The United Nations Conference on Trade and Development (UNCTAD) study on trade efficiency shows that an average trade transaction passes through 27 to 30 parties and in this process at least 40 documents are needed. Over 200 data elements are typically requested, of which 60 to 70 percent are re-typed at least once, while 15 percent are re-typed 30 times. As a result, trade transaction costs range from 2 to 15 percent of the total transaction value causing considerable amount of loss of money, time and business opportunities as well as making goods more expensive for the consumer. In this respect, trade facilitation - simplification and harmonization of international trade procedures to move goods in cross-border trade more efficiently - is a major concern for all countries.
Having significant impact on international trade, trade facilitation became a topic of discussion at the World Trade Organization's (WTO) Singapore Ministerial Conference in December 1996 and was later formally introduced as a subject for multilateral trade negotiations at the WTO on 1 August 2004. Negotiations on the Trade Facilitation Agreement ("TFA") was concluded by the WTO members at the Bali Ministerial Conference in December 2013. The final text of the TFA and the Protocol Amending the Marrakesh Agreement Establishing the World Trade Organization ("Protocol") was adopted and submitted to the WTO Members for acceptance with the General Council Decision of 27 November 2014.
The TFA will enter into force once two-thirds (108) of the WTO Members have completed their domestic ratification process and formally accepted the TFA. Turkey ratified the TFA and the Protocol with the Decree of the Council of Ministers number 2016/8570 published on the Official Gazette with number 29644 dated 5 March 2016 and has become the 71st WTO Member to accept the TFA. As of today the number of Member states that have completed this process is 89.
To summarize shortly, the TFA is made up of three sections:
- Consisting of 13 articles, Section I
brings substantive obligations which aim to expedite the movement,
release and clearance of goods, including goods in transit and
brings measures to enhance impartiality, non-discrimination and
transparency in customs procedures. It aims to enhance cooperation
between border agencies and simplify customs procedures that will
reduce transaction costs and boost international trade. According
to the Organization for Economic Cooperation and Development
(OECD), the trade facilitation measures that would be most
effective in terms of reducing costs are:
- Harmonization and simplification of trade documents,
- Streamlining of border procedures,
- Automation of the trade and customs processes,
- Ensuring the availability of trade-related information, and
- Possibility to request advance rulings on customs matters.
- Section II contains provisions related to special and differential treatment of developing and least-developed country Members. TFA provides flexibility for these Members in the implementation of the TFA, by allowing them to determine when they will implement individual provisions of the TFA and to identify provisions that they will only be able to implement upon the receipt of technical assistance and support for capacity building. Turkey has also benefited from this section. According to the Category A notification submitted by Turkey to the WTO in July 2014, upon the entry into force of the TFA, Turkey intends to implement all TFA provisions except for Article 7.9 on perishable goods.
- Section III makes certain institutional arrangements by establishing a permanent committee on trade facilitation at the WTO and also requiring Members to have a national committee to facilitate domestic coordination and implementation of the provisions of the TFA.
According to the WTO's flagship World Trade Report released on 26 October 2015, if these customs measures brought by the TFA are implemented properly, TFA could create 1 trillion USD worth of global economic activity, add 21 million new jobs and lower the total cost of doing international trade by 14 per cent for low-income countries and 13 per cent for upper middle-income countries. With this potential, all trading parties have high expectations of the TFA and are pressuring the Members to complete the ratification process. Turkey has completed the ratification process along with 89 other Members, however 19 other Members must ratify the TFA for it to enter into force.
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