From the United States, and before the election of Donald Trump, announcements are made about new increases in customs tariffs on products originating in China, in what has been called the "Trade War." Likewise, the White House, in its current administration, decrees administrative restrictions on de minimis (1), which in the United States is US$800, as well as the requirement of additional data specific to this type of shipment, and the application of regulatory standards on health and safety, to protect American companies from unfair competition against imported goods. And legislative measures are proposed that could consider excluding de minimis eligibility for sensitive products, such as textiles and clothing.
In Geneva, the dispute settlement system has been paralyzed for some years, because the United States has blocked the appointment of permanent members of the Appellate Body. Without judges there is no second instance, and without a second instance there is no system. And with Trump becoming President, this is something that should not change substantially.
With protectionism becoming a fad, it seems that Argentina will now become a beacon of light in terms of trade facilitation, through the issuance of international trade liberalization measures.
However, in this context, we are left with something.
More than 7 years ago, the Trade Facilitation Agreement (TFA) came into force on February 22, 2017, after being ratified by two-thirds of the Members of the World Trade Organization (WTO). As of June 2024, 124 Members are signatories, the last being Venezuela, on June 11 of this year.
The Agreement promised, already in its mandate, that “the negotiations will be aimed at clarifying and improving relevant aspects of Articles V (Freedom of Transit); VIII (Fees and Formalities Concerning Importation and Exportation); and X (Publication and Administration of Trade Regulations) of GATT 1994, with a view to further expediting the movement of cargo, customs clearance and release into circulation of goods, including goods in transit.” According to the WTO’s own estimates, the implementation of the provisions of the TFA could add up to 2,7% to annual export growth and increase world GDP by 0,5%, particularly benefiting developing and least-developed countries.
Indeed, the TFA contains 12 articles and more than 40 disciplines, which aim to expedite the movement and clearance of goods, including goods in transit, increase the transparency and publicity of commercial information, as well as strengthen cooperation between customs authorities and other border agencies.
Latin America (2) was a very enthusiastic region when it came to signing the Agreement, and using the category mechanism, namely, A (immediate compliance), B (deadline for compliance) and C (deadline plus assistance) (3), they put the Agreement into effect.
The question we are asking ourselves today, more than 7 years after its entry into force, is whether this impetus, whether these promises of simplification and transparency, are really being fulfilled. Is there any technical instrument that can prove to us that the levels of facilitation have been expanded, that the levels of transparency and legal certainty have increased? Are there measurements available that allow the private sector, the main recipient of the benefits of the Trade Facilitation Agreement (TFA), to indicate that, today, it is easier to conduct international trade to and from Latin America?
The Agreement considered in its Section III “Institutional provisions and final provisions”, the creation of a Trade Facilitation Committee in the WTO, which has its counterpart in the signatory countries. The work that the Committee does in the WTO is very interesting, and it collects good practices from the Members that are very useful to replicate. However, it does not effectively monitor the implementation of the measures contained in the Agreement by the Members. Furthermore, with respect to the National Facilitation Committees in Latin America, we can discover, with just a glance, important gaps. There are countries where the Committee has not been established; others where it was established, but has not held any session; there are cases, quite a few, where the committee is only formed by government agencies, without the permanent participation of the private sector; and others where the private sector only has the right to speak but not to vote, in the meetings that are held. Then, the participation of the private sector, in most cases, is passive, that is, it is limited to listening to and commenting on the initiatives and projects presented by government authorities and does not have many opportunities to present its own initiatives.
If we talk about substantive provisions, the gaps between what each Member has declared in Category A and full and complete compliance may be even more surprising. There are many provisions declared in Category A, but which are partially complied with.
Let's review some examples.
Article 7.7, referring to Trade facilitation measures for authorised operators (OAS). Many Members have declared it in category A, but when a land carrier or an express transport company wants to be certified, they cannot, because the program is only open to importers or exporters. We recognize, obviously, that each Member is gradually adding actors in the chain, the point is that the notification mechanism does not take this into account, and worse still, there is no one to monitor the progress or lack thereof, for each provision.
Another example, article 6.1, referring to the Pre-arrival processingWhen we review the regulations of many Latin American countries, we find that there is the possibility of making an advance import declaration, but this mechanism is only allowed for maritime transport, and not for land and air transport.
Finally, regarding the advance rulings, Article 3, which must be implemented in matters of tariff classification and origin, even though it may be provided for other matters, we wonder how many Members are implementing it for customs valuation methods or the application of quotas.
These three examples show us that it is necessary to review the full and complete compliance with the provisions of the TFA, obviously considering the gradual approach, the appropriate time and the resources necessary for its implementation. But the Agreement cannot be relegated to a corner. The WTO and the Members, but fundamentally the private sector, must review it, beyond the dissemination of good practices. That is why it is important that commercial operators have a seat in the National Committees on Trade Facilitation, with the right to speak and vote.
The agenda of these Committees should be focused on reviewing the real compliance gaps that still exist, and from there generate projects not only with the private sector, but also with international organizations and academia. For example, review how many and on what matters advance resolutions have been issued; if the regulations are published in advance of their entry into force and if the private sector is allowed to make observations and comments; if the requirements for original documentation have been eliminated and digital copies are allowed; how many time-of-dispatch (TRS) measurements have been made; which operators can be certified as AEO; how the implementation of the de Minimis for express shipping, etc.
When the TFA negotiations were launched, a promise was made to reduce the time and costs of international trade. It would be good to know and measure whether these promises are being kept, beyond the evolution of the global economy itself. Creating more transparent, predictable and less bureaucratic international trade environments is possible, so that trade facilitation "does not go out of fashion" and continues to be a driver of growth in the region.
The question we face is whether the TFA and other instruments such as the SAFE Framework, the Revised Kyoto Convention, and even the FTAs will be sufficient to navigate the waters of approaching protectionism.
- Discipline applicable to urgent shipments, article 7.8 of the AFC, which considers the non-application of customs duties to low-value shipments and simplified processing.
- Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela.
- The explanation of the Categories is simplified for text purposes only.
Lawyer, Master in International Law from the University of Heidelberg. He worked for almost 20 years in the Chilean Customs, holding various responsibilities. He is an accredited expert of the WCO and is a frequent arbitrator/panelist at the WTO. He is a professor at various universities and the author of various publications on customs and international trade. He is President of the Chilean Institute of International Trade, and is currently Director of Regulatory and Customs Affairs for DHL for Central and South America.
