer to the Joint Customs Consultative Committee but the vast majority of exporters and importers have never heard of it let alone sit on it or even have visibility on the outcome of the committee meetings. SITPRO, some will remember, closed some years ago so any trade facilitation body would now sit within the Department for International Trade.  Article 23 of the TFA establishes the requirement and the author has attended meetings of such committees in various countries. It is acknowledged that the success of these committees is contingent on equal public and private sector participation, involving all stakeholders. Where this is the case issues can be heard, discussed and, often, resolved. The principal purpose of these committees is to monitor the implementation of the TFA in an open and constructive environment. However, they need not be limited to TFA issues and evidence is emerging that the most effective institutions are those that encompass all areas and operations of international trade activity.

Arguably, in relation to the WTO TFA, the school report for the United Kingdom may well read “Article 23 – Tries hard but could Do Better” !!

Article written by Jon Walden - Associate of Strong & Herd LLP

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