The WTO Trade Facilitation Agreement And Free Circulation of Goods: An OECS Approach

The Trade Facilitation Agreement On February 22, 2017 the World Trade Organisation (WTO) Agreement on Trade Facilitation entered into force when two-thirds (110 Members) of the WTO membership ratified the Agreement. The Trade Facilitation Agreement (TFA), which was concluded in December 2013 at the 9th Ministerial Conference in Bali, aims to clarify and improve multilateral trade rules on (i) Fees and formalities connected with Importation & Exportation, (ii) Publication and Administration of Trade Regulations, and (iii) Trade in Transit. Through improvements in these trade rules, the intention is to (a) expedite movement, release and clearance of goods; (b) strengthen cooperation between Customs and other border and regulatory agencies; and (c) enhance technical assistance and capacity building support for developing countries like the OECS Member States.
The TFA contains thirty-five (35) technical measures which are geared toward better facilitation of trade among WTO Members. The Agreement also contains provisions that grant special and differential treatment to developing and least-developed country Members to spread the implementation of these measures over three (3) categories. Another important feature of the TFA is the provision of Article 24.5 which allows Members of a Customs Union, or regional economic arrangement such as the OECS and CARICOM, to adopt regional approaches to assist in the implementation of their obligations under the agreement. Therefore, the implementation of the TFA is also a strategic step for the OECS Member States toward facilitating the free circulation of goods in the OECS Economic Union, which will allow goods to move between Member States without the imposition of import duties and charges and import formalities.
The Current Trading Environment in the OECS The OECS Economic Union comprises small, open economies which are heavily dependent on trade and foreign investment. They are net importers of goods and net exporters of services. Small domestic production bases and internal markets necessitates that the Members trade with each other and third country partners. However, they typically operate a trade deficit in terms of their performance within bilateral trade agreements. Therefore, the competitiveness of the OECS is linked heavily to the efficiency with which it is able to trade.
Currently, goods imported into the OECS Economic Union, and goods traded between its Members, are subjected to a number of physical, technical and fiscal requirements which include several documents; multiple agency approvals; physical inspections of goods; licenses and permits; Customs duties and other related charges. In many instances, these requirements are still manually executed due to the non-existence of a paperless environment to facilitate import procedural requirements.
A regional approach to implementation In light of this, the TFA provides a number of measures to mitigate existing non-tariff barriers as well as enhance trade facilitation initiatives, which can be implemented using regional approaches. Furthermore, the cost implications of implementing some of these measures necessitates that the OECS utilise a regional approach to implementing obligations such as risk assessment, advance rulings, single window and enquiry points. These regional approaches are critical to the establishment of a regional border management system for the OECS Customs Union, as well as the removal of import formalities to facilitate goods circulating freely among Member States.
Regional approaches adopted for the implementation of the TFA must take account of differences in levels of compliance and readiness among the Member States to implement the Agreement. Therefore, sequenced, co-ordinated regional approaches must be geared toward developing optimal levels of capacity and functionality across the Member States in order to better facilitate international and intra-regional trade.
Moreover, Member States that are more advanced with their implementation processes can share experiences and best practices with those states that may require a longer time for implementation. The implementation of the TFA and facilitation of the free circulation of goods in the Economic Union requires continuous access to technical assistance and support for building capacity of Customs and Border Agencies. Therefore, a regional approach should also be adopted to avoid duplication of donor interventions at the national level and streamline donor resources and technical assistance at the regional level where possible. It is imperative that Member States take ownership and drive their national and regional trade facilitation agendas and determine where donor agencies are best equipped to advance their interests in a strategic manner.
In closing, the OECS must view implementation of the TFA, not simply as the implementation of a WTO commitment, but as part of the broader regional integration agenda and strategic priorities of the Economic Union to establish a Custom Union and Common Market, facilitate free circulation of goods and build economic resilience. Therefore, the implementation of TFA measures will require careful co-ordination between the public and private sector as well as the support of the political directorate.
More importantly each regional approach to implementing measures under the TFA must be geared toward improving the competitiveness of SMEs, reducing institutional and procedural inefficiencies, improving consumer satisfaction and safety, creating job opportunities, enhancing commercial activity at the national level and facilitating greater participation in the regional and global value chain.
For more information on the Trade Facilitation Agreement and Free Circulation of Goods Contact cwoods@oecs.org