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
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
Streamlining of border
Automation of the trade and customs
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
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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