WTO Facilitation Agreement Represents Win for Trade Industry, Say Panelists
The World Trade Organization (WTO) trade facilitation agreement struck in December validates decades of express industry calls to modernize customs procedures, said Managing Director for Trade and International Affairs at FedEx Express Ralph Carter at a Jan. 29 Center for Strategic and International Studies panel titled “Future of U.S. Trade Facilitation and its Development Impact.” The facilitation agreement represents a victory for the global trading community, although the Express industry remains “concerned” over implementation, said Carter.
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“This is not like a lot of international agreements where through the stroke of a pen, you know, you reduce a tariff,” said Carter. “That’s easy to do and it’s easy to verify that it’s been done. This agreement is going to require things to actually change, operational things. Practices that have been going on for many years will have to change in order to implement this.” WTO member nations plan to formally sign the Bali package in July, following the completion of various administrative prerequisites, said panelist Dawn Shackleford, deputy assistant U.S. Trade Representative for WTO and Multilateral Affairs.
The facilitation agreement is part of a broader package brokered in Bali that includes market access and agricultural provisions for least-developed countries (see 13120903).The agreement brings the first enforceable customs standards to the WTO community, currently 159 members, and will help ramp up U.S. exports, said Carter. The agreement will likely, in fact, fuel exports globally, said Carter. “When a country does autonomous customs modernization on its own, the bigger impact that it experienced was an increase in exports. The exports increased greater than imports. Seems counter-intuitive,” said Carter. “But the reason is, if you look at the figures today that the WTO has now demonstrated, is 60 percent of global trade is in component parts. These are things moving around that are part of a global supply chain that are going into a country to be assembled, connected to … into something else. And then 40 percent of the value of the average export is imported content.”
The World Customs Organization (WCO) intends to publish implementation tools that will help draw accord between the WTO agreement trade facilitation standards and voluntary WCO rules, said panelist Ana Guevara, president of Aventi Associates and a former UPS official. The agreement has the potential to fulfill ambitious trade and development objectives alike, said Carter. “Administrative costs account for about 10 percent of the cost of trade, which is twice the average tariff of about five percent,” said Carter. “That’s why studies like the World Economic Forum concluded that if you reduce trade facilitation barriers you can have six times the impact on GDP then you would if you reduced or eliminated all tariffs around the world.”