It may be surprising to know that there is no standard definition of trade facilitation in the WTO Trade Facilitation Agreement. Different international organizations have been working in the area and have developed their own understanding of the scope of the agreement in terms of what trade facilitation should encompass. These have been included in the Trade Facilitation Agreement Business Guide published by ITC.
Trade facilitation, as a subject, became more visible after the WTO’s Singapore Ministerial Conference in 1996 and could be described as simplification of trade procedures in order to move goods, more efficiently, across borders. According to the UN, trade facilitation is defined as the systematic rationalization of procedures and documents for international trade (trade procedures being the activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade). However, the question of what the WTO Trade Facilitation Agreement should encompass was the subject of extended discussions among WTO members in the lead-up to the formal launch of the negotiations in 2004 as well as throughout the subsequent negotiations phase.
A wide variety of activities undertaken by governments and/or the private sector can facilitate trade. For example, the simplification and electronic exchange of trade documents and data, improvements in trade payment systems, modernized roads, ports and terminal facilities, simplified customs procedures and efficient trade logistic systems can all have a positive effect on the speed and cost of moving goods across borders. A threshold debate was whether these and other activities were an appropriate subject of WTO action, given the WTO’s traditional role as the multilateral body responsible for setting and enforcing rules of trade between nations and not, for example, defining technical trade data elements.
Moreover, WTO members recognized that a number of other international organizations were already working in the trade facilitation field – such as the WCO, UNECE, UNCTAD, ICC and ITC – providing standards, best practice recommendations and other guidance for governments and businesses.
In the end, consistent with the WTO’s traditional role and to avoid duplication of activity with other organizations, WTO members decided to act on trade facilitation on the basis of trade principles found in the WTO’s foundation agreement, the General Agreement on Tariffs and Trade (GATT).
In particular, they agreed to extend or ‘clarify and improve’ trade facilitative principles found in three GATT articles:
- GATT Article V which provides for freedom of transit;
- GATT Article VII concerning limitations on fees and charges imposed on or in connection with imports or exports; simplification of import/export formalities and documentation requirements; and use of customs penalties for errors in import and export processing; and
- GATT Article X which outlines the requirements for publication of trade regulations as well as rights of appeal of adverse customs decisions.
This early decision on the scope of negotiations indicates the character of the final Agreement. Consistent with these objectives, it is an agreement that is focused on administrative requirements related to the movement, release and clearance of import, export and transit goods, such as the fees and charges, documentation requirements, and other rules, procedures or formalities applied by customs and other border authorities.WTO training manual
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