Trade facilitation and customs valuation
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Landlocked developing countries and trade bottlenecks
Trade is critical to the economic growth of countries which means facilitating trade is a priority for governments. Landlocked developing countries (LLDCs) are without direct territorial access to a sea or ocean so ease of trade is linked to their survival.
WTO’s TBT Agreement: technical barriers to trade
The WTO’s TBT Agreement entered into force with the establishment of the WTO on 1 January 1995. It aims to ensure that product requirements in regulations and standards (on safety quality health and the environment) as well as procedures for assessing product compliance with such requirements (certification testing inspection accreditation) are not unjustifiably discriminatory and do not create unnecessary obstacles to trade.1 The TBT Agreement also emphasizes the importance of transparency and contains disciplines that strongly encourage the use of international standards as a basis for harmonizing regulations across WTO members.
WTO’s SPS Agreement: sanitary and phytosanitary measures
The WTO SPS Agreement sets out the basic rules for food safety and animal and plant health standards. It aims to strike a balance between WTO members’ rights to protect human animal or plant life or health and their obligation not to restrict trade more than necessary. Given the technical and costly nature of some of these measures certain sanitary and phytosanitary (SPS) requirements imposed by importing members could be difficult to meet for LLDCs for whom agricultural products might represent an important part of their exports.
COVID-19 and border measures
Countries have put in place a range of restrictions on the movement of persons across borders especially for non-essential purposes as well as export prohibitions on essential goods and food. There has been a proliferation of measures banning the export of essential medical supplies as well as food paired with measures to facilitate the import of the same types of product (i.e. value added tax and import duty exemptions).
Trade profiles of landlocked developing countries
Trade plays a critical role in achieving the development objectives of LLDCs and is key to realizing the Sustainable Development Goals (SDGs) in particular target 17.11: significantly increase the exports of developing countries.
Trade Policies for a Circular Economy
From its initial focus on minimizing waste generation the circular economy has evolved into a broad-based approach to make resource use more sustainable. A big part of the appeal of a circular economy is the opportunities it creates not only for resource savings and better human health and environmental outcomes but also for trade and economic diversification.
Export Prohibitions and Restrictions
Eighty countries and customs territories so far have introduced export prohibitions or restrictions as a result of the COVID-19 pandemic according to a new report by the WTO Secretariat. The report which is based on information from official sources and news outlets draws attention to the current lack of transparency at the multilateral level and long-term risks that export restrictions pose to global supply chains and public welfare.
The Development of Trade Policies in the Asia and Pacific Region Over the Past 30 Years Since 1989
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.
Trade Issues Affecting Disaster Response
The frequency severity and economic impact of natural disasters are growing. Import surges resulting from disaster-response efforts can highlight underlying structural failings in the border clearance regimes of disaster-affected countries.
Implementing the 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.
Russia - Tariff Treatment of Certain Agricultural and Manufacturing Products
On 18 August 1997 the EC requested consultations with the US in respect of a ban on imports of poultry and poultry products from the EC by the US Department of Agriculture’s Food Safety Inspection Service and any related measures. The EC contended that although the ban is allegedly on grounds of product safety the ban does not indicate the grounds upon which EC poultry products have suddenly become ineligible for entry into the US market. The EC considered that the ban is inconsistent with Articles I III X and XI of GATT 1994 Articles 2 3 4 5 8 and Annex C of the SPS Agreement or Article 2 and 5 of the TBT Agreement.
Has the Multilateral Hong Kong Ministerial Decision on Duty Free Quota Free Market Access Provided a Breakthrough in the Least-Developed Countries' Export Performance?
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.
Reducing Trade Costs in LDCs: The Role of Aid for Trade
This study analyses the role of Aid for Trade in reducing trade costs in least developed countries (LDCs). The analysis builds on questionnaires and case stories submitted as part of the Aid-for-Trade monitoring and evaluation exercise for the Fifth Global Review of Aid for Trade. Trade costs are high in LDCs and constitute a major impediment to their participation in international trade. The most important sources of trade costs in LDCs are inadequate transport infrastructure cumbersome border procedures and compliance with non-tariff measures for merchandise exports. In the case of LDC services exports major drivers of trade costs include ICT networks poor regulation low skill levels the recognition of professional qualifications and restrictions on the movement of natural persons. LDCs are well aware of the issue of high trade costs which is addressed by more than 90% of LDCs in their national strategies. Trade facilitation is the top Aid-for-Trade priority for LDCs which is also reflected in increasing Aid-for-Trade flows. The analysis of questionnaires case stories diagnostic trade integration studies and existing econometric work illustrates the important role played by Aid-for-Trade interventions in lowering trade costs in LDCs.
Making (Small) Firms Happy
This paper considers the asymmetric effect of Trade Facilitation Agreement (TFA) policies on heterogeneous exporters based on matching a detailed panel of French firm exports to a new database of Trade Facilitation Indicators (TFIs) released recently by the Organisation for Economic Cooperation and Development (OECD). We analyze the effect of these TFIs on three trade-related outcomes: (i) exported value (firm intensive margin) (ii) number of products exported (product extensive margin) and (iii) average export value per product exported (product intensive margin). We find strong evidence of a heterogeneous effect of trade facilitation across firm size. While better information availability advance ruling and appeal procedures mainly benefit small firms the simplification of documents and automation tend to favor large firms’ trade. This is coherent with the idea that while some elements of the TFA simply reduce the fixed cost of exporting (favoring small firms in particular) other chapters in the TFA reduce the scope for corruption at borders making large firms less reluctant to serve corrupt countries.
TBT and Trade Facilitation Agreements
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.
The challenges of implementing the Trade Facilitation Agreement
This section of the report looks at the various challenges involved in ratifying and implementing the Trade Facilitation Agreement (TFA) particularly for developing and least-developed countries (LDCs). It first assesses the implementation needs of developing countries then goes on to evaluate the costs associated with implementing the measures covered by the TFA. It proceeds to explain the role of the Trade Facilitation Agreement Facility in meeting the challenges of implementation and to review the key success factors identified in previous trade facilitation reforms. Finally it underlines the importance of monitoring implementation of the TFA and its economic impacts.
Acknowledgements
The World Trade Report 2015 was prepared under the general responsibility of Xiaozhun Yi WTO Deputy Director-General and Robert Koopman Director of the Economic Research and Statistics Division. This year the report was coordinated by Coleman Nee and Robert Teh. The authors of the report are Marc Auboin Marc Bacchetta Cosimo Beverelli John Hancock Christian Henn Alexander Keck Jose-Antonio Monteiro Coleman Nee Simon Neumueller Roberta Piermartini and Robert Teh (Economic Research and Statistics Division); and Nora Neufeld (Market Access Division).